Used car confusion as trade guides move wider apart

According to many people in the trade the valuation gap between Glasses and CAP guides has widened to such an extent that professional car buyers do not really understand the market. It seems that there really are two separate arenas for retail pricing; one dictated by CAP and one by Glasses.

It is generally assumed that the data collected by CAP as the name suggests is derived from what happens at the auctions in the way of fleet sales and main dealer part-exchange sales, whereas Glass take their data from remarketing companies rental houses and manufacturers.

Unfortunately if the trade find this confusing just think what it must be like for car buyer searching the web for their next used car who could potentially find that a similar car may be advertised from similar sources for thousands of pounds difference.

An experienced buyer who works on behalf of a medium sized multi-franchise group said that in all his years in the business he has never known there to be such disparity between valuation makers who presumably have access to the most up to date data and should therefore surely be more in line with each other. He explained that the way he combats this is to value his product somewhere in the middle, “not very scientific but it works for me” he said.

So are there two different markets and is the customer likely to get a fair deal if they are not sure which market they actually find themselves in?

The guides are what they are, offering a “guide” price, something to help trade buyers ‘sense check’ their own feelings. Because it is such a rapidly changing market place, subject to regional preferences and the ebb and flow of supply and demand and what the latest ‘hero’ car is, it is all about opinions.

The good thing for car buyers is that they have all the tools available to help them make a decision and this confusion in the trade can actually sometimes help the canny buyer. They can use the evidence of these price differences as leverage to try and buy the car they want from the preferred dealer and at the very best price.

The market is sure to settle down as the long term feeling is that the market is still much smaller than at its peak a few years ago. It is generally accepted that the scrappage effect has taken away many cars from the usual 1-3 year old market purely by the demographic of the scrappage customer who in the main went to the market a) because they qualified and b) because the incentives were too good to not do so, but as they had 10 year old cars anyway many of them are unlikely to be back in the market anytime soon.

As long as manufacturers do not get caught in the oversupply trap and pre-reg too many cars to create a false position there should be a steadying of prices over the next few months. However during that time it might be wise for CAP and Glasses to have a chat over a pie and a pint and see if they can sing from a similar hymn sheet.

Our buyer told us that there are some luxury cars which have a difference in value of as much a £10,000 depending on what guide you use. I wouldn’t like to be the customer trying to sell that car!

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3 Responses to Used car confusion as trade guides move wider apart

  1. MTI May 13, 2011 at 3:40 pm #

    Mike Hind from CAP pointed out on Twitter…”Need to point out that contrary to the piece in @in51der CAP does not stand for Central Auction Prices. CAP is not an acronym.”

    Happy to put the record straight.

  2. Mike Hind May 13, 2011 at 4:14 pm #

    It’s a common misconception that CAP is an acronym. You have to go back a long time to find any ‘official’ reference to Car Auction Prices or Current Actual Prices and as far as I’m aware it has never stood for Central Auction Prices.
    Although I can’t speak for our colleagues and respected rivals in Weybridge, I do not believe there is such a simple difference between our raw data sources as this article suggests. Certainly, CAP’s research process includes auction and dealers (franchise/independent/supermarkets) but also specialist remarketeers of all persuasions (rental/lease/finance etc), major fleets and manufacturers.
    The differences between the 2 major guides are more about how we interpret and process that data and the purposes for which they are used.
    I’ve lost count of the number of times journalists have asked me ‘who is the most accurate’? My response is always to explain that its a lot more subtle than that. It’s no secret that Glass is the ‘language’ of large swathes of the trade but that CAP is the ‘benchmark’ for many other parts of the industry.
    Sophisticated industry operators tend to understand these differences, so I don’t think it’s generally a particular problem when the guides diverge. Add to this the fact that many professionals will also have their own expert knowledge and will themselves read the market closely, using a guide to ‘sanity check’ what they are seeing.

  3. Peter Dean May 13, 2011 at 8:24 pm #

    I’d say buy at CAP prices and sell at Glasses you’ll be sure and make money if this can be achieved!

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