What's the Real Price for That Used Car? Different Pricing
Services Have Different Numbers
by Jerry Edgerton
Unlike new cars, where manufacturers set the price before negotiation, used-car prices are
all over the lot--and beyond. Prices at the car dealer alone don't determine what a used car
or truck is worth. About one-third of all used cars change hands in private sales. If you are
about to buy or sell a used car, you need some guidance.
Four major price services for used cars gather and present information differently--and
often produce different results. These businesses started out being all about the books.
Black Book, Kelley Blue Book, and the NADA (National Automobile Dealers Association) Used
Car Guide--an orange book--all started with the guides that used-car pros at wholesale
auctions and at dealerships carried. These three services now also offer data online--the
most useful and efficient place for you to look.
A more recent entry, Edmunds.com, is an Internet-only service aimed strictly at consumers.
Depending whether you're buying or selling a used car, and if you intend to deal with a
dealership or another individual, you need to know where to check for the most useful
information.
Before you start checking prices, though, here are some used-car basics to remember. If
you're planning to buy a new car, you almost always can get more for your old car selling it
yourself than if you trade it in. But don't expect to get the same price for your used car as
the number you see in local dealer ads for the same model. The dealer can offer used-car
buyers a limited warranty (often 30 days) and financing, and probably will have the vehicle
in better shape for sale than you will. Dealers now also offer so-called certified used cars
with warranties of one year or more, often backed by the original manufacturer.
Your credit union can help with great rates on auto loans and all your
financing needs.
If you're looking to buy a used car, you are on the flip side of these realities: You'll get a
better price buying from an individual but probably will have no recourse if defects turn up
after the sale.
Here, in alphabetical order, is a rundown of the methodology and what information you will
find from the four major used-car price services. Online used-car prices are adjusted for
broad regions--the Southeast, say, or the West Coast. So double-check the prices you're
getting against ads you see for your town in newspapers or on local Web sites.
Black Book
The Black Book organization sells subscriptions, mostly to automotive industry companies
and dealers, for its books and online data. But you can get its pricing for free from many
credit union Web sites and at online automotive sites like carquotes.com.
Black Book bases its weekly updates on wholesale auction prices--with its staff attending
about 50 auctions a week either in person or following online auctions where dealers buy
and sell cars. "Our editors adjust that data by mathematical factors and their own
experience to get the trade-in and retail prices," explains Ricky Beggs, vice president and
managing editor. "Then we double-check our numbers constantly against dealers'
advertised prices."
Black Book bases its weekly updates on wholesale auction prices--with its
staff attending about 50 auctions a week either in person or following online
auctions.
Black Book pricing will give you trade-in value and dealer's retail price for three levels of car
condition: clean, average, and rough. Black Book doesn't try to determine so-called privateparty values from individual sales. In comparisons of two high-volume recent models, a
2003 Ford Escape small SUV and a 2004 Honda Accord sedan, Black Book data for a car in
average condition showed lower trade-in values than the NADA Guides and higher than
Kelley Blue Book and Edmunds.com. On retail pricing, Black Book was lower than Blue Book
and NADA and similar to Edmunds.com.
Edmunds.com
Edmunds collects data from auctions and new and used-car dealerships, and works to
establish a "True Market Value" that it says represents what used cars actually are selling
for. Its staff statisticians construct models of how different prices affect one another. Quick
adjustment results, says Vice President Bob Kurilko. Take a situation where, for example, a
new car rebate knocks down values for used cars of the same model because buying a new
one has just become more attractive. "If a manufacturer announces a $1,000 rebate on a
2006 car, the 2005 version just lost $800 in value and the 2004 car $640," explains Kurilko.
The Edmunds Web site, like Kelley Blue Book, gives a "private party" value for used cars
sold in individual transactions. Edmunds and Blue Book numbers sometimes are close
together, sometimes not. So check both and then compare them with local ads. Edmunds
alone also gives a price for certified late-model cars dealers sell. Kurilko says Edmunds'
dealer retail prices are lower than Kelley Blue Book and NADA because they represent actual
transaction prices and not dealer asking prices.
The price of a car in a trade or resale is exactly what a willing buyer will pay-no more and no less.
Kelley Blue Book
Kelley Blue Book is the oldest (started in 1926) and best-known price service and its Web
site gets more visits than any other automotive information Web site, according to the
Nielsen Internet rating service. The Kelley organization collects data from auctions and new
and used-car dealers and gives trade-in, retail, and private party values for each model.
Kelley pioneered the detailed Web site questionnaire to rate carefully the condition of your
used car as Excellent, Good, Fair, or Poor. "If real estate is location, location, location then
used-car prices are all about condition, condition, condition," says Jack Nerad, executive
editorial director of Kelley Blue Book. On retail prices, however, the kbb.com Web site gives
only one level--assuming excellent condition. That is because dealers typically will have a
car in good shape for sale on their lots, Nerad says.
NADA Used Car Guide
Published by the National Automobile Dealers Association, a dealer trade group, this guide
goes to dealers as part of their NADA membership. You can check NADA prices at its Web
site. NADA prices appear to be higher than all the competitors for trade-ins. NADA retail
prices also appear similar to Kelley Blue Book and higher than the other two. This results
from assuming that all trade-ins and cars being sold are in very clean condition--not the
case with many trade-ins. So take this into account if your trade-in vehicle isn't in top-notch
condition. Editor Patricia Erney says the NADA retail price is based on reports from dealers
of transaction prices for these cars. Also see if your insurance agent or credit union can let
you see an industry version of the NADA orange book. It will give wholesale as well as retail
values that can help you set your negotiating strategy at the dealership.
You almost always can get more for your old car selling it yourself than if
you trade it in.
As with buying a new car, doing more used-car research leads to a better deal. Whether you
plan to buy from a dealer or shop carefully among individual ads will determine where you
want to do that research.
And remember that no matter what price guide you use, the price of a car in a trade or resale is exactly what a willing buyer will pay—no more and no less.
Jerry Edgerton is an automotive writer whose work has appeared in Money and other
national magazines. He also is the author of the book "Car Shopping Made Easy."
Published March 13, 2006
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