With their carnival-style atmosphere and promises of steals on wheels, public auto auctions provide a popular option to traditional lots for buying used cars.
About 300 cars a month change hands at sales in Lake Forest and Garden Grove. Hundreds more are sold at two lots in Van Nuys.
But with success has come heightened scrutiny.
Car dealers eye auctions' sales volume enviously, grasping for ways to compete.
Auto bid-offs have grabbed the California Department of Motor Vehicles' attention too, but for less salutary reasons: More than 625 consumer complaints about the sales have been filed with the agency since 1995, with defective cars, missing titles and oversized buyer's fees topping the list of gripes.
Now auctions have the attention of the state Legislature, where a battle is revving up over how the sales should be regulated.
A bill advancing in the Senate would hold auctions to the same consumer standards as car dealers, which are liable for their cars' condition as well as for DMV paperwork and fees.
A rival measure pending in the Assembly would do the opposite, creating a narrow new class of licenses that would allow holders to sell cars on consignment, free of many such responsibilities.
Both proposals would make auctioneers clearly disclose buyers' fees--which can add more than $1,000 to a car's bid price--before the gavel comes down on a sale.
"The controversy has reached the point that both houses and both sides of the aisle think it's time to make some policy," said Peter Welch, lobbyist for the California Motor Car Dealers Assn.
Public auto auctions, which offer repossessed, seized, government-surplus or traded-in cars, have flourished since the early '90s.
Though the total number of cars traded this way is unknown, about 20 companies statewide specialize in the sales, said Rick Graff, executive secretary of the California State Auctioneers Assn.
Reflecting the format's growing popularity, Priceline.com and Ford Motor Co. are experimenting with online auto auctions.
Irvine-based Autobytel.com Inc., which operates a Web site for buying and selling automobiles, has added a wholesale auction program for licensed dealers and plans to extend the service to the public eventually.
At live auctions, would-be buyers get a couple of hours to look over the cars before bidding begins. They can start them, but not drive them.
Once the sale opens, consumers flash numbered cards to bid. Spotters blow whistles and point to show where the latest offer came from as the auctioneer's rat-a-tat patter urges the crowd to raise it.
Winning bidders usually pony up 25% of the purchase price in cash, cashier's check or certified check to drive away their cars.
"People like the concept of one-price selling, of not dealing with a salesman," said Donald Morrow, president of North Bay Auto Auctions in Fairfield, which auctions off 50 to 60 cars every Saturday night for an average of $4,300 apiece.
Auctioneers typically add a buyer's fee or "premium" of 10% to 15% to the winning bid, a sore point with critics.
"You think you're paying what you bid, then you find out you're paying a lot more," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento nonprofit group.
Auctioneers defend the fees.
"We perform a service, like a dentist or an accountant," said Norman Haigh, owner of Auction Plus in Garden Grove and Auction Services in Lake Forest.
"We make our money from the buyer's fee, not on a dealer's markup," he said, adding that auction companies also collect smaller fees from those who supply the cars to be sold. "We give disclosure in writing, we do it orally in English and Spanish, it's even posted on huge signs."
The DMV issues auto-dealer licenses to auctioneers who operate their own lots, entitling customers to seek redress from them if they cannot obtain a car's title, if the car fails smog tests or if they encounter mechanical or safety problems.
But auctions have found a way to circumvent those rules. Before consumers enter, they must sign forms agreeing to accept a car "as is" and to handle compliance issues, fees and repairs themselves.
"They pass the buck," Orange County Deputy Dist. Atty. Wendy Brough said.
Brough sued Haigh in 1997, accusing him of false advertising, gouging customers on fees and selling cars not in basic working order. A judge ruled that Haigh, as an auctioneer, was not liable for his cars' condition, but ordered him to pay more than $28,000 in fines and refunds on the other charges.
Haigh's case highlights the central question fueling this year's legislative debate: Should auto auctioneers be treated like other auction concerns or like traditional car dealers?
The Senate bill--supported by consumer advocates, prosecutors and car dealers--groups auctioneers with dealers. The measure would make auctions responsible for much of what they disclaim in terms-of-sale forms.
