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.

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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.