Eighty percent of car buyers are using the Internet to research cars and used car prices. For vehicle research, the Internet’s great! For vehicle prices, the Internet can miss the mark. The prices do not reflect reality for the buyer or the seller. Web sites that place values on vehicles have created more confusion than ever.
“My car’s worth $25,800.” “I looked up used car prices on the web and my vehicle’s worth twenty grand.” I hear quotes like these everyday. I wish, for the customer’s sake, that the values are real. By “real” I mean a viable number according to market value that someone would be willing to pay.
As hard as it is to accept, even for a dealer, what we think a car is worth, and what it’s actually worth according to “market value,” is often drastically different.
To find a vehicle’s true value the context must first be discussed. What’s context?
Context includes, but is not limited to:
- Vehicle condition: mileage, maintenance, 1-owner…etc
- Desirability: new model, special editions, just plain cool…etc
- Seasonality: plow trucks, convertibles, 4-wheel drive…etc
- The Economy: dealer and factory incentives, gas prices, hybrids, SUVs
- Location: Beverly Hills versus the Bronx
Now, each of the above context variables could easily have several sub categories. For example…
- Vehicle condition is extremely relative. One person may think there vehicle is perfect, someone else states it needs $1000’s worth of work.
- Desirability is also relative. A bunch of very cool bells and whistles may not add any value, or it may add $1000’s.
- Seasonality is relative. A convertible in the summer has more value than one during a Chicago winter. A plow truck in June will have significantly less value than in November in the northeast.
- Economic recessions, exorbitant gas prices, combined with manufacturer incentives can shift new and used car prices all over the map.
- Location has a major effect on used car prices. A convertible in California is worth more than one located in Canada.
To summarize, context funnels down to market value. Web sites such as Edmunds, NADA, and Kelley Blue Book can miss these important marks, creating a host misinformation. To be fair, these are great research sites, but they are only one automated voice on price. The market is the real indicator of vehicle worth—for better or worse.
What should one do? Buyers and sellers would be wise to follow the market. Check out autotrader.com, cars.com, and/or *ebaymotors.com and watch for what vehicles are being advertised and sold. While these are not the final word either, they’re much more accurate than web sites leaning heavily on opinion and averages.
*Note: eBay used car pricing is generally wholesale. In other words, it would not be accurate to compare a wholesale-priced eBay car (which may need a significant amount of reconditioning) to a retail-priced vehicle in showroom and/or perfect working condition.
In the end, industry experts agree that it’s best to take the highest price and the lowest price you find and throw them out. The remaining numbers in the middle is where one should wade.