Used car prices – it’s just a guide

He emitted a little laugh at first but quite quickly his face turned into a grimace and he was clearly quite angry.

“Do you think I am an idiot?” he snarled at the salesman who was facing him from the opposite side of his car.

“No, of course not sir” he replied calmly, “I believe that to be a fair price for your car”.

“Well in that case you must think I am an idiot. I have written confirmation from Parkers as to the value of this car and they say it’s worth £2,000 more than you say it is, so are you trying to rip me off?”

“No sir, of course I am not trying to rip you off.” The salesman replied “The price I have given you for your car is based on current market conditions and, in my opinion is a fair and just offer.”

“So the Parkers valuation is wrong then is it? You must really think I’m dumb if you think I’m going to swallow that ridiculous offer” The man angrily retorted.

“Sir, I’m not trying to be smart here but are Parkers going to buy the car from you?” The salesman said politely.

“Well of course they’re not”

“In that case sir can I suggest that a second hand vehicle is only ever worth what someone is prepared to pay for it?”

Valuing cars is subjective at the best of times and this may be an extreme example but conversations just like the one above are taking place all the time.

Any car valuation guide will take its data from actual research carried out through different trade outlets i.e. auction, fleet disposal, manufacturer used car programmes etc. They will then put all the stats in a pot add in some trending information and seasonal adjustments and arrive at a guide price for what a car is supposedly worth.

There are times when the market completely agrees with most of the valuations in one guide but with very few in another and other times when the valuations in a guide can be way too high and on occasion way too low.

Most good car businesses will take into account the view of every one of the price guides at its disposal, after all it is all about opinions, but will also use their own experience and professional expertise to value a customer’s car.

However the only opinions which really count are the ones of the people prepared to write out the cheque and make a financial commitment. The problem we always encounter in the motor trade is when dealing with a product which immediately depreciates, customers are always going to be out of pocket and I have rarely met a customer who said ‘oh as much as that’ when being told the price being offered for his car.

The challenge is managing the expectation by being as professional as possible and working hard to arrive at a “cost to change” which is acceptable enough to complete a deal.

The other problem being faced by car buyers is that because of rapidly changing market conditions and various supply and demand issues, cars can vary quite wildly in price from one month to the next but also from one dealer to the next. The old adage “one man’s meat is another man’s poison” has never been so true. These factors coupled with a sales network with less and less experience will of course lead to a lack of confidence when pricing a trade-in,

Indeed because some sales personnel are scared to make a mistake they will often offer a customer much less than what a car is worth and let that customer walk away rather than have some courage, value it properly and get a deal done.

Of course with the rise and rise of the internet the picture has become even more confusing. The price you are offered can often vary from dealer to dealer based on the success or failure they have had in making a profit from a particular make or model in the past. We only need to make a quick search on Auto Trader to see the massive variance in price for similar models to see this in action.

The bottom line is that although dealers have a good idea what a car is worth, it is certainly not an exact science and customers quoting “The Parkers Price” when they enter a showroom need to realise that it too is just a guide.

As with a lot of things in life if someone is not happy it is always best to get a 2nd or 3rd opinion before deciding to take the plunge.

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One Response to Used car prices – it’s just a guide

  1. Mr Price Guide February 21, 2011 at 9:37 pm #

    Excellent article. Try to get guide prices from as many online valuation sites as possible. More importantly get a sense of supply and demand. If there are loads of cars like the you are interested in for sale, then you can simply wonder down the street if there is no tempting discount to make you stay!

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