Kelley Blue Book was founded in 1926 and since then has commonly been considered to be the top-dog in the used car pricing industry. Over the last couple of decades as technology exponentially started to speed up and the mass production of vehicles increased, KBB began to have a hard time keeping up. Once the young, spry, and “accurate” car pricing company, its faults are beginning to show with age.
It is an interesting area of research as companies like Kelley Blue Book likes to keep all their determining factors relatively closed off, so most of the information discovered is partly speculation. However, it is fair to assume they are as close to accurate as we’ll get without official comment from KBB since experts in the field corroborate the details.
First, it is important to know generally how does Kelley Blue Book set their prices.
Do they pull a number out of thin air?
To understand where their issues are, you need to understand exactly how KBB generates their pricing. There are quite a few factors that go into determining just how much value a used vehicle has. Every day, KBB receives massive amounts of information on used car prices from dealerships, auctions, independently listed cars, manufacturers, rental services, and many more.
Once that information has been obtained, it is uploaded into their algorithm that determines the estimated price based off these factors as well:
- Current economic conditions
- The season
- Availability
- Current trends
- Location
- Developments in the industry
Here’s the problem. The overflow of data that comes pouring into their servers can overwhelm their systems as it takes time to analyze. Inaccuracies can take some time to catch but by that point, the car you were selling was already sold at the wrong price point.
Reasons For Their Faults
Delay
That amount of data circulating through KBB can have some serious lag time for prices to be properly analyzed. The value reflected may not always be up to date yet. Trends and economic conditions can change at the snap of a finger. Kelley Blue Book may have not adjusted their pricing when you happen to check.
Wrong Set of Data
Collecting used car pricing data from dealerships might not always be the most accurate. The majority do not use Kelley Blue Book for their trade-in value. Instead, they use National Auto Researcher’s Black Book or the Manheim Market Report. Both pricing lists are not available to the public and usually value the cars at a lower price than KBB. If Kelley Blue Book is using this data to calculate their prices, then their listed price tag can potentially be lower than the actual value.
Condition of the Car
With all these factors that go into Kelley Blue Book determining the price, people often forget to consider the condition of the car. When trying to sell a car, they’ll often find they aren’t getting anywhere near the value listed on KBB. Dealerships and private-party buyers can claim that due to the condition, it’s only fair to shave off an additional hundred dollars or more. Kelley Blue Book can account for all these various factors, but unless someone physically looks at your car, the listed price might be misrepresented.
We Can Beat Kelley Blue Book
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