No car value guide—including the esteemed Kelley Blue Book (KBB)
—is perfect, but taken together with other reliable car websites and guides, KBB offers relatively accurate and trustworthy information on buying and selling new and used cars. That being said, no car guide should be taken as gospel, so take KBB as a starting point and keep them in mind as you go through the buying, selling, or trade-in process.
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KBB’s formula for determining accurate used car prices
KBB uses a secret algorithm that includes data gathered from wholesale auctions, independent and franchised dealers, rental companies, auto manufacturers, and private sales to calculate its car values.
The algorithm takes qualitative data into account as well. Historical tendencies, present economic metrics, industry evolution, sales locations, and time of year also impact how KBB assesses its figures.
Taken together, KBB crunches the numbers and comes up with four values:
Private party values: What you’ll have to pay if purchasing a specific used car in a private sale.
Trade-in value: The cash value you’ll likely receive for your used car if you trade it into a dealer.
Suggested retail value: The amount dealers are likely seeking for a specific used automobile.
Certified pre-owned value: This figure informs you of a car’s likely worth if covered under the certified pre-owned program.
Key Takeaway While KBB uses a comprehensive formula to determine its automobile values, keep in mind that they should be used as a guide, as these values are not set in stone.
Questions about KBB’s pricing
While KBB’s values are considered relatively accurate, they aren’t perfect, as they don’t account for lag time, customer bias, and divergent data sets.
Lag time
Data doesn’t always move quickly through KBB’s system, so prices may not always reflect the latest consumer tendencies and market trends.
Customer bias
Many people over-value the cars they’re trying to sell or trade-in and are thus surprised when they’re offered a figure that doesn’t match what they saw on KBB’s website.
Divergent data sets
In terms of wholesale pricing, most dealers don’t use KBB. Instead, they tend to rely on guides that are not available to the public, such as Black Book and Manheim’s Market Report. These guides tend to price vehicles lower than KBB.
Key Takeaway Dealers rely on their own guides to price vehicles, and will likely have a different—and lower—number in mind when you’re trying to sell or trade-in a used car.
What’s a consumer to do?
The prices you find in KBB are not gospel, so prepare yourself by printing out KBB car condition definitions, being ready to negotiate, asking where the dealer gets their information, and consulting other guides to supplement KBB’s information.
KBB’s car condition definitions are always good to have in your back pocket. They can help in your negotiations with a private seller if you suspect they’re trying to get more money than the car is worth.
Always be ready to negotiate when buying a car. KBB’s prices tend to skew higher than other sources, so when you’re ready to bargain, start with KBB’s listed price and negotiate lower.
Don’t be afraid to ask a dealer where they get their information from, as their likely sources (Black Book and Manheim Market Reports) usually provide lower prices than what you’ll find in KBB, especially for trade-ins.
Consulting other guidebooks is always a good idea. They all use different formulas when calculating values, so check out a few and then determine an average value for the car you’ve got your eye on to buy, trade-in, or sell.
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Other resources
It’s always a good idea to learn as much as possible about a car you’re looking to buy, trade-in, or sell, so make sure to consult other guides, such as Edmunds, NADA, J.D. Power, and Consumer Reports as well as KBB.
Edmunds
offers vehicle valuations based on five car condition sections (KBB offers four). Some authorities in the car business see Edmunds as being more accurate than KBB, which may or may not be true, depending on the vehicle. But taken together, you’ll be able to average a relatively accurate figure for the car in question.National Automobile Dealers Association (NADA) Guides
were originally intended for NADA dealer members, but are now available to the public. Prices here tend to skew higher than KBB, as NADA’s algorithm requires trade-ins to be in excellent condition. If necessary, adjust any prices you find in NADA if your trade-in doesn’t meet that requirement.J.D. Power
offers ratings for new vehicles only. However, you can search for used car prices by dealer based on their zip codes.Consumer Reports
provides information on used cars, including pricing, reliability, and advice on vehicles to steer clear of. Keep in mind, Consumer Reports is subscription-based, so if you subscribe, you’ll get much more information.Key Takeaway Always consult more than one guide to get the most accurate price for a used car you’re looking to buy, trade-in, or sell.
Use multiple guides for accuracy
Use Kelley Blue Book along with other reputable sources to arm yourself with information and give yourself the best chance to make a deal that works for you.
When used in tandem with other guides, Kelley Blue Book can deliver relatively accurate and reliable pricing information. Remember though, any guide is just that—a guide.
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FAQs
Is Kelley Blue Book or Edmunds more accurate?
Ultimately, it depends on who you talk to. Some experts see Edmunds as more authoritative, while others see KBB as the more trusted source. By consulting both, you’ll likely be able to come up with the most reliable price for a car you’re looking to buy, sell, or trade-in.
Do car dealers use NADA or Kelley Blue Book?
Dealers usually stick with their own sources, such as Black Book and Manheim Market Report. Why? Those guides tend to skew lower, and they’re not available to the public.
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