Where used cars really come from
3:35

Where used cars really come from

Roadshow
[MUSIC] [BLANK_AUDIO] When you traded in your car to the dealer last time, I bet you drove by a couple of days later to say, I wanna know what they're gonna sell it for. And you never did see it on the lot, did you? No, your darling little car came to a place like this. This is the Mannheim San Francisco Bay auto auction facility. It's a wholesale auction. Don't get your Google map out and try to come here and buy a car. This is where the people who sell you used cars come to buy them. What this is is a mix of carnival, a stock yard And a car show all in once. Where do these cars come from? Some of the, a lot of them, are lease returns from the banks that initially leased you the car. That may be a car maker's financing arm or it may have been your credit union. Suddenly they got a lease return. They bring it here. Rental car companies, they bring cars here that are done with a rental fleet. Even insurance companies sell cars here that are technically totalled but are still Usable, salvageable cars. And dealers bring cars here to sell to other dealers. They do that to get the right cars in the right place. A Cadillac dealer may struggle with a [UNKNOWN] challenger on its lock. That is often the story of what happens to your trade-in. An auctioneer works the mike in a booth above each lane. 14 grand, 14, one, who has Another guy works the crowd to make every car seem like the deal they shouldn't miss. Key car features are shown on overhead screens, or just written on the car in marker. Bid numbers flick almost imperceptibly. [NOISE] Someone just bought a car. [NOISE] On average a car is up just 45 seconds. [SOUND] Remember last time you traded your car in at the dealership and you were all nervous it looked great and be in great condition? And you told the salesperson what a cream puff it was? They probably didn't care as much as you think because that trade when it got wholesaled came to a place like this. This is the Mannheim reconditioning center. It's the sister facility to the auctioning lanes just over yonder. Here they handle the big five to get cars ready for top dollar. Paint, glass, tires, brakes, and engine repairs. Though they're not gonna rebuild an engine if it's blown, that's a whole different category of car. [MUSIC] Options like this have been around for 80 years, but change is coming. Crossovers and trucks are beginning to flood the floor a few years after they first did that in the new market. The average age of a new car buyer, almost 52 years old, so if you're looking to capture millennials You're selling used cars, like these. [BLANK_AUDIO] And yet car share, ride share, and eventually autonomous cars could radically change the number of cars in auction, and the nature of the parties that are buying and selling them. As you look around me, what do you see? Lots of cars. But what are you really seeing? Lots of car valuations being negotiated. The Manheim folks like to describe facilities like this as the stock exchange of automotive valuations. Always remember, the used car market is much bigger than the new car market even though it gets all the spotlight. This is where values are set to determine a lot about what you pay for cars but also what you lease them for, those critical residual values. This is kind of a live [UNKNOWN] of the majority of the auto industry. [SOUND]

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