The used-car price guide books get it wrong.
So says Doug Wolford, chairman of the Kentucky Auto Dealers Assn. “They say prices are down, but that’s not true. In the auction lanes, prices are high.”
He offers up various reasons for that.
Consumers are keeping their cars longer, either to save money or because of problems getting auto loans. That extended ownership creates a demand for well-equipped, low-mileage used cars. That demand increases market prices.
Also the competition is heating up, what with severaland dealers who lost their franchises last year now exclusively and aggressively getting in the used-car business. Their inventory needs are boosting vehicle values.
Yet the various guide books in recent months have set values that are unrealistically low, says Wolford, the chief financial officer and wholesale used-car buyer for Neil Huffmanin Louisville.
He cites various examples, such as an ’06Altima that went for $9,800 at auction, but was “booked” at $8,500. Then there’s the ’06 Land Rover with 28,000 miles (44,800 km) on the odometer. The National Automobile Dealers Assn.’s used-car guide book valued it at $17,600. It fetched $21,800 at auction.
The low book values hurt dealers. As they hotly bid against each other, wholesale prices go up. But then customers, upon consulting the guide books, think the retail prices should go much lower.
“Dealers are losing millions of dollars,” Wolford says. “States are losing money, too, because the lower values mean they’re collecting less in sales-tax revenues.”
He is on something of a crusade to fix what he sees as a wrong. He has beefed toofficials so often, they are on a first-name basis with him.
Aofficial told him that much of the depressed pricing had to do with short-term volatility of the market. Wolford is not buying that explanation. “I don’t know about you, but I don’t think a year of incorrect pricing is short-term volatility.”
The good news? NADA assures him it will get it right this year.