Although automotive experts acknowledge that KBB is one of the most popular and trusted guides in automotive pricing, the question remains: Is it accurate and reliable? Here’s an assessment.
How KBB Determines Used Car Values
Kelley Blue Book receives real-world used car prices on a daily basis from wholesale auctions, independent and franchised dealers, rental fleets, auto manufacturers, lessors and private party transactions.
That process results in the following values for used cars:
- Private party value – How much you will have to shell out for a specific used car from a private seller.
- Trade-in value – The amount you are likely to get from a dealer for a trade-in.
- Suggested retail value – What dealers are typically asking for a specific used car.
- Certified pre-owned (CPO) value – How much cars covered by the CPO program are worth.
Some Issues with KBB Pricing
Here are factors that could affect how accurate the KBB values are:
Lag – It takes time for data and analysis to make its way through KBB. Prices listed may not always reflect the very latest trends and economic conditions.
Consumer bias – Most people think the car they are selling or trading in is in better condition than it really is. If you misjudge the condition of a car for trade-in or purchase, your expectations may not match the reality of KBB’s valuation structure.
Mismatched data – Most dealers do not use KBB for trade-in (wholesale) values. Instead, many rely on National Auto Research’s Black Book or the Manheim Market Report, neither of which is available to the public. More important, both tend to skew lower than KBB in wholesale pricing.
Solutions For Consumers
If you use KBB as a general guide and follow the suggestions below, Kelley Blue Book data can be very useful.
Print out definitions. If negotiating to buy a used car from a private seller, show KBB’s car condition definitions to the seller, especially if you believe the car is priced too high.
Negotiate. KBB’s pricing structure tends to favors dealers, meaning listed retail prices can be higher than with other guides. Start with the listed retail price and bargain down.
Ask for sources. Be aware that insider guides like Manheim or Black Book tend to show lower wholesale prices than KBB. Ask about the source of the trade-in offer or wholesale price.
Consult other guides. Consult one or more other websites or pricing guides to get an “average” for the vehicle you are trading in, selling or planning to buy.
The following are several sources you can check for pricing and rating information before buying, trading in or selling a used car.
Edmunds – This website offers an appraisal engine that includes five car condition categories compared with KBB’s four. This can be helpful – or generate confusion – depending on how realistic you are about your car’s condition. Many experts believe Edmunds values are more accurate than KBB. That’s not always the case, of course, which is why getting several estimates and averaging still makes the most sense.
NADA Guides – One of the oldest guides, it was designed for dealer members of the National Automobile Dealers Association (NADA) trade group. NADA pricing is often higher than Kelley Blue Book since the algorithm has a standard that calls for all trade-ins to be in very clean condition. As a result, you may need to adjust NADA prices down.
J.D. Power – Although the ratings are only for new cars, the used car search provides dealer pricing based on ZIP code. This information could be valuable if you are planning to sell a car outright and want to know what typical pricing in your area looks like.
Consumer Reports – The well-respected, noncommercial (no advertising accepted) publication offers lots of information if you buy an online subscription ($35/year or $6.95/month), less if you don’t. The website features general pricing on used cars, information on reliability, cars to avoid and much more.
The Bottom Line
Since the three main consumer guides – KBB, Edmunds.com and NADA – use different algorithms, your best bet is to check all three and calculate an average price.
Kelley Blue Book is a very good resource, but it should not be the only one you consult. Although none of the top used car buying guides is perfect, when taken together – along with additional information gained from other websites – they can provide reasonably reliable and accurate information for your used car transaction.