Are Kelley Blue Book Values Accurate and Reliable?

by ETF Base on May 24, 2020

If you’re looking to sell your vehicle, you need to know the exact value. But you can’t go and knock on every car dealer’s door to ask how much your vehicle is worth.

The Kelley Blue Book is a solution to this problem. Every car has a different value according to its model, build, and specifications. The Kelley Blue Book can help you determine the average cost of your vehicle, with a 27-point quiz to determine your car’s equity

Over 20 million unique visitors to their website every month prove that it is popular. But can you rely on the accuracy of this platform about your vehicle value? Is the Kelley Blue Book realistic? We did a bit of research and did a little assessment of the platform. 

Critical Factors About the Kelley Blue Book:

The Kelley Blue Book and its online website is one of the most trusted sources for pricing of your car and has been for more than 90 years. 

Kelley asses a car based on the following parameters:

  • Private Party Value of the car
  • The trade-in value of the car
  • Suggested retail value
  • Certified pre-owned value of the vehicle

These blue book values are determined by analyzing the value of a car from real-world metrics and according to parameters such as industry developments in the model of the car, economic conditions, and the location at which the trade is taking place.

Problems can arise due to the delay in price info assessment, due to customers overpricing the value of their car and the difference between the prices offered by Kelley Blue Book and dealers.

How is the Price of a Used Car Determined using KBB?

The data of Kelley Blue Book is updated regularly. There are a few factors that can affect this price.

  • Price of cars in wholesale auctions.
  • Prices offered by independent and franchised dealers 
  • The price-setting of manufacturers for a model.
  • Rental fleets
  • Lessons
  • Private party transactions

Kelley has a set algorithm that determines the value of the car based on historical trends in the industry, current financial conditions, development in the industrial manufacturing process, what time of year you are trying to price the car, and the location where the vehicle is being valued.

This Process Will Give You Four Kinds of Values for a Car:

Private party value:

If you are trying to sell or buy a car from a private user, then this valuation of the car comes under the category of private party value.

Trade-in value:

This is the value you’ll get if you’re going to a trader or a dealer. This value might vary with the deals that the manufacturer or the dealer has to offer.

Suggested retail value:

This valuation consists of price dealers are explicitly asking for a specific used car.

Certified pre-owned value:

How much the value of cars covered by the CPO program is coming under this particular category.

What are the Issues with the KBB Valuation?

Nothing is perfect. And the Kelley Blue Book is no exception to that. There are some issues that can affect accuracy when you’re trying to evaluate your car with the Kelley Blue Book.

  • The time required for the evaluation

KBB takes time for the analysis of all data and evaluating your car accordingly to give you the most accurate price.

But due to this lag, the priced value might not always reflect the latest trends and economic conditions. 

  • Higher expectations for the value

People have higher expectations from the car they are trading. It’s usual that they think the car is in a lot better condition than it is.

This might happen due to the misjudgment of the condition of the car.

But during an evaluation, the price of the car might drop by a big difference, and this will not match the expectation of the customer. 

  • Difference in values

Dealers use different records for evaluating the price of a car — for example, National Auto Research’s black book or the Manheim market report.

Now, both the records mentioned above are not available to the public. The most crucial part is that evaluation using these records tends to be a lot slower than the wholesale price of the car.

How Could Customers Determine the Accuracy of KBB?

It’s not hard or very complicated to determine the accuracy of the results. Just follow the suggestions given below, and you’ll be good to go.

  • Use The KBB Value as a Reference

You can print out the statement given by KBB to the trader as a reference.

It shows the car’s condition definition. It is essential if you think the car is overpriced.

  • Try to Negotiate the Price

KBB is designed in favor of the dealer. So, the original price of the car can be higher than the price listed by the book. 

So, always start with the listed retail price and then bargain down from there.

  • Ask for Sources Used by Dealers

As stated earlier, sources used by guides like Black Book might have a much lower price as compared to the price shown by Kelley Blue Book.

So, always ask the dealer for the source of the price they are suggesting. 

  • Take Suggestions From Different Platforms

Whenever you’re dealing with a car, never rely on a single platform for the pricing of the car. There are numerous sources available online which can help you determine the value of the vehicle.

There are also sources available which will compare prices from all these platforms and give you an average price for your model.

Always take references from the various platforms while you are trading a car.

The bottom line is, Kelley Blue Book is a reliable source, but you shouldn’t entirely rely on only one source for pricing your car.

There are various car pricing platforms available online, which you can refer to. But none of them are going to be perfect.

So, what you can do is take data from all these platforms, take into consideration which parameters are focused on while pricing the car on each platform, and then decide on an average retail value of your vehicle.

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