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A guide is simply a guide

Several professional organisations make it their business to put market values on cars. But how can automotive retailers tell who is right and who is wrong? Tom Madden, BCA'S director, customer affairs, looks for an answer.

Whatever all the experts tell you, it is the retail buyer - the motorist - who decides what a car is really worth. They vote with their wallets by walking away from cars they perceive to be too dear.

Those who put their hands in their pocket and pay good money out of taxed income are the driving force for residual values - not price guides, not car auctions, not fleet operators, nor dealers and traders, although all these elements have a part to play.

Take a step back and look at the pure basics of a huge market, which is by turn emotive, complex and - in the wholesale arena - quite volatile. Prices change day by day, hour by hour and while on average you may say a particular car is worth a certain value, there are no guarantees.

This volatility may even itself out over periods of time, but it is the dealer who carries this function out - to some extent - at retail level.

You just don't see big swings on windscreen sticker prices between comparable product on a day to day basis. Professional buyers have a responsibility to their business to protect their margins, to ensure they remain a profitable business and deliver a good value product to their customers - it's not an easy wire to walk.

Simply put - either as a buyer or seller - if you slavishly live by the book you may die by the book.

The main guides are published monthly. Information gathering from sources including ourselves is ongoing, but eventually there must be a cut off date - say two weeks - before the guide is in your hand.

Then you use that guide for a calendar month. At the end of the month you could be looking at information that will have been gathered weeks earlier and you're wondering why the figure on the page doesn't match the car you are now trying to trade.

What are you valuing for? On a part-exchange to make a deal? On a car for retail? On a car to trade?

So many different factors come into play, you need to first establish what you are trying to achieve.

If you value a PX too cheaply then you may lose the whole deal and possibly a valuable finance arrangement. If you value a car for retail too dearly when you buy it, you run the risk of it sitting on your forecourt for weeks without getting any attention from retail buyers - who, by the way, are better informed than they have ever been.

So you need a 'bottom line' figure - if all your plans go wrong, what can you cash that car in for today? And that is the auction price, where open, competitive bidding sets a true market value.

If you want a snapshot of prices there's no better source than BCA's Auction View - our exclusive online service for customers that delivers the latest composite auction prices - by make, model, age and mileage - direct to your desktop PC.

The service also delivers an auction stock locator, catalogues, vehicle images and a host of other useful information.

It doesn't hurt to attend auctions either and see for yourself where the interest is and what the buyers are clamouring for… and what they're not. You'll get more solid market information by spending a day on the auction hall floor and participating in the forum than perhaps anywhere else.

Valuing cars is not just about knowing which page to turn to in the price guide. It's about market knowledge, access to information, nous, commonsense and experience… and you don't get that from the pages of a book.

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