Pricing Issues - Cars at KBB, NADA Price or Above it? Is This A Big Problem?

[kcar]

Looking at these prices, I don't price them myself but we don't use any pricing tools yet* For now I'll assume they use typical books. Used cars are being priced sometimes at the exact KBB.com/NADA.com price or above it. I kind of see this a problem as consumers can easily look up the price and see there's really no deal on it.. What do you all think? Our used car business isn't what it should be, and comments, photos, feature highlights, videos aren't making an impact.. ps. my marketing is hitting every site and every way possible to get shoppers looking, so that's not the issue.

So are we buying the wrong cars for the market (no market research), or are the prices wrong (no pricing research). This is something I want to figure out so I can get on the right path and narrow down the problems. Do we need research and pricing tools? I'd imagine we do, but just want to see what every one is doing?

Also for a long time now I've been trying to do sale prices for used cars. So compare at: $29,393 Discounted Price: $27,482, but I'm not sure how it will work? Do you raise the price then lower it, but then you're overpricing it and consumers can see that in their online pricing sites. Or do you actually put a deal on the car and since you took it in much lower? Managers don't seem understand the idea, and I can see that it would effect salespeople's commissions.. But just doing a set price gives the customer no perception/interest of getting a deal, to get them in the door.

 

[ddavis]

Book and auction values are only applicable if you are planning on sending a vehicle to auction or if you need to figure out what a finance institution is willing to lend. The market value is determined by the internet. Customers are much more likely to search on AutoTrader or Cars.com and sort by price.

The best tool for pricing used cars is vAuto. There is a ton of good information on their website. Look under News and Resources and check out some of the webinars. I highly recommend getting one of Dale Pollak's Velocity Books.

 

[mcampo2501]

I think auction value is pretty relevant. If dealership A can buy a car at auction for X price, than dealership B shouldn't pay too much more than X for it as a trade in. I agree that VAuto is the best way to go. It gives you a picture of everything and really allows you to pay the right money for a trade, while at the same time insuring that you aren't pricing that car too high or too low when it clears re-con. It's a great tool to fight people on KBB pricing too, as you can show the customer that their car is only selling for an average of Y price. I suspect the values on KBB get tightened up soon now that Cox owns every popular pricing guide outside of NADA, so pricing should only get easier as time goes by.

 

[ddavis]

I think auction value is pretty relevant. If dealership A can buy a car at auction for X price, than dealership B shouldn't pay too much more than X for it as a trade in. I agree that VAuto is the best way to go. It gives you a picture of everything and really allows you to pay the right money for a trade, while at the same time insuring that you aren't pricing that car too high or too low when it clears re-con. It's a great tool to fight people on KBB pricing too, as you can show the customer that their car is only selling for an average of Y price. I suspect the values on KBB get tightened up soon now that Cox owns every popular pricing guide outside of NADA, so pricing should only get easier as time goes by.

Mike, I think you are using auction value more to acquire the vehicle, not really to price it. All of those values are relevant. That is why vAuto supplies them.

Back in the early spring, I was at an open factory sale. They had over 400 really nice vehicles. We bid most of them and walked away without buying one. Everyone of those cars brought retail book and some even original MSRP. That was before auction fees and transportation. In my frustration, I asked one of the guys, that were buying, why? He said, "they aren't going to get any cheaper". While prices did go up, they never caught up to those.

If you plan to wholesale a car, look at book and auction values. For retail, use the market, which is the internet. You will have an idea of how fast they are turning and what you can expect to make.

vAuto has a new acquisition tool called Provision that I really like.

 

[ed.brooks]

Book and auction values are only applicable if you are planning on sending a vehicle to auction or if you need to figure out what a finance institution is willing to lend. The market value is determined by the internet. Customers are much more likely to search on AutoTrader or Cars.com and sort by price.

The best tool for pricing used cars is vAuto. There is a ton of good information on their website. Look under News and Resources and check out some of the webinars. I highly recommend getting one of Dale Pollak's Velocity Books.

I agree with everything Doug said (no surprise there!)
That said, if I can help you out with anything at all, please don't hesitate to call. I'd also recommend clicking on the "See what our Dealers have to say about us" link in my signature.

 

[bzweifel]

KBB retail pricing is a $6,000+ deal on most of my late model inventory. You would be way way high if you are pricing at KBB retail or CPO. This would be the cause of "our used car business isn't what it should be".

fyi, I'd stay quiete until you're asked anything regaurding low volume.

The conversation you need to have IS NOT as easy as walking into the Used Car Managers office and saying "Hey, let me show you something, look at all these cars priced lower than ours on the internet..."

 

[ddavis]

Most of the Internet Directors are paid on volume. I never felt comfortable making pricing decisions when the Used Car Managers were being paid on gross. Serious conflict of interest. At my last stores, the GM made it part of the job description.

 

[ddavis]

I agree with everything Doug said (no surprise there!)
That said, if I can help you out with anything at all, please don't hesitate to call. I'd also recommend clicking on the "See what our Dealers have to say about us" link in my signature.

Ed,

I clicked on the link to see how many people that I know. They were all anonymous. Did you get these at an AA meeting?

 

[ed.brooks]

Ed,

I clicked on the link to see how many people that I know. They were all anonymous. Did you get these at an AA meeting?

Not AA or NA, it's just the format at Driving Sales - probably the largest and most comprehensive collection of automotive vendor ratings.

They are anonymous, but manually verified as Arnold Tijerina states here:

1) I know for a FACT that the reviews on DrivingSales are real. I used to go through each of them one by one and verify them...

 

[ddavis]

Ed, I saw all of the orange, your name at the top and the vAuto logo to the right. I thought it was the vAuto site. I didn't notice the Driving Sales until I went back in.