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Start Prices in Japan’s Car Auctions
What are start prices and where can you find them?
When listing their car for sale in a car auction in Japan, the owner can specify the price at which they would like the the bidding to start. For obvious reasons, you cannot enter a bid that is below the start price.
You can see the start prices for the cars listed in the search results or in the car details screen. As you can see in the image below, there can be a wide range of start prices:
So why are there such a range of different start prices, and can the start price give you any clue about what the final sold price of any particular used car is likely to be?
Well, there seem to be two schools of thought among sellers at the auctions:
Start low and build momentum
The first of these two schools of thought is that the seller should start the bidding well below his desired selling price. The idea of this being that this then allows the bidding competition to gain momentum, which will then push the final price up higher.
Critics of this idea would then counter that the problem with this strategy is that not only could momentum build, but it could also flag and bidding could easily fizzle out well short of the seller’s reserve price.
Start high and get the price you want with one or two clicks
This other school of thought is that a seller should set his price high – as close to his desired sale price as he thinks he can get. The logic behind this is that it then only takes one or two buyers to click through a bid, and the price will be over his reserve and he will have made a sale at the price he wanted.
Sometimes sellers take this to an extreme and set the start price above what historical sale prices would predict would be a market price for the car. This kind of over enthusiasm on the part of the seller can mean that cars sometimes fail to meet their reserve with “no call” – meaning that no one bid on them at all.
This can be the Achilles heel of this technique: That the start price is so close to the selling price can mean that potential buyers are unwilling to jump in and enter a bid as they don’t want to be caught out paying more than its worth.
Should auction start prices influence your bidding?
Having bought thousands of cars for customers, and seen many tens of thousands of bids, it is my opinion that the only time that the start price really can influence the outcome of bidding is when it is so high that it is actually above the market price for the car, which as a result fails to sell.
Apart from that, really the only information you can get from the start price is that it tells you the lowest amount you can bid. At the end of the day, it seems clear to me that the amount a car will end up selling for will be the value the market assigns to it through competition with other bidders, and with reference to similar vehicles sold in the past.
Rather than looking at the start price, how much you decide to bid needs to be based on your budget and what similar cars are being sold for at the auctions in Japan.
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