DEFINITION of 'Blue Book'

Blue Book is a guidebook that compiles and quotes prices for new and used automobiles and other vehicles of all makes, models and types. Formally known as Kelley Blue Book, it was originally only available to those in the automotive industry, but both a consumer edition and an online edition was made available in the 1990s for the general public.

BREAKING DOWN 'Blue Book'

Blue Book has become the premier appraisal guide for vehicle price quotes in North America. Auto insurance companies frequently use Blue Books as a benchmark for assessing the market value of a car that has been involved in a collision in order to determine whether it's worthwhile to fix the car or whether it should be written off as a total loss.

How Blue Book Is Used

Originated by the Kelley Blue Book Company, which was acquired by AutoTrader.com and Cox Automotive, the guidebook is not to be confused with other titles referred to as “blue books,” such as the Social Security Blue Book that lists disabling impairments.

Blue Books show buyers and sellers of automobiles what prices others have paid, the so-called fair purchase price, to acquire vehicles of the same make, model, year, and comparable mileage and use. Furthermore, Blue Books can detail the anticipated costs associated with a vehicle such as fuel, maintenance and repairs, insurance, and financing along with the anticipated depreciation of its value over time. That way, buyers can see the potential cost to own the vehicle five years out from the date it is acquired.

The fair purchase price listed in the Blue Book is established to show the price other consumers typically pay for the same vehicle. These prices are adjusted based on the region where the transactions take place from new-vehicle purchases that occur across the country. The prices are adjusted on a recurring basis to account for changes in market conditions.

Blue Books do not show the lowest prices paid in the market for vehicles, but rather the going price that a vehicle currently sells for.

The prices in the Blue Book are set by gathering data on thousands of consumer vehicle purchase prices. This is coupled with data taken from national vehicle registration databases. The aggregate information is reviewed weekly by Kelley Blue Book.

Kelley Blue Book is available as a mobile app and has versions for the automotive markets in Portugal and Brazil.

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