If you’re shopping for a used car, you’ve probably seen “Priced below Blue Book” a bunch of times now. Kelley Blue Book© (KBB)* is one of the most popular automotive valuation companies in the US and dealers often use the guide to qualify their pricing.
Used car inventory and prices have fluctuated because of the recession and cash-for-clunkers program. We wanted to know how KBB fair market value compares to popular vehicles on Mojo Motors, so we put on our statistical analysis hats and went to work to find out if KBB is really accurate.**
Are KBB prices too high?
We studied the list prices of the five most popular used cars on Mojo Motors using the average price in the greater New York area of both certified pre owned cars (CPO) and non CPO. Remember, just because they are popular, does not mean they are the most reliable cars you can buy. Then we compared the results to KBB’s average retail price of those models of both certified pre owned and non-CPO in New York in ‘Very Good’ condition with standard features. See the data beneath our more technical explanation of the study below:
To conduct this analysis, we performed a least squares regression analysis on popular vehicles in the greater New York area using the latest available list price of these vehicles as listed on MojoMotors.com. Vehicles listed on MojoMotors.com are exclusively used cars on dealership lots – Mojo does not set the prices of these vehicles. Once we assembled the regression, we calculated the ‘market list price’ for each vehicle assuming 12,000 miles per year (thus a 2011 BMW’s value would be calculated at 36,000 miles).
Used 2011 BMW 328xi with 36,000 miles
– KBB Average Suggested Retail Price – $26,178
– Mojo Motors Average List Price – $25,573
Average 328xi on Mojo is $605 cheaper than KBB suggested retail price
Used 2009 Ford F150 XLT 4X4 5.4 V8 with 60,000 miles
– KBB Average Suggested Retail Price – $22,438
– Mojo Motors Average List Price – $23,443
Average F150 XLT on Mojo is $1,000 pricier than KBB suggested retail price
Used 2011 Honda Accord LX with 48,000 miles
– KBB Average Suggested Retail Price – $14,968
– Mojo Motors Average List Price – $14,680
Average Accord LX on Mojo is $288 cheaper than KBB suggested retail price
Used 2012 Ford Mustang GT with 32,000 miles
– KBB Average Suggested Retail Price – $26,548
– Mojo Motors Average List Price – $22,679
Average Mustang GT on Mojo is $3,869 cheaper than KBB suggested retail price
Used 2009 Toyota RAV4 Limited with 60,000 miles
– KBB Average Suggested Retail Price – $18,572
– Mojo Motors Average List Price – $18,074
Average RAV4 Limited on Mojo is $498 cheaper than KBB suggested retail price
Some KBB prices are too low
Kelley Blue Book prices are definitely not perfect and while they tend to skew higher than lower, there are times when they actually under-price a vehicle by a lot of money. On classic or nice cars and/or vehicles with high mileage, KBB should not be your source of valuation.
Take a Saab 9000, for example. This quirky Swedish hatchback from the mid-1990’s has a cult following. While KBB values a 1994 Saab 9000 with 165,000 miles at $1,240, a quick search online reveals a Saab 9000 from that year will fetch well over $5,000. KBB under valued a car by $4,000!
Most accurate car pricing guide
The most accurate car pricing guide is YOU. The best way to find out the right price for a car you’re selling or a car you want to buy, is comparing prices online. Start searching for used car prices here. This will give you an idea of what’s happening in your market and how dealers are actually pricing vehicles. Simply looking at the mileage, price and trims will help you determine what the most fair and accurate prices should be. You should also read this before buying a used car. It’s a crash course on pretty much everything you need to know about buying a new or used car.
Side note, don’t forget to factor in added costs like dealer fees, taxes and paper work! There are at least six types of dealer fees you will face when buying a car. If a price looks too-good-to-be-true, it probably is.*** Find out if the dealer only lists their “finance price” online or if they have any disclaimers like a $2,000 dealer-fee on every car. This can be more of an issue with independent dealers than franchise dealers, but it’s good to search dealer websites for any disclaimers.
*Usually misspelled as Kelly Blue Book
** It’s not really so simple
*** It definitely is too-good-to-be-true
Written by Max Katsarelas
Photo source: autoevolution