What Good Are KBB and NADA Values if Dealers Ignore?

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What Good Are KBB and NADA Values if Dealers Ignore?

March 26, 2013, 12:12:32 AM

Bought a new car over the weekend. Traded in a 2011 Chevy Traverse. KBB "Trade In Value" was $21K. First Dealer offered $18K; when shown KBB print-out claimed they use "Average Auction Value". Left and went to Dealer #2. Second Dealer offered $18.5K but I was able to negotiate to $19K. Second Dealer also claimed they use "Auction Value" and showed me a Data Base of recent auction values by vehicle type.

So my gripe is this...of what value are KBB and NADA price guides if Dealers don't use? Who is their data for?

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #1 – March 26, 2013, 10:29:23 AM

if an established trade in value guide set a benchmark and the dealer comes in lower... wouldnt that mean less risk on thier part? more potential profit on thier part?
I would hope for full trade in value but i would not expect it.

there is a huge difference between :
"best cost" & "best price"

best cost is getting something the cheapest with no other factors
best price is getting somethng at a price that comes with perks.

if dealer 1 was a place that had honest to goodness support and sales staff and would always work with you during your car ownership, they are the "best choice"

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #2 – March 27, 2013, 03:19:05 AM

Good question. Those resources are quite frequently inaccurate in both directions. The dealers use black book values which reflect dealer auction prices in their region and are not widely published, available to or known by "the public." I guess if KBB and NADA were at one time accurate, perhaps now that they are published everywhere like invoice prices of new vehicles many people will try to "beat" what those references show as averages. Dealers are going to offer lower-than-published amounts for trade-ins just as customers are going to offer lower-than-published amounts for new vehicle purchases.
KBB and NADA are inaccurate for other reasons too but that's all the time I have to partite.

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #3 – March 27, 2013, 02:21:00 PM

Agree that "trading" a car to a dealership is a losing venture regardless of which price guide one uses.

Have you noticed the absence of "We'll Pay Off Your Car No Matter What You Owe" from the local car stores? The reason is a rash of lawsuits and finally the FTC taking action on this misleading claim.

This is from the FTC web site:

03/14/2012
FTC Takes Action To Stop Deceptive Car Dealership Ads
FTC Alleges Dealers Falsely Promised To Pay Off Trade-ins, No Matter What Consumers Owed
Five car dealers around the country have agreed to Federal Trade Commission settlement orders that require them to stop running ads in which they promise to pay off a consumer's trade-in no matter what the consumer owes on the vehicle.

The dealers named in the FTC's complaints are: 1) Billion Auto, Inc., in Sioux Falls, South Dakota; 2) Frank Myers AutoMaxx, LLC, in Winston-Salem, North Carolina; 3) Key Hyundai of Manchester, LLC and Hyundai of Milford LLC, in Vernon and Milford, Connecticut, respectively, and which advertise jointly; 4) and Ramey Motors, Inc., in Princeton, West Virginia.

FULL STORY HERE: http://ftc.gov/opa/2012/03/autoloans.shtm

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #4 – March 27, 2013, 04:56:36 PM

Yeah I put absolutely zero stock in ANY "book" value. I hop on craigslist/ebay/autotrader/any outlet I can find and see what people/dealers are asking for everything. No better way to find out "what it's worth" than to actually gauge the market right this second...

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #5 – March 27, 2013, 07:42:21 PM

KBB and NADA don't buy cars, so no matter what they say your car is worth, it means nothing. Both sources claim to base their numbers on "average reported trade values from dealers". I'm not sure where they get this. In all my years at dealerships, none of them ever reported to either source. Very few dealers actually use a book anymore, and if they do it's usually only if the computers are down. Trade values are usually based on actual prices dealers can buy the same car you are trading at auction (Manheim, etc). We can log into these sites and get reports on cars with the same options, same mileage range, etc. Also, prices fluctuate throughout the year and in different parts of the country. If 2 different dealers were that close in the appraisal, your car probably is worth (at auction) right around 18,500. The first dealer was probably trying to hold some gross (profit) and the second dealer may have been overallowing a little just to try and help move a new unit. On average, whatever trade in value you see on KBB, you can figure the real value is about $3,000 less. Car sales now (since the internet) are a lot different than the old days. Cars used to be marked up a lot more (both new and used) and there used to be thousands of dollars of profit to play with for a dealer to close a deal. Now, the profit is closer to in the hundreds. Plus, online dealers have gotten nuts with trying to have the lowest prices on used cars just to get people on the lot. Car sales seem to run on the "Gillette" principle now. Thin profit margins in hopes of more units sold. On average, car salesmen make a lot less now than they did 10-15 years ago. Also, don't be upset if the car you traded in for $19,000 is for sale on the lot next week for $24,000. If they really did put $19,000 ACV (actual cash value) in it, they still have to put it through their shop, inspect & repair it, detail it, advertise it, AND try to make some kind of profit selling it. Each of these steps costs money, employees have to be paid, and they have to keep the lights on at the dealership. :)

For the record, I hate KBB & NADA for the false hope they give people.

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #6 – March 28, 2013, 12:11:04 AM

Quote from: CougrrrFiveO;411968

KBB and NADA don't buy cars, so no matter what they say your car is worth, it means nothing. Both sources claim to base their numbers on "average reported trade values from dealers". I'm not sure where they get this. In all my years at dealerships, none of them ever reported to either source. Very few dealers actually use a book anymore, and if they do it's usually only if the computers are down.

Great insight from someone clearly experienced in the field. I should have bought a second Cougar instead of assuming a mortgage payment on a new car....insurance would have been much cheaper!

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #7 – March 28, 2013, 01:40:17 AM

the princeton wv dealership is still running that add to this day!

What Good Are KBB and NADA Values if Dealers Ignore?

Reply #8 – March 28, 2013, 02:41:43 PM

Also dont forget that the region will have a deciding factor on trade in value.

Example. Try and trade in a 2wd truck in Colorado and see what happens. They are basicly worthless and the dealers cant get rid of them on or off the lot. Half the time they cant even auction them off without taking a loss.

I have been at dealerships (tech) for 13 years now. Trying to change that today.

kyle