autohitch logo
Are Cars Cheaper At Dealer Auctions

How Much Cheaper Are Cars At Dealer Auctions

Most experts claim that you can expect a car to be 15-40% cheaper than the retail price at dealer auctions, but I have found that to be more in the 20-30% range.


You will be surprised by just how many cars sell for close to retail prices at these supposedly “Wholesale auctions.” 


We live in an era where high-volume car sales are becoming the norm.

Dealer Invoice Price- What You Didn't Know

Why Are Cars Sold At Auction

Cars end up at auction for a variety of reasons, not all of which are negative.

Most come from dealerships looking to turn over stagnant inventory and free up capital to reinvest in faster-selling models.

Others are off-lease vehicles returned to leasing companies, repo cars that banks need to sell to recoup losses, rental cars hitting mileage limits, or private seller trade-ins.


Dealerships send unsold cars hitting 60, 90 or 120 days on the lot to auction per rigid pre-owned aging policies. The goal is improving inefficient inventory turnover ratios judged critically by shareholders.

  • Auctioning underperformers brings in cash for more promising inventory.
  • Selling the wrong models for their locale or an overstock of certain makes also helps turnover.
  • Getting rid of vehicles with complicated histories or issues needing expensive reconditioning is another reason dealers wholesale to auctions.

Leasing and Rental Companies

Banks and lenders auction repossessed vehicles when owners default on loans to mitigate losses. Off-lease cars come from leasing companies after return.

  • These vehicles must be quickly resold by the leasing and rental companies.
  • Rental companies regularly cycle out former fleet units at auction once hitting predetermined mileages, despite good maintenance records.

Private Party Trade-ins

Dealerships may send trade-ins from private customer sellers directly to auction if they know the vehicles won’t sell well on their lot or are looking to quickly flip the inventory. This happens without waiting the typical 60-90 days to see if the traded in car will sell on their lot.


While some auction cars have minor mechanical or cosmetic flaws, many are in solid shape and simply sat too long unsold on dealers’ lots.

  • However the binding as-is nature of bids makes pre-purchase inspections essential.

Why Are Auction Cars Cheaper?

Auction vehicles typically sell at 20-30% below comparable retail dealership prices for several key reasons, and not all always apply depending on the type of auction:

  • Low Overhead – Auction companies avoid the higher staffing, test drive, reconditioning, and facility costs of dealerships.
  • High Volume – Quick turnover of large inventory volumes via auction allows thinner profit margins.
  • As-Is Sales – Cars sold as-is without warranties save auctions vehicle preparation costs.
  • Wholesale Pricing – Dealers buy at below retail pricing, discounts partially passed to auction buyers.
  • Access to Inventory – Dealerships send slower models to auction, creating discounts on off-lease, trade-ins and fleet vehicles.
  • Competitive Bidding – Auction environment drives lower end sales prices through bidder competition.

Buying Cars At Dealer Auctions In 2023

It used to be that you could go to the dealer auction and expect to get a car at a significantly reduced price.  The idea was to get the car cheaper, clean/fix any issues, and sell retail to the public for a profit.  Typically, a dealer could expect to markup a car around one or two thousand dollars (For the average car).

Car Dealer auto Auctions

The problem today is that Car Buying Sites are exposing Used Car Prices so well that profit margins have slid so far that, in some cases, a dealer might buy the car at the dealer auction and then sell it to the public for almost the same price.

How Can They Do This?

Third-party products and add-on products.  Items Such as:

  • Financing
  • Warranty
  • Insurance
  • Interior/Exterior Protections
  • Service Contracts

These extra products have become so lucrative, thanks to big commissions by third parties, that if a dealer can consistently sell some or all of these products to car buyers,

they can afford to sell cars at a bargain or even wholesale prices.

How To Buy Cars At Auto Auctions

The truth is that you have to treat the auction just as you would treat the dealer-  Don’t get emotional about a car. 

The problem is that it’s actually easier to mess up at the auction because of the exciting environment all of the fast-paced buying and selling creates. 

For some quick tips from someone who has been there many times before, try this at the Auto Auction:

  1.  Research which cars will be in the auction ahead of time
  2.  After you have found the car or cars you like, pull the Carfax Report
  3.  Research Used Car Prices prior to arrival and pick a max for each
  4.  If you can get access- Look up prior auction sales to see what other dealers are paying for the cars
  5.  Arrive early to physically inspect the vehicles you have narrowed down and finalize the number you will spend based on your findings.
  6.  While bidding, don’t go over your max!


Cars purchased at the Dealer Auctions are certainly cheaper (On Average) than cars purchased at the dealerships themselves.  This is especially considering if you purchase those add-on products!

However, Dealer Auctions are no joke, and there is a reason that this is a business and not a game.  Most dealers that buy these cars do recondition them to get them in proper shape for retail sale, an expense most people don’t consider.

Parts and labor are typically very cheap for the average dealer, whereas you might be paying full price to mechanics and detailers.  In the end, is cheaper actually going to be cheaper, or even worth it?

Leave a Reply

Your email address will not be published. Required fields are marked *

Picture of Steve Momot - Author

Steve Momot - Author

Steve, a seasoned expert in the automotive industry, formerly held a car dealer license in Florida. With extensive experience spanning across car trading and mechanical work, he founded Autohitch. His mission? To guide both buyers and sellers through the intricate maze of car purchasing, ensuring a seamless and informed experience. Outside of the automotive world, Steve has a passion for fishing and capturing the beauty of nature through photography.


Share on.

Table of Contents