A Comprehensive Guide to Car Auctions in the Philippines

A Comprehensive Guide to Car Auctions in the Philippines

July 31, 2018

There are many ways as to purchasing a great vehicle here in the Philippines. A car auction is currently one of the most ideal means of selecting and acquiring a car from a wide range of ready and available choices.

Car auctioning is basically a method of selling new, or in most cases, used vehicles based on an auction system. There are two major categories of car auctioning that are open to the general public: government or police auctions and public car auctions.

Government auctions include municipal or city vehicles such as buses, police cruiser, utility trucks, etc. These auctions also sell impound cars that have been confiscated due to crime or traffic violations.

Public car auctions typically include repossessed vehicles that have been acquired from banks, wholesale lots of cars, flooded vehicles, bottom-level trade-ins, or even high-end and first-rate luxury sports cars and SUVs. The quality and reliability of the stock cars vary in an auction-to-auction basis, so it is important that you do substantial research. Due to the relative popularity of public car auctioning, competition and the tendency for overbidding at prices higher than market value can get somewhat fierce.

A car dealership auction is a more specialized form of car auctions. Thousands and even millions of cars are sold at dealership auto auctions on a yearly basis. These dealer auctions are in many cases, restricted to the general public and only set for licensed dealers to participate. Prices in these auctions are usually lower than cars advertised on any car dealer’s lot—indeed, buy-and-sell cars in the Philippines are prevalent.

Maintaining the longevity of inventory can cost dealers both money and reputation. Most vehicles that are sold are off-lease returns, replaced rental fleets, company cats, repossessed vehicles, and trade-ins.

  • Off-Lease – These vehicles are returned to financial institutions upon the end of a lease term. Closed auctions are typically the venue for such financial institutions to dispose a large quantity of end-of-lease returns.
  • Off-Rental – Rental companies usually replace their inventory once a year, thus releasing a sea of late-model cars to the secondary market.
  • Company Cars – Companies of different sizes own or lease cars, trucks, or vans that they usually keep for around two or more years.
  • Repossessed – These vehicles are either voluntarily or involuntarily repossessed by financial institutions for delinquency or any other reason from repossession. Car auctions are usually the bank’s main option for deliverance.
  • Trade-In – Cars that have been traded-in vary in overall condition but typically have many useful extras and after-market modifications. Although, some are also considerably older and out of warranty.
  • Salvage – These are vehicles that have been in accidents, floods, fires, or recovered from thefts that have been purchased by insurance companies. Insurance companies sell these cars to dealers and body shops or auto-recyclers that fix them to good condition for resale.

Overview and Aspects of a Car Auction

Overview and Aspects of a Car Auction in the Philippines

Whether you are working with a car dealership or just a casual buyer, when it comes to understanding a general scope of car auction here in the Philippines, it is vital that you attain a well-acquainted grasp of the major elements that go into the event process:

Pricing

Regardless of source, cars are sent to auctions with the primary purpose of being sold as quickly and as hassle-free as possible, this typically happens at prices that dealers can easily revamp with a small profit from reselling. Contrary to popular opinion, cars at auctions are not sold at drastically low prices. This usually transpires at cases wherein there are not enough interested bidders.

The reserved price is not disclosed publicly and a ‘winning’ bid is only considered valid sale when the reserved price is met.

Condition

Similar to any used vehicle, general vehicle condition varies on a case-by-case basis. Many aspects of vehicle appearance may suffer from everyday usage and have the following common damages: used-up upholstery, scratched bumpers, dings on the doors, chipped hood, dents, etc.

Inspection

Depending on the auction, pre-sale vehicle inspection or test driving is not allowed at some auctions. Mechanics and guests are not typically allowed to see the cars until after the sale is completed. Many auctions offer a fee for post-sale inspection. This system definitely varies, and there are many auto auctions that provide for pre-sale inspection.

Inventory Finance

Many car dealerships do not pay cash for the vehicles that they acquire at auto auctions. They rely more on inventory financing—a line of credit extended by a bank to acquire vehicles. In the industry, this is known as ‘floor planning’ or simply flooring vehicle inventory.

Auction Lighting System

Auction Lighting System
Generally speaking, auctions use a light system that dictates the outlay of the auctioning procedurals. Below are the light colors that when illuminated, pertain to a particular phase:

  • Green Light – the seller presents that the vehicle is sound and subject to all arbitration policies.
  • Red Light – the vehicle is being sold ‘as is’ mechanically. It is important to review the auction policies for the specific details.
  • Yellow Light – the yellow light signifies to listen to the announcement made by the auctioneer. The selling dealer must announce any item that is subject to arbitration. Once these items are announced, they are no longer subject to arbitration.
  • Blue Light – this pertains to the event that the assignable title does not accompany the vehicle: the seller has 30 days to provide an assignable title to the auction. Again, in order to have a more case-specific understanding of this, you need to review the auction policies and procedures for a more detailed overview on the matter.

Car Auction Advantages and Notes for Assessment

If you have been contemplating on acquiring a vehicle by means of visiting a car auction here in the Philippines, there are many pros that come into play that you can put into great consideration. A car auction is a great option for purchasing relatively lower-priced vehicles if you have somewhat of a good mechanical and electronic knowledge set when it comes to cars.

Good Price 

Arguably the most alluring advantage or purchasing a car at an auction is that cars are sold in their lowest prices. If you are in the market for getting the most bang for your buck, visiting a car auction is a must.

Wide Selections

There is always a great number of cars sold in an auction, and it is very much a high possibility that you may encounter the car of your dreams in the lot. If you are somebody that is into collecting automobiles, there are always many vintage cars available at the auction.

Guaranteed Quality

In the world of car auctioning here in the Philippines, sellers usually conduct thorough inspections of every vehicle’s quality prior to including them in the auction grounds, which in turn, grants the assurance that the floor cars are in good quality. Many car auctions here in the Philippines also post their vehicles online, so it would also be greatly advisable to do prior research.

Warranty

It is a common likelihood in the car auctioning world that you are able to acquire a vehicle that is still in a warranty. Cars that are under warranty entail that you are still enabled to ask the assistance of the company whenever there are any issues with the car.

Let’s explore a few of the major points of assessment for inspection prior to bidding in car auctions here in the Philippines:

  • Be honest with yourself – If you don’t have the skills and tools or means to deal with mechanical challenges that may happen, do not talk yourself into believing otherwise: do not allow yourself to be drowned in repair costs.
  • Using your eyes – Keep a keen eye open for evident signals for repair such as paint overspray, damaged sheet metal, puddles underneath the vehicle, beaten disc brakes, uneven alignment, etc. Refrain from sticking with a car that you are skeptical about because of certain smells or apparent damages.
  • Don’t be too quick to believe – Polish and touchup paint are easy to pull off. Sometimes nothing is as good as it looks. Extensive and meticulous examination is always worth it.
  • Checking the VIN – Take note of the VIN number found in the base windshield of any car that you are interested in. Then check other places where the VIN should appear: doors, trunk lid stickers, etc. If the numbers don’t match, the car may have been through a major accident. It may be a sign to check out more promising alternatives.
  • Pulling the dipsticks – A good signifier that a car has been well-maintained is when you pull the oil or transmission fluid dipsticks and the lubricants appear clear and clean.
  • Know the car’s value before bidding – There are many online sources that can give general ideas as to the worth of used cars. Be sure to practice extensive research as to your potential picks.
  • Don’t forget that “As is” means “As is” – Cars in auctions are sold in ‘as is’ condition. This means that there are no guarantees, no warranties, and no means of legal recourse. This fact greatly emphasizes the risks that you may be taking, and reiterates the importance of meticulous examination.  
  • Observe – Take time and closely observe the actions of other bidders. Go to a few auctions in the Philippines before actually participating in one, as to get well-versed with the players and the process.
  • Don’t get caught up in the bidding process – It is very much easy to get carried away during budding and wind up spending much more than a car is actually worth. Learn to not pin yourself on the hopes of one specific vehicle. Always have the fortitude to walk away when you begin to entertain irrational courses of action.

Tips for Auction Bidding in the Philippines

Tips for Car Auction Bidding in the Philippines

In this day and age, an average of 230 automotive vehicles is sold in public car auctions here in the Philippines. In just one day, more than 300 bidders attend an auction with inventories almost completely wiped out.

More and more Filipinos are starting to embrace the public auction as a primary means for buying secondhand vehicles. Below is a step-by-step guideline with points of advisory for engaging in a public auction here in the Philippines:

  1. Locate your closest public auction. Inquire on the inventory or a catalogue listing of all the vehicles that are to be sold at the auction. Make a list of your potential picks.
  2. Attend the viewing days that are held prior to auction day (usually held 2 or 3 weeks prior). Do your extensive research during that time frame because auctioneers only give brief descriptions of the units for bidding.
  3. Check every car on your list. Inspect the interior, exterior, and the engine. You may also feel free to bring a mechanic or somebody with an expert opinion (test drives are prohibited). If you have any questions on the auctioning mechanics, make sure to clarify before proceeding.
  4. Note the lot numbers of the vehicles that you inspected. Set a bid limit on your potential picks and stick to them. Make sure that all documents required by the auction house are ready before auction day.
  5. Bring 20,000 Pesos in cash that will serve as a bond for the auction. Later on, it will either be deducted from the final bid price of the unit or returned to you if you didn’t win in the bid. The bond is essentially just to signify that you are a serious buyer.

Car Auctions with HMR Philippines

HMR Philippines is a one-stop shop for office, household, and industrial merchandise imported straight from leading retail outlets in Australia, Europe, and the US. We are a trusted Surplus Superstore that caters to good ranging from construction materials to furniture to telecommunications equipment.

We are also a growing and highly-reputable name for public car auctioning here in the Philippines.

HMR Philippines holds regular public buddings at our HMR Auto Auction facility in Sucat, Paranaque.

Find out more about this by clicking this link!