You are only partially correct.
Auctions are not just for people to 'dump' horses. But, if they own them, it is their right to sell them at an auction or anywhere else.
The local auction sells horses from $20.00 to more than $3000.00 every single sale. An estate of a man that raised reiners and cutters sold all of those horses through the last 'Monday night sale' and they brought from about $400.00 up to $4,000.00 or $5,000.00. Over 250 horses sold. About 100 of those horses brought no other bids accept from the slaughter buyer. The others brought up to $5000.00.
So, your contention that they are just dumped is really very uninformed. They were all horses that the previous owner did not want for probably 50 different reasons. Buyers were there for all of them. Thankfully that included the hated 'killer buyers'. What do you think would happen to all of THOSE horses if no one was there to bid on them?
Most of the trail horse prospects that I buy are from an auction. Most of the 'kid horse' prospects that I help parents buy are from an auction. I would rather buy at an auction than from an individual. I am not a 'trader' and I do not buy them to re-sell. Surprised? Why would I NOT want to drive a short distance to be able to pick from probably 30 possible prospects than drive all over the country to look at an individual horse that has probably been misrepresented and is priced several hundred dollars higher than I will have to pay at an auction?. Why would I NOT want to buy from a place where I can pick out a horse or two and I can set the price that I am willing to to pay?
Auctions set the value of almost all horses -- those sold at auction and those sold privately. Most cutting prospects and many broodmares and cutting performers are purchased through the auctions held at the NCHA Futurity and other NCHA events held in Fort Worth. Most TB yearlings as well as breeding stock are purchased through the TB sales in Lexington, KY and other places. The race prospect sales held each year in Okc, OK at Heritage Place are where many barrel racers as well as race horse owners buy their prospects.
So when people make real uniformed remarks about auctions, I know that they know little about the horse business. These are the same people that are trying to shut down slaughter markets completely. Only thing is, they have no idea of what would or could happen when the lowest end of the horses sold if there was no one to bid on them at all. Where do you think they would all go?