JOHANNESBURG – The salvage auctions market is experiencing booming growth in South Africa. The South African Institute of Auctioneers (SAIA) reported a sharp increase in buyers in the salvage auctions market, where garages and entrepreneurs as parts merchants bid to buy vehicles at a fraction of the retail cost. Salvage auctions sell vehicles that have been declared a “total loss” by an insurance company, often due to accidents, theft, or natural disasters.
However, they are still deemed valuable for repair, parts, or resale.
Gert Labuschagne, chief operations officer (COO) of GoBid and member of the SAIA, explained that factors including rising vehicle and spares costs as well as South Africa’s stagnant economy are driving growth in salvage auctions. “This is amid the potential risks and costs of these products, including costs associated with repairs. Vehicles classified as “salvage” are not necessarily beyond repair; instead, the classification often results from the combined costs of repairs, car rental, and related claim expenses exceeding the vehicle’s post-repair value. Once these vehicles are repaired to meet roadworthy standards, they may be returned to use,” he said.
However, Labuschagne has encouraged buyers of the importance to scrutinise salvage auctioneers.
“While the popularity of these types of auctions is filled with opportunities for buyers, it is also important to note the ins and outs of the business and to seek out trustworthy and reputable auctioneers who work within the boundaries of the law and are members of the industry’s official professional body. Salvage auctions serve a critical role in the insurance and financial ecosystem by helping recover value from vehicles deemed uneconomical to repair and reducing fraud through regulated channels,” he said.
Vehicles sold at salvage auctions range from accident-damaged to repossessed and used cars and are sold “as is or voetstoots” through professional auction platforms. The vehicles are categorised either as Code 2 (used and repairable), Code 3 (rebuilt or permanently unfit motor vehicle), Code 3A (scrapped for parts only) and Code 4 (permanently demolished and not for resale).
Sonja Styger, SAIA COO, added that with the growth in popularity of salvage auctions combined with a rising number of outlets and technology platforms, it is possible to find daily auctions where bidders can participate from anywhere in the country. “This includes the ability for buyers to identify the vehicles they like and arrange viewing prior to the auction and bidding. In most instances, auctioneers should be able to field questions about the vehicle to ensure transparency and buyer confidence in the process,” said Styger.
The bidding process includes online formats, which have opened the doors for anyone from an entry-level entrepreneur to a large dealership to participate on a national scale. “This accessibility also attracts unaccredited operators, leading to issues such as cloned vehicles, misrepresented conditions, hidden fees and other activities not in line with industry standards, all of which can result in significant costs for buyers. That is where SAIA’s role becomes essential. SAIA-accredited auctioneers comply with a strict Code of Conduct, operate within all legal frameworks and provide full transparency to protect both buyers and sellers. Failure to comply with these requirements will therefore have consequences and serves as a deterrent to chancers or fly-by-night operators,” said Labuschagne.
Typical buyers identified range from ordinary South Africans to seasoned professionals:
- Mechanics and panel beaters seeking vehicles to repair and resell.
- DIY rebuilders taking on projects for personal use.
- Parts dealers harvesting components for resale.
- Dealers looking for competitively priced vehicles.
- Fleet managers sourcing budget additions.
