| Eighty percent of car buyers are using the | | | | summer has more value than one during a |
| Internet to research cars and used car | | | | Chicago winter. A plow truck in June will |
| prices. For vehicle research, the Internet's | | | | have significantly less value than in |
| great! For vehicle prices, the Internet | | | | November in the northeast. |
| sucks! It sucks because the prices do not | | | | |
| reflect reality for the buyer or the seller. | | | | Economic recessions, exorbitant gas prices, |
| Web sites that place values on vehicles have | | | | combined with manufacturer incentives can |
| created more confusion than ever. | | | | shift new and used car prices all over the |
| | | | map. |
| "My car's worth $25,800." "I looked up used | | | | |
| car prices on the web and my vehicle's worth | | | | Location has a major effect on used car |
| twenty grand." I hear quotes like these | | | | prices. A convertible in California is worth |
| everyday. I wish, for the customer's sake, | | | | more than one located in Canada. |
| that the values are real. By "real" I mean a | | | | |
| viable number according to market value. | | | | To summarize, context funnels down to market |
| | | | value. Web sites such as Edmunds, NADA, and |
| As hard as it is to accept, even for me as a | | | | Kelley have drastically missed this mark, |
| dealer, what we think a car is worth, and | | | | creating a host misinformation. To be fair, |
| what it's actually worth according to "market | | | | these are great research sites, but they can |
| value" is often drastically different. | | | | not be the final say on price. |
| | | | |
| To find a vehicle's value the context must | | | | Stating that a vehicle is worth a certain |
| first be discussed. What's context? | | | | amount of money based on a web site's data |
| | | | does not take the above factors into account. |
| Context includes, but is not limited to: | | | | It's a value based on misinformation. |
| | | | |
| 1) Vehicle condition: mileage, maintenance, | | | | These web sites have created an aura of trust |
| 1-owner...etc | | | | when in actuality, the values are mythical. |
| | | | The market is the real indicator of vehicle |
| 2) Desirability: new model, special editions, | | | | worth-for better or worse. |
| just plain cool... | | | | |
| | | | What should one do? Buyers and sellers would |
| 3) Seasonality: plow trucks, convertibles, | | | | be wise to follow the market. Check out |
| 4-wheel drive...etc | | | | autotrader.com, cars.com, and/or and watch |
| | | | what vehicles are being advertised and sold |
| 4) The Economy: factory incentives, gas | | | | for. While these sites are not the final word |
| prices, hybrids, SUVs | | | | either, they're much more accurate than web |
| | | | sites leaning heavily on opinion and |
| 5) Location: Beverly Hills versus the Bronx | | | | averages. |
| | | | |
| Now, each of the above context variables | | | | Note: eBay used car pricing is generally |
| could easily have several sub categories. For | | | | wholesale. In other words, it would not be |
| example... | | | | accurate to compare a wholesale-priced eBay |
| | | | car (which may need a significant amount of |
| Vehicle condition is extremely relative. One | | | | reconditioning) to a retail-priced vehicle in |
| person may think there vehicle is perfect, | | | | showroom and/or perfect working condition. |
| someone else states it needs $1000 worth of | | | | |
| work. | | | | In the end, and this come straight from |
| | | | industry expert, Barry Roth, "Take the |
| Desirability is also relative. A bunch of | | | | highest price and the lowest price you find |
| very cool bells and whistles may not add any | | | | on the Internet and throw them out. The |
| value, or it may add $1000's. | | | | remaining numbers in the middle is where one |
| | | | should wade. But don't forget value. |
| Seasonality is relative. A convertible in the | | | | |