Online used-car pricing: where the
haggling begins |
| By Terry Jackson
• Bankrate.com |
|
If you're selling or buying a used car, the Internet
can be a true blessing.
With a few strokes of the keyboard, you can find out
what a 2001 Mustang might be worth if you were trading it in, selling
it yourself or buying it from a neighbor or from the corner-used
car lot.
But be forewarned: The operative word in the last
sentence is "might" -- when it comes to determining a
specific dollar amount value for a used vehicle, the Web can also
be a jungle of conflicting numbers. Depending on which site you
use, values can vary by thousands of dollars for seemingly identical
cars, in identical condition.
Bankrate found this out by taking a test spin on three
of the more popular automotive Web sites -- Kelley
Blue Book, Edmunds.com
and CarsDirect.com.
Let's say you are shopping for a 2002 Ford Explorer
XLT with two-wheel-drive, V6, automatic transmission, AM/FM cassette
and leather seats with 50,000 miles on the odometer.
Run through the calculator on Edmunds, and the result
says the retail price of that Explorer should be $10,774. But surf
over to Kelley's site, and the same vehicle comes up with a retail
value of $15,040.
So what's up?
Blame differing approaches and internal methods of calculation.
Alex Rosten, manager of pricing and market analysis
for Edmunds, says his site's prices are derived from a complex calculation
using many sources.
"We use transaction data from dealers, depreciation
rates for individual models and historical data,'' he says. "There's
also some forecasting involved.''
Robyn Eckard, director of media relations for Kelley
Blue Book, says her site, which is an evolution from the printed
Kelley Blue Book price guides that dealers have used since 1913,
also uses sales data from dealers, wholesale auctions and other
sources.
So what explains a difference of more than $4,000
on the retail pricing of our hypothetical 2002 Explorer?
Rosten argues that in addition to building a better
computer model for figuring these things, the Edmunds site is not
as closely aligned with car dealers as Kelley's. "Their prices
are very dealer-friendly,'' he says, implying that by showing consumers
higher retail prices and, in some cases, lower trade-in values,
it gives a dealer greater leverage.
Eckard flatly denies that. "We are not out there
to make dealers happy,'' she says, contending that Kelley's prices
are more reflective of the market.
She also contends that there's no direct comparison
possible between Web sites because they use different definitions
and start from different assumptions. "It's an apples-to-oranges
situation,'' she says.
|
