I suspect that there is nothing mechanically wrong with the engine from what is reported. More likely the MAS or something electric/electronic. But of course this is just pure speculation.

If it goes down at auction cheap enough, buy it. Don't offer what the dealer has told you is the reserve. That's very likely to be inflated and BS.

I suspect the dealer has worked out that he cannot get enough profit if he goes to the expense of fixing it before presenting it for normal sale (warranty?) and thus, has gone the auction route.

As Arthur said, "As for the "collectability" of C36's, forget it." These cars are only bought by nutters like you and me. There aren't many of us around, and therefore the price of C36s is incredibly low.

Put in a low bid and walk when it is passed in at auction. They'll find you later.