When ten out of twelve recent used car transactions I did meant selling desirable vehicles above their NADA and Black Book numbers, I started to wonder: what is the use of these silly little guides? If they can’t keep up with changes in the market, they become more of a hindrance than help.

One of these deals was on a 2005 Audi S4 Cabrio with only 18,000 miles.  I had been helping a client try to buy one for about two weeks; every time we bid on one at auction, or on eBay, we missed—and not by a bit—often by several thousand dollars.  Finally, we found the one he wanted in the Hampdens, and had to pay over $33,000 for it—wholesale.  NADA (and the Black Book) valued it at only $26,150; Kelly at lease was closer to reality at $33,275.  But no bank or credit union (or the buyer’s lender, insurance company USAA) would use the higher number—meaning he had to come out-of-pocket thousands to buy his lovely blue convertible.  At least when people wonder why we in the trade use the auction reports more than the various bluebooks, I can now tell ‘em.

Part of me wonders if this is an automotive bubble like the one in real estate that devastated our economy.  In the case of large SUVs and trucks, I believe it is, as I’ve related before.  But by and large, I tend to think these higher used car prices are here to stay.  For a start, lending is really pretty tight—unlike the stupidly unregulated mortgage industry throughout most of the naughties—so not just anyone can buy in; a bigger factor is what’s happing with the business model on the new car side of the business, which we’ll get to next time.

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