KBB: Since its inception in 1918, when Les Kelley, the son of a preacher, launched a used car dealership in Los Angeles, Kelley Blue Book® has established itself as a cornerstone of automotive valuation in the United States.
Initially created to aid Kelley in identifying which used cars to acquire from local dealers, the Blue Book has since become the most trusted and widely accepted pricing guide for both consumers and the automotive industry alike, serving as a benchmark for assessing the values of new and used vehicles.
The service was originally developed to meet the demands of the banking and insurance sectors, which required reliable pricing information for used cars. Lending institutions needed to accurately appraise collateral for auto loans, while insurance companies sought consistent replacement values for insured vehicles.
The credibility of Blue Book valuations grew to the extent that, post-World War II, even the federal government relied on them to establish price limits on used cars. This widespread acceptance prompted dealerships across the country to subscribe to Kelley Blue Book regularly.
For many years, Kelley Blue Book primarily functioned as a trade publication, primarily utilized by industry professionals. It wasn’t until 1993 that the Consumer Edition was released, granting car buyers access to its pricing information.
Today, Kelley Blue Book values are easily accessible to the public through both printed editions and its website, kbb.com, which has become the leading automotive resource in the nation.
The Car Buying Market Today
To understand the landscape of the car market in the United States, it’s noteworthy that around 213 million vehicles are on the roads each year. When it comes to annual vehicle sales, several key statistics stand out:
- – Out of the total vehicles sold in the US yearly, approximately 16 million are classified as new, while about 41 million fall into the used category.
- – Among the used vehicles purchased, the distribution is as follows:
- – One-third are acquired from private sellers,
- – One-third come from franchised dealerships,
- – One-third are sourced from independent dealers.
- – Additionally, around 17 million used vehicles are sent to auctions annually.
When comparing the automotive sector to other industries that handle both new and used goods—such as real estate, antiques, fine art, musical instruments, and premium sports equipment—the car market is unique due to the rapid depreciation that vehicles experience with use.
Moreover, it’s important to highlight that vehicles sold through dealerships are required to meet specific safety regulations, ensuring they are roadworthy, which includes functional brakes, lights, and other essential features.
In contrast, vehicles sold through private transactions do not have to adhere to these safety standards, often resulting in lower prices compared to dealership offerings.
This lack of regulation also means that private sellers are not subject to the same legal responsibilities as dealerships, further influencing the pricing dynamics in the used car market.
How are Kelley Blue Book Values Established?
Every day, Kelley Blue Book compiles essential new vehicle data from manufacturers and collects actual transaction prices for new and used cars. This information serves as the foundation for their expert analyses, derived from various key sources of used vehicle purchase data throughout the year:
Wholesale Auctions
These auctions are exclusively for industry professionals, where dealership and wholesaler representatives bring in vehicles for trade or sale while acquiring others they believe will perform well in their inventory.
The vehicles auctioned come from various sources, including dealers, rental agencies, fleet operators, off-lease vehicles from financial institutions, as well as manufacturers’ demonstration and promotional cars.
Kelley Blue Book representatives frequently audit these auctions to gain insights into the potential “actual cash value” of used vehicles being sold.
Independent Dealers
These dealerships focus solely on selling pre-owned vehicles. They engage in the sale of used cars to auctions, individual consumers, and wholesalers.
Franchised Dealers
These are authorized dealerships representing specific manufacturers, like Honda or Ford. They offer a selection of used vehicles for sale to both auctions and consumers.
Rental and Fleet Services
Typically, rental companies auction their vehicles after a year of service, although some have started extending this usage period in recent times.
Original Equipment Manufacturers (O.E.M.s)
Manufacturers such as Honda and Ford often auction off vehicles that have been used for employee purposes, promotional events, or other corporate distribution channels.
Financial Institution Lessors
When a vehicle is leased, it is owned by a financial institution while the lessee pays for its use. Upon lease termination, these vehicles are either sold back to the lessee or offered directly to dealerships at auction. Additionally, financial institutions manage the trading and sale of repossessed cars and trucks.
Consumer Private Party Transactions
Kelley Blue Book also monitors the prices of vehicles sold directly between consumers each year, contributing to their comprehensive understanding of the used car market.
Also Read: Difference Between Kelley Blue Book® and Black Book® Pricings?
How are the Final Values Determined?
The values assigned to used vehicles are established through a unique editorial methodology. This methodology involves a comprehensive examination of various data points, including historical trends, current economic indicators, industry changes, seasonal patterns, and geographic factors. The resultant values provide an up-to-date snapshot of the dynamic automotive market, making them a trusted resource for numerous prominent organizations as well as everyday consumers.
### What Types of Used Car Blue Book Values Are Offered?
Kelley Blue Book® Private Party Value
This value indicates the typical price a buyer should anticipate when purchasing a used vehicle directly from an individual seller.
Kelley Blue Book® Trade-In Value
This figure represents the expected amount that consumers can receive from a dealership when trading in their vehicle.
Kelley Blue Book® Suggested Retail Value
This value reflects the prices that dealers commonly ask for used cars. It serves as a foundational reference point for negotiations between buyers and dealerships.
Important Note: Dealers are required to ensure that vehicles meet minimum safety standards, and most will also perform mechanical and cosmetic refurbishments before offering them for sale.
Kelley Blue Book® Certified Pre-Owned (CPO) Value
This suggested retail value pertains to vehicles that fall under the manufacturer’s Certified Pre-Owned program, reflecting typical dealer asking prices. It acts as a starting point for discussions between buyers and dealers.
Also Read: KBB The Reality about Kelly Blue Book Review, Pricing Issue
Fair Purchase Price
The Fair Purchase Price represents the true market value of a vehicle, determined by analyzing a vast number of recent sales data from auto dealerships throughout the United States.
This figure is not generated through a secret formula; rather, it is grounded in real-world transactions and a comprehensive understanding of current market trends.
New Car Reviews, Auto Classifieds, Dealer Locations and More
When it comes to purchasing a new or pre-owned vehicle, informed decision-making goes beyond simply identifying the right price. Conducting thorough research is essential, and seeking expert insights can significantly enhance your understanding of the options available.
At kbb.com, we provide comprehensive reviews for nearly every new car on the market, ensuring that you have access to the latest information. Each review is refreshed annually to incorporate updates in pricing, features, and other relevant factors.
However, having accurate pricing information and detailed reviews is only part of the equation. To make a well-informed purchase, you need to locate the vehicle that best suits your needs. That’s why kbb.com also offers listings of car dealerships and auto classifieds, assisting you in finding the perfect car for your requirements.
The Country’s Most-visited Automotive Information Website
Given the variety of new car prices and the range of used vehicle values, nearly every car parked in driveways, displayed on lots, or listed in auto classifieds has an associated Blue Book value.
This explains why approximately one-third of car buyers rely on www.kbb.com during their purchasing process.
In addition to its comprehensive Blue Book values, the site offers insightful new car reviews, detailed auto classifieds, and dealer information, making it an invaluable resource for anyone looking to make an informed car purchase.