Carfax has been celebrating its 30th anniversary in 2014, and before turning the corner into the new year, we took a look at the company’s first three decades and where it is headed from here.

On its website, the company’s mission from the onset was clear: “to be the leading source of vehicle history information for buyers and sellers of used cars.”

These days, it has millions of monthly visitors and pulls data from 92,000 sources that include everything from state motor vehicle departments and auctions to police departments and rental agencies, just to name a few.

And as Carfax would share with Auto Remarketing, the company spent its first three decades honing in on vehicle history, and is now putting a combined focused on used-car listings with vehicle history.

In essence, it boils down to building confidence, something Carfax intends to continue fostering with its online listings.

“Used-car shoppers need lots of questions answered before they feel confident about buying a used car, especially when they’re online. The most successful dealers work to answer all the basics, including questions about a vehicle’s history. For decades, Carfax has been helping dealers build consumer confidence on the lot and wherever dealers list their inventory for sale online,” said Bill Eager, vice president, dealer business unit at Carfax.

“Earlier this year, we launched Carfax Used Car Listings, a trusted marketplace that helps Carfax Advantage Dealers immediately build confidence with online shoppers without ads or gimmicks. It also connects them with millions of in-market shoppers — another result of working together with our dealers for 30 years building a brand people trust,” he continued. “We’ll continue working to find additional ways to support our dealers and help them build confidence with potential buyers.”

Dealers, of course, have been a big part of the company’s efforts thus far, with vehicle history being an integral key to the car-buying process.

As Alex Hafer puts it, there are two things that consumers want to know before they buy a car.

“Am I buying a good car, and am I getting a fair price?” said Hafer, who is the general manager at Koons Lexus of Wilmington (Del.). “With Carfax, it’s not a guarantee that the car hasn’t been in an accident, but it does give you peace-of-mind and tells you the vehicle history.

“It’s just more pieces of data that will make you feel more confident you’re making a good decision to buy a car,” he continued.

Hafer later added, “The customer feels that they’re empowered today because of all the information, and Carfax just gives them even more information.”

In today’s car-buying environment, the savvy dealers are the ones providing as much information as possible to consumers to help them make the decision, Hafer said. And Carfax is one of those tools that helps in the process.

But it has also provided aid on the wholesale side of the market.

The Wholesale Front

Jim DesRochers, vice president at Dealers Auto Auction of the Southwest, looked at the data streams for Carfax and wanted to work with the company to help bridge what he found to be a “big disconnect between the wholesale side of the business and the retail side.”

So, he traveled east to Virginia to talk with the folks at Carfax about potentially crafting a new solution.

“When I went to them,” he told Auto Remarketing in an interview this summer, “I said, ‘What would it take to create a product that would bridge the wholesale and retail gap?’ And I called that ‘transparent transactions.’ I labeled it that way because my feeling was, the more we disclose going forward to the wholesale buyer, the better it is for the dealer on the retail end. I don’t think we can deny that no matter what, you’ve got to sell these cars to somebody if you’re going to come back to the auction.”

The second development from his conversation with Carfax was this: in the past 30 years, Carfax had “created tremendous streams of data,” but it was their work to bridge aforementioned gap and help the auction’s customers that really made Carfax shine, DesRochers said.

In fact, as part of a deal announced back in January, DAASW began offering a Carfax report with every vehicle at its weekly sales in early February.

The reports have red, yellow and green highlights on each car crossing the block and are provided at no cost to buyers or consignors.

“This new program is a great tool in our arsenal of 360 Services which bridges the VHR gap between the wholesale and retail worlds,” DesRochers said when the deal was announced. 

“It eliminates the arbitration issues on VHR reports, which are avoided under current association guidelines, and provides a transparent transaction on the wholesale level, driving auction credibility and repeat business,” he noted.

Additionally, as DesRochers would later share with Auto Remarketing, these red, green and yellow Carfax stickers allowed dealers to make quicker decisions in the lanes without having to scan each and every vehicle.

“We also found out, after the first month of testing, that 85 or 90 percent of the announcements were matching up to the Carfax database. Where the difference was, if the car had never been in the database and the dealer was obviously making the announcement for the first time,” DesRochers said.

“You could have a car with a green sticker on it that says, ‘Carfax says it’s great,’ but the dealer could be up on the block saying, ‘It is going to be a frame-damage car,’” he added. “So, that means that everything you knew about the car was green — clean Carfax — but this would be the first announcement that would go to Carfax or any VHR system that showed it as frame(-damage) and the next time, the Carfax would come up. So, that’s how we got the confidence building.”

DesRochers said it took some time for dealers to come around to this system at the auction, but “now they love it” — and a lot of that has to do with the large numbers of dealers in his market niche that are selling cars 100 percent as-is because they’re typically older, high-mileage vehicles and don’t want them to come back in arbitration.

“Can you imagine the actual upside of the price for that car if it has a green Carfax sticker or if it only has a yellow Carfax sticker, which means minor stuff wrong with it? It drives price,” he said. “And if it’s got a red Carfax sticker, it’s being sold as-is, so people are bidding that way anyways.”

Carfax & CPO

Going back to the retail side of the business, we reached out to Tom DeLuise, the national TCUV/TRAC sales and operations manager at Toyota Motor Sales USA, to talk about how Carfax has changed the certified pre-owned segment.

“Carfax has been an integral part of the success with Toyota’s Certified Used Vehicles,” DeLuise said. “Customers expect more from a certified used vehicle, and Carfax has brought an identity and credibility of the CPO vehicle in the consumer’s mind.

“In addition, Carfax has provided value and reporting that has supported a consistency amongst our dealer partners. Having dealer buy-in is critical.  Carfax’s comprehensive vehicle history database helps ensure the integrity of the TCUV program while saving dealers acquisition costs on vehicles that may not qualify for certification,” he continued.

“Another key feature is the ‘Carfax Buyback Guarantee’ which was unheard of in the industry at that time and added confidence to our program.  The VHR brings peace-of-mind to uncertain buyers.  Carfax really served as a catalyst as on-line vehicle shopping grew into the primary lead source for most dealerships,” DeLuise added.

When asked what value points Carfax has brought to dealers, DeLuise had this to say: “The Carfax VHR has changed the way a salesperson presents the vehicle and represents the high value of TCUV.  The VHR allows the salesperson not only to build value in the vehicle and but also helps them build gross profit. 

“Carfax and their representatives have assisted TCUV’s success by elevating awareness and building TCUV value. Carfax provides extensive education to dealers and their associates helping them meet the needs of their customers,” he added.

Editor's Note: This story appears in the Dec. 15 print and digital editions of Auto Remarketing, which is available now.