Kelley Blue Book announced this morning that it is launching range-based pricing for used-car values. This follows the range-based pricing for new-car values that KBB introduced in October.
“As a result of in-depth consumer and dealer research, Kelley Blue Book’s new range-based used-car pricing is expected to alleviate some of the friction from the shopping process by setting common expectations on pricing and valuation terminology for both buyers and sellers,” said Jared Rowe, president of Kelley Blue Book.
“This evolution in our valuations display continues to offer fresh, local and market-reflective pricing from the most trusted brand in the industry, with 88 years of automotive expertise, in an all-new format,” he continued. “The new range-based pricing is centered on Used Car Fair Purchase Price, which reflects the price consumers typically are paying a dealer for a used vehicle this week.”
The upgraded experience on KBB.com comes with “an updated look and feel with the Price Advisor tool,” as well, the company said, noting that the new website display gives shoppers market-based information on KBB’s estimate of what they can expect to pay for a used ride from a private party or a dealer.
The consumer also receives a KBB estimate on what the seller can expect to get from the dealer on a that vehicle as a trade-in.
Citing its own research from 2013, KBB indicated that after shoppers took an initial look at Price Advisor, 95 percent of used-car owners surveyed said the information was valuable. Moreover, 92 percent said they would use Price Advisor in negotiating a fair price.
“In fact, 89 percent of those surveyed who engaged with the tool expect to pay within the featured Used Car Fair Purchase Price range,” KBB pointed out.
The company went on to note how Price Advisor gives buyers a “graphical representation” of what KBB believes their price expectation should be when buying a used car from a dealer or private individual.
“In addition, if shoppers are considering a used car that is similarly priced to a new model which could be purchased for only a few dollars more each month, an ‘upgrade’ offer appears on the site alerting consumers of this information,” KBB explained. “The ‘upgrade’ offer takes into account the average interest rate of a new vehicle versus a used model and average monthly payment terms. In some cases, the new model makes more financial sense for a shopper’s wallet.”
Rowe added: “The goal of the ‘upgrade’ offer is to provide all relevant vehicle information to car buyers based on Kelley Blue Book’s market knowledge. Buyers often associate used vehicles with the cheaper option, when in reality, they could pay more over time.”
Moving over to the benefits for consumers selling their cars, KBB said the new range-based approach offers a representation of what KBB estimates the car’s worth to be.
The trade-in range encompasses what KBB calls the variability and negotiability of that trade-in’s value. That value, of course, can be influenced by such factors as condition, mileage, supply and demand.
KBB also lets consumers receive an Instant Cash Offer on their trade from a participating dealer through the Trade-In Marketplace. Among the details used in producing the offer are things like VIN-specific information, condition-related details, and how the car’s specific history and after-market equipment impact the value.
The consumer can the use the Instant Cash Offer for purchasing his or her next ride or redeem it for cash.
Lastly, KBB explained that there are color zones (green, red and white) in the Price Advisor gauge that illustrate high- and low-end transaction points. These reflect KBB’s thoughts on what shopper can expect given recent transaction data on similar rides.
Stay tuned to Auto Remarketing for more on this new range-based pricing approach. Read our one-on-one interview feature with Rowe here to learn more about the industry-facing side of KBB's business.