Modern technology is making it easier than ever for South African consumers to avoid being ripped off when buying or selling a second-hand car, with a range of new indicators available to supplement the ‘blue book’ values that have been used by the industry for more than 55 years.
But how do dealers arrive at their valuations? Chances are that they’re using the TransUnion Auto Dealers’ Guide – previously known as the Mead & McGrouther Auto Dealers’ Guide, or simply the ‘blue book’ – to benchmarktheir valuation, says Kriben Reddy, Head of Auto Information Solutions at TransUnion Africa.
The Guide has been the industry’s ‘bible’ for more than 55 years now, and contains the retail and trade values of every make and model of car on the market. These indicators are based on information received from dealers across the country every month. While dealers tend to use this data as a guide, banks and insurers tend to lean heavily on these values to determine financing and insurance risk, says Reddy.
“Establishing a fair price for a used car isn’t an exact science. A used vehicle’s price is determined by a range of factors – make, model, mileage, the condition of the car, and the demand for it in the market. Previously, this information was reserved for car dealers, banks and insurance companies,” explains Reddy. “Today, it’s never been easier to make informed decisions around buying, selling and insuring your car.”
For a start, it’s important to know the difference between ‘retail’, ‘trade’, and ‘book’ value:
- Simply put, the retail price is the price at which a dealer will sell a vehicle to a consumer.
- The trade priceis the price at which a dealer will buy a car from a consumer, either as a trade-in or a straight sale. This price depends on whether the car needs any work, what the dealer expects to sell it for, and how that model sells in the dealer’s area.
- The book value refers to the values contained in the Guide. Book value can mean either the retail price or the trade price, depending on whether a dealer is selling the vehicle or buying it.
“Consumers can make life even easier for themselves by using an app called FirstCheck, which provides users with the current market value of a specific car, its full history and the legal status of the vehicle – including whether a car is still under finance or flagged as stolen,” he adds.“This will help people avoid popular scams, like selling cars with hidden faults, accident-damaged vehicles or vehicles that are still under finance with a bank – which means the bank is still the legal owner, and will report that car as stolen or attempt to take it back.”
TransUnion recently added three new indicators into theirintelligence mix to help consumers and dealers alike make more informed decisions.
- The Market Price Indicator is based on the advertised prices of cars from websites across the country. If you’re in the market, this provides the best view of the prices being asked for specific vehicles at any given moment.
- The Confidence Level highlights the certainty of the price: the higher the number of data points, the higher the confidence level in a particular price point.
- The Spread indicates how far apart the various price points are on any given car.
The Market Price Indicator is already built into TransUnion’s dealer-specific 1Check app, and will soon be available on the consumer-focused FirstCheck app as well.
“These indicators don’t replace our existing data points, but enhance the existing data by offering a more rounded view of the market,” says Reddy.“Remember: if the price looks too good to be true, it probably is.”