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Millions of motorvehicles for sale,are given at dealer auto auctions every year. These auctions arerestricted for the general public and only licensed dealers canparticipate. Prices of vehicles sold at dealer auctions tend to belower than those advertised on any dealer’s lot. Sellers forgo apotentially higher sticker price to take their inventory to a dealerauction where it will be auctioned off for thousands less than retailfor a number of reasons. Maintaining aging inventory costs dealersboth money and reputation. Most vehicles sold are off-lease returns,replaced rental fleets, company cars, repossessed forsale vehicle, andtrade-ins.Off-lease:vehicles returned to the financial institution at the end of a leaseterm. Closed auctions are usually the only venue for such financialinstitutions to dispose of a large volume of end-of-lease returns.The terms of a lease normally put a restriction on the number ofmiles driven, require regular maintenance and penalize for excessivewear. Usually, off-lease vehicles are returned within 2–3 years,often before their original factory warranty expires.Off-rental:rental companies normally replace their fleets once a year, releasinga flood of late-model cars to the secondary market. Like the bigfinancial institutions that underwrite car leases, rental companiesalso rely on auto auctions to sell off their used inventory. Thesevehicles tend to be well maintained and driven for only one year.Mileage tends to accumulate quickly on a rental car. Optionalfeatures are limited to an A/C and automatic transmission, but thesecars are otherwise as close to the base model as they can get. Usageof rental cars is rough; it is safe to assume that during that firstyear each rental car will be driven by a normal distribution of alltypes of drivers in all kinds of conditions.Company/fleet cars:companies of varying sizes own or lease cars, trucks or vans thatthey typically keep for two or more years, although it is notuncommon to see current year models sold at the auctions. Adequatemaintenance and large volumes of similar vehicles are typicalcharacteristics. Like rentals, these fleet vehicles do not have manyextras and get thoroughly exploited on a daily basis. Unlike rentals,usage of company cars varies greatly from the executive luxury sedandriven slowly and carefully on occasion to the delivery truck thatregularly mounts curbs and gets abused in city traffic.Repossessed:vehicles can be voluntarily or involuntarily repossessed by financialinstitutions for delinquency or another reason for recall. Autoauctions are again the bank’s only option for deliverance.Repossessed vehicles can feasibly sell for less because the financialinstitution disposing of them only seeks to offset its losses (alsorestricted by federal regulations). The condition of such cars may becompromised by neglect; if the owner can't pay the loan, repairscould also be neglected. There is also the potential for sabotagefrom ill-meaning previous users (e.g., extensive keying or tearing ofthe interior).Trade-in:dealer inventory that is aging or does not meet their profile (e.g.,an old Toyota Avalon that was traded in for a new CLK350 Cabriolet ata Mercedes-Benz franchised dealership). Traded-in cars may haveuseful extras and sometimes even after market modifications. Theoverall condition of such vehicles varies greatly. Some may beconsiderably older and out of warranty.Salvage:vehicles that have been in accidents, floods, fires or recoveredthefts that have been purchased by insurance companies. The insurancecompanies sell these vehicles to dealers or body shops who will fixthem and resell them, or auto recyclers who will part out theremaining parts of the vehicle that haven't been damaged.Among these types of vehiclesthere are a number of quality cars ready to market. Late models withremaining factory warranty are not uncommon. The law requires listingdealers to disclose bigger mechanical problems, which may void themanufacturer’s warranty and classify the vehicle as junk, salvage,lemon/consumer buy-back, etc. There are special auctions for thesetypes of vehicles (salvage, rebuilt or junk vehicles), sold mostly byinsurance companies. Other types of auctions specialize in the saleof police or government cars; some of those actually allow publicaccess.Pricing.Regardless of their source, vehicles are sent to auction with themain purpose to be sold quickly and hassle-free, and this usuallyhappens at prices that dealers can easily recoup with a small profitfrom a resale. Contrary to popular belief, cars seldom sell forunreasonably low prices at the dealer auctions. This may happen ifthere are not enough interested bidders or if the vehicle isexceptionally unattractive and should not be taken for granted. Manysellers put reserve prices on their stock specifically to preventthis from happening. The reserve price is not disclosed publicly anda “winning” auction bid is only considered a sale if the reserveprice is met. Sellers have the option to re-list vehicles that didnot sell at a particular auction.