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KBB wholesale vs KBB consumer web site..... Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Thu, 9 Sep 2004 13:17:40
In Reply to: MikeL. - book vs. auction price question, Ari  [Profile/Gallery]
, Thu, 9 Sep 2004 05:33:06
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Here in California the defacto standard is Kelley Blue Book. A consumer can buy a KBB at the bookstore, but it does not give actual wholesale values. The actual KBB or the software program called Karpower that most dealers use lately, that has the actual wholesale book values, is sold only to licesned auto dealers, banks and lenders.
Actual wholesale KBB is the benchmark/standard that dealers and wholesale auto buyers use to measure value and communicate to one another. One car may have more miles another less or more equipment, so you plug in the #'s and come up with "book".
Say as a Saab dealer I'm taking in trade a Ford Exploder (sic) and it "books" for $18k. I call the Ford dealer and describe the car and the actual wholesale book and the Ford dealer's used car manager says to me "I'm a buyer for 3 grand back" which means $15k. The Ford dealer's consideration is that he's getting $5k back in rebates on new ones so used ones aren't worth book. That's the case with most cars and trucks including Saabs, there are massive rebates on new ones.
If you actually look at the actual physical KBB the wholesale values are printed next to the original MSRP. So a car that actually sells for MSRP *might* bring actual wholesale book, maybe, maybe not, depending on how hard it was to sell the first time.
Now I get another Exploder that has a few more miles and a somewhat more equipment that books for $19k. I know the Ford dealer is a buyer at "$3k back" so I will assume, for a similar unit, their bid would be $16k.
Now you have the KBB consumer website, http://www.kbb.com If I plug in the Exploder values that books, actual wholesale KBB, for $18K, KBB.com says the trade in value is $16,300 in excellent condtion, $15,400 in good condition and $13,600 in fair condition. I would expect an Exploder, with their massive incentives, to bring only the "fair" figure of $13.6k even if it is actually in excellent condition, or in the used car managers lingo "$5,400 back" of book.
So the actual KBB wholesale book value is used for reference and bids for the vehicle are in increments "back of book". Then there are allowances for repairs and necessary reconditioning, color, equipment, model and so forth. For instance an Exploder 2wd will command one figure and a 4wd a different figure, depending on the region.
A smart used car manager knows to make adustments in relation to the book. That is if the book says 4wd is $1,800 more than 2wd, that 4wd vehicle may or may not bring the extra $1.8k, that's the art of it.
The most common "off the page" allowance that used car folks make is doubling the mileage deduct for high mile vehicles. Used car folks know that KBB doesn't allow enough of a deduction for higher mileage vehicles. So if the book says a $2k deduction for a certain mileage, most used car folks will go with $4k. Conversely, if the book says there is an addition for low mileage, used car dealers won't pay it, they deduct for high miles and double the deduct for really high miles and don't add for low miles. This is pretty much SOP around the industry and IMO reflects the true realities of used car buying and selling. Although I personally am a sucker for low miles and a used car wholesaler, knowing that, will bring me the low mile cars.
With a Saab there is no book add for xenons, heated seats, vented seats or most of the touring package items, so a car with all this stuff may be $2,500 back instead of $3,000 back, and so on.
Did I help or just confuse you more?
posted by 63.197.222...
, Thu, 9 Sep 2004 05:33:06, Thu, 9 Sep 2004 13:17:40 <-- Viewing This Message, Fri, 10 Sep 2004 05:27:52, Fri, 10 Sep 2004 14:10:18
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