Vehicle Valuations vs Actual Sales Prices??

[imreen]

I am currently working for a smaller independent dealer and haven't been in the industry for too long, however I was just curious on some of the opinions and thoughts from veterans who have been in the space for awhile and have seen it evolve over the years. Is it even possible anymore to consistently sell cars at the NADA (or comparable) retail values anymore?
I just get the vibe from my short experience that these third party lead sites such as cargurus (especially), carfax, etc are in the business of increasingly overcharging dealers while creating a space where they push prices down in order to secure more visitors to their site. For example I am trying to sell one of my personal car through our dealership and while NADA values the clean retail at about $31,500, cargurus deems $28,500 a "fair" price and a "Good" price is closer to $25.5-27k. I find it crazy how something isn't even considered a "Great" deal until is is priced at $7k under an NADA value.
Is there a way anyone here has been able to break this cycle and are able to sell cars for what they are actually worth? As from my point of view it seems like these third party sites are creating, for a lack of better words, crabs in a barrel sentiment where dealers have to source increasingly cheaper inventory to compete and are conditioned to be content with ever decreasing margins on their units as the sites push for lower prices to benefit their own metrics rather than the benefit of dealers who keep their business operational in the first place. This probably came off more of a rant than I would like it to, however I am genuinely interested on others sentiment and perspective on this and all discussion to this thread is much appreciated. Thank you and I look forward to hearing others stances on this!

 

[Carsten]

Same issue as Zillow.

Sellers (including trade in) and Buyers don't see eye to eye.

Why do people fly first class?

 

[Tallcool1]

I am currently working for a smaller independent dealer and haven't been in the industry for too long, however I was just curious on some of the opinions and thoughts from veterans who have been in the space for awhile and have seen it evolve over the years. Is it even possible anymore to consistently sell cars at the NADA (or comparable) retail values anymore?
I just get the vibe from my short experience that these third party lead sites such as cargurus (especially), carfax, etc are in the business of increasingly overcharging dealers while creating a space where they push prices down in order to secure more visitors to their site. For example I am trying to sell one of my personal car through our dealership and while NADA values the clean retail at about $31,500, cargurus deems $28,500 a "fair" price and a "Good" price is closer to $25.5-27k. I find it crazy how something isn't even considered a "Great" deal until is is priced at $7k under an NADA value.
Is there a way anyone here has been able to break this cycle and are able to sell cars for what they are actually worth? As from my point of view it seems like these third party sites are creating, for a lack of better words, crabs in a barrel sentiment where dealers have to source increasingly cheaper inventory to compete and are conditioned to be content with ever decreasing margins on their units as the sites push for lower prices to benefit their own metrics rather than the benefit of dealers who keep their business operational in the first place. This probably came off more of a rant than I would like it to, however I am genuinely interested on others sentiment and perspective on this and all discussion to this thread is much appreciated. Thank you and I look forward to hearing others stances on this!

Welcome to Dealer Refresh.

I want to be sure to answer your question before I end up on a rant myself.

There are certain vehicles that easily sell for JD Power Retail Book. There are certain vehicles that consistently sell for more than that book number. And of course, there are certain vehicles that won't bring close to Retail Book.

Without telling you that it is a vehicle to vehicle thing, my general observation is that price point is a big factor in determining which category vehicles fall in. Anything under $10,000 consistently brings 15%-20% over retail. Form $10,000-$17,500?? falls from 10% over to even book. Anything over $30,000 consistently brings 10%-20% below retail. In between will fall from even book to below book as the price approaches that $30K

Example is a 24 Camry with 25K miles that we recently sold. We priced it at $28,500 to get anyone to look at it. We sold it for $28,500. It had a JD Power Retail Book value of $32,575. So it sold for $4,000 under book. That all sound terrible. The rest of the story...this was a very clean and nicely equipped car. ROUGH Trade was $24,200. We paid $23,130 for this vehicle.

The moral to the story is that JD Power is no longer a good tool for buying inventory. It is a good tool for selling and financing. When we are looking for inventory, we look at Car Gurus and CarFax to figure out what we have to price the vehicle in order to make it go away.

Hang in there and ask lots of questions.

 

[DrewAment]

We let the vendors put a carrot in front of us with the "ratings" .... and we played along. How stupid are we?

Side note -- for a couple of the major metro markets I work in, there are dealers that do the whole "price includes a $x,xxx finance discount". Basically the price is only valid if you finance with the dealer. Have seen up to $2,000 in "finance discount". Then you have some dealers that do the the whole hard adds == "Price does not include dealer added accessories" .. blah blah blah.

Both these types of non-transparent price in these markets, and where pricing is used for the "algorithm", makes those fair/good/great ratings not worth anything .... if they were even worth anything before.

 

[Tallcool1]

We let the vendors put a carrot in front of us with the "ratings" .... and we played along. How stupid are we?

Side note -- for a couple of the major metro markets I work in, there are dealers that do the whole "price includes a $x,xxx finance discount". Basically the price is only valid if you finance with the dealer. Have seen up to $2,000 in "finance discount". Then you have some dealers that do the the whole hard adds == "Price does not include dealer added accessories" .. blah blah blah.

Both these types of non-transparent price in these markets, and where pricing is used for the "algorithm", makes those fair/good/great ratings not worth anything .... if they were even worth anything before.



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Speaking of (indirectly), has anyone seen any updates on the FTC CARS Rule?

 

[Jon Singo]

I am currently working for a smaller independent dealer and haven't been in the industry for too long, however I was just curious on some of the opinions and thoughts from veterans who have been in the space for awhile and have seen it evolve over the years. Is it even possible anymore to consistently sell cars at the NADA (or comparable) retail values anymore?
I just get the vibe from my short experience that these third party lead sites such as cargurus (especially), carfax, etc are in the business of increasingly overcharging dealers while creating a space where they push prices down in order to secure more visitors to their site. For example I am trying to sell one of my personal car through our dealership and while NADA values the clean retail at about $31,500, cargurus deems $28,500 a "fair" price and a "Good" price is closer to $25.5-27k. I find it crazy how something isn't even considered a "Great" deal until is is priced at $7k under an NADA value.
Is there a way anyone here has been able to break this cycle and are able to sell cars for what they are actually worth? As from my point of view it seems like these third party sites are creating, for a lack of better words, crabs in a barrel sentiment where dealers have to source increasingly cheaper inventory to compete and are conditioned to be content with ever decreasing margins on their units as the sites push for lower prices to benefit their own metrics rather than the benefit of dealers who keep their business operational in the first place. This probably came off more of a rant than I would like it to, however I am genuinely interested on others sentiment and perspective on this and all discussion to this thread is much appreciated. Thank you and I look forward to hearing others stances on this!

Welcome!

Wait until you see the vehicles at auction selling for more than both the NADA retail and Cargurus value!

Jokes aside, very limited supply (8mil? short) and economic pressure have created a lengthy period of margin compression. Very few data points are going to line up like you want them to. To make matters worse, most of the data used by banks (in this case NADA) is reactionary and doesn't always follow logical trends of the wholesale market or consumer demand.

My best advice is to stick with what you KNOW sells quickly in your PMA, get really good at it, then expand slowly into other inventory to test the waters. Good luck and keep the questions coming!

 

[Alex Snyder]

Speaking of (indirectly), has anyone seen any updates on the FTC CARS Rule?

Not since the October ruling. However, they were pretty strong in stating that it is coming regardless of how the courts play ball with NADA during NIADA.

ComplyAuto's attorneys are echoing what the FTC said at NIADA. I wrote about it for the FRIKINtech blog last month.

Here is a little exerpt:

Oral arguments were made by NADA and the FTC to the 5th Circuit Court of Appeals in New Orleans on October 9th, 2024. Lawyers have opined NADA made the best arguments for the way the FTC has laid out the CARS rules. The basis of the argument was that the FTC did not follow their own rules allowing enough time for the public to weigh on whether a rule was even necessary.

These same attorneys believe the NADA will win a temporary victory that forces the FTC to delay things further, but the FTC will win in the long run. At this point, you should bet on the CARS rules going into effect and prepare.

Yes, an argument can be made that a new administration will change the leadership of the FTC, but it may take time for any changes to impact the CARS rule. Read more: The FTC CARS rules in 2025 | FRIKINtech

 

[Tallcool1]

Not since the October ruling. However, they were pretty strong in stating that it is coming regardless of how the courts play ball with NADA during NIADA.

ComplyAuto's attorneys are echoing what the FTC said at NIADA. I wrote about it for the FRIKINtech blog last month.

Here is a little exerpt:

Nice!

I don't think a new administration will have any bearing.