myth or fact? (re cars at auction)

As I continue my hunt for a great 996 (the hunt is almost as much fun as the purchase) I have heard something on the street (or at the poker table!) that goes something like this: "A dealer only keeps the best cars on trade on their lot, the rest they take to auction. Thus any carfax search that shows "car bought at auction" is an inferior car either due to problems, color or low options." As I look for a 996 I am looking at all distribution channels (Porsche dealer, second tier but reputable exotic car dealers, ebay (flame away) and private party). I am not sure why I would discount a car that checks out on a PPI just because it snaked its way through an auction but I await the feedback from you more experienced buyers of Porsches (note-as stated in an earlier post I am new to the buying experience of exotic cars). Thanks again.

There are lots of exceptions and 'yeah, buts', I'm sure, but I believe this is generally true. Especially for relatively low volume dealerships, there just isn't the gross margin in the business to carry inventory that doesn't move, deal with cars that keep coming back, or employ lots of high pressure sales sharks. These dealerships make money by selling cars with little effort or manpower, and doing the majority of their service work either under warranty or on cars they've known for awhile by rote. That doesn't mean the corollary is true, mind you. Not every car at auction is bad. Some are just high mileage, for example, or have been collision damaged and thus tainted no matter how well the repair work was done. And some were taken as trades by dealers that couldn't resell the vehicle because it wasn't their kind of thing. When I bought my 996, the Porsche dealer took my BMW Z3 on a trade, openly planning to ship it to auction. It was a one owner, meticulously maintained, low mileage, showroom new car. But it went to auction because this Porsche dealer doesn't sell used BMWs.

This is not true. Here is why. A Porsche owner decides he wants a new Corvette so he trades it in at a Chevy dealer. Now you are in the market for a Porsche are you going to buy one from a Chevy dealer. NO. So he has 2 choices wholesale the car or sell it at auction. He is going to do whatever will get him more money. I sold cars for 2 years when I was younger. I hope this helps.

Not so sure ReidN there once was a guy named Bob who bought his Porsche from Ford, well that is a whole other story.

Having spent to much of my life in the car business, I can tell you that cars go to auction for many reasons, some of which are: 1. The dealer does not normally try to sell that type of car on his lot. 2. The dealer can't find a wholesaler willing to take it. Kind of rare but occasionally happens. 3. The car has several minor problems that just ain't worth fooling with. 4. The car has one or more major problems. 5. The car has a bad news history. 6. The car has been on the dealers lot for way to long and it's time to say bye-bye. Any car I would consider buying at auction, I would go over it with a fine-tooth comb. Don't look twice, but look several times before buying. If your buying at auction, you must be aware of what type of auction you are at. There are auctions that are referred to as the "Mooch Auctions". These auctions are made up of mostly the general public who happen to know someone with a dealers license who take them to the auction to buy a car. The prices for a halfway good vehicle will normally be well over wholesale because the "mooches" think they are getting a good deal. Kind of defeats the whole purpose of buying at an auction. Tom L 2002 C2

also.... all lease cars that are returned go to auction.

Is that true? Up here, I think that the majority of pre-owned Porsches at Porsche dealers are actually returned from lease. It's a key source of inventory for them, because they generally sold the cars in the first place and have the provenance and service histories on them.

was it a red turbo ?

I think most go to auction... not sure if some stay with the dealer, but it is entirely possible.

My understanding is all lease cars go to auction. They are not owned by the dealer that leased them, but the leasing company. The leasing co, want's to make as much money as they can on them as well, so they go to auction where dealers purchase them to sell on their lots.

That makes total sense, where it's an independent leasing company. I think around here that a lot of leasing business is done by the manufacturers' own finance arms, represented by the retailer (like Porsche Financial Services). That would probably explain why it seems to be more common to see lease returns on dealer lots.

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I wouldn't but hey thats me... [QUOTE]Originally Posted by rountreed Not so sure ReidN there once was a guy named Bob who bought his Porsche from Ford, well that is a whole other story.

My car was sold by Porsche Leasing Ltd at auction after a one year lease. I don't know whether it might have been offered to Porsche dealers first, but a used car dealer bought it at auction. The car was pretty nearly perfect, so I would not be afraid of auctioned cars.

the p-car dealer and other dealer are sitting on the same auction.

YMMV but my 996 was a leased car that Porsche sent to the auction. I bought if from an independent with 1 year of the factory warranty still remaining. Approximately 30k miles and 2 1/2 years later I could not be happier with the car. It has been great. Sure there is some crap that goes through the auctions, but in my opinion to dismiss all cars that have gone through auctions as bad is too much of a generalization. Would I buy a car that has been through an auction, you bet if it checked out with a PPI to my satisfaction.

Just to add my personal shopping anecdote, I found my '02 Targa at a higher end (but run from a pretty blah! operation) dealer. It was a 1 owner care leased through Porsche Financial but reposessed from the Dr. leasing it. Went straight to auction and ended up on the used lot. PPI revealed a fixable valve item the dealer paid to have repaired. I walked away in June with a mint 30K mile nicely equipped car that hasn't given me an ounce of trouble so far. Keep looking for the best car specifically for you. They're out there. Piccia '02 Targa

What is this worry about auctions... It is a business. Where do you think all the shiny 2nd hand cars come from on the used car lot (private, affiliated with a new car dealer, etc)? They are not all trades at that respective establishment. A used car dept (to cover all the types) sends it's buyers to the highline auctions to source specific types of cars that they want on their lot to draw people in and sell to. As stated by others, many of the newer inventory is offlease, the rest as explained above (sat too long, isn't selling, wrong type of car for the dealer, etc). If you are serious, hire a broker to represent you or take you to a real auction. Be prepared to pay them for their time (flat fee or a % of the deal).

Great info and appreciate every reply. Very helpful to me. Great forum with great information.

I also worked in the car industry when I was younger and DirtTrack49 has described the situation accurately. Cars end up at auctions frequently because they could not be sold via other means. It is not true that all leased cars end up at auction; only undesirable ones. Either because of overstock, inaccurate residual values or undesirable attributes (accident history). While it may be perfectly fine, you do run a higher percentage chance that there's some history here. And, now that CarFax reports police records as well (in some states), you can see a fascinating running pattern of: Ownership Accident Report Sold at Auction When you look at some cars on used car lots. Caveat emptor is always applicable I guess. Thanks, Peter

I am a dealer and I can tell you that all lease cars do not go to auction- the returning dealer normally gets a quote from the lease company and if reasonable and a car they want they buy it. Sometimes if the quote is too high the dealers gamble and let them run it at auction and actually pick it up for less. Just like everything else in life all lease companys have different procedures and the quotes vary so there can be good cars at the autcion but I will agree in general the cars at auction have been wholesaled by a dealer. Most lease companys like to sell them to the dealer they are returned to say that dont have to pay transportation and the auction fees.