Automotive Marketing Professional Community for Car Dealers, OEM and Suppliers
What is my car worth? This apparently is a loaded question. Kelley Blue Book says one thing and NADA says another. Which one is right? Consider this...
The structure of the vehicle values provides the differentiation between the two groups. At KBB there are many "values" or "worths": Trade-In, Private Party, Suggested Retail, and Certified Pre-owned. At NADA, there is Trade-In Value and Suggested Retail Value. NADA lumps all buyers and sellers into one category which could be entitled "Vehicle Value" or the like and you would simply infer that you get what you pay for if you are on the buying end. In a crowded and complicated marketplace, simplicity is hard to find.
Kelley Blue Book attempts to "funnel" you into one of two categories: "What should I pay for a used car" or "What's my car worth?" There is problem with this philosophy: The insinuation that in a vehicle transaction that one party can get a "steal" and the other gets snookered.
Does the distinction between the current "worth" of a vehicle and what you should be expected to pay for a certain vehicle need to be made? Why does this matter? I'll tell you.
The test vehicle used in this scenario is my very own 2008 Hyundai Santa Fe GLS. The Trade-in value on my "Good" Santa Fe is $8,364 and the Private Party value is $10,274. Then I check out the suggested retail price which is essentially the dealer's price, and lo and behold...$12,624. Herein lies the problem.
KBB inadvertently skews used car values because of the consumer's perception that a dealer gets a Santa Fe for $8,364 and flips it for $12,624 for a fast handsome profit. You see consumers then head over to a used car dealer demanding at least $10k because that is what "I could sell it for".
The NADA's approach makes much more sense. There is no suggested retail, certified retail, private party clutter to cloud the mind. I would go a step further and advise dropping the Trade-In value as well. A car is worth what it is worth, considering the condition of the vehicle.
When you go to the new car lot or used car lot, your car is worth what it is worth. When you sell your car on autotrader, your car is worth what it is worth. When you go to purchase a vehicle, the car is worth what it is worth. And how do we know it's worth...you guessed it, exactly what price someone will pay and exactly the price at which someone will sell.
Maybe this is parochial and the KBB way is sophisticated but I believe the "multiple value" approach oftentimes leads to falsely inflated values.