Tag Archive | "Kelley Blue Book"

Kelley Blue Book Says Used-Car Prices Are Expected to Remain High for Years

With used-car prices at historic highs, customers hoping for those prices to decline may have to wait years for a reprieve.

Prices for used cars are likely to stay high for the next two to three years, according to a report released Thursday by Kelley Blue Book, which tracks new- and used-car prices, according to The New York Times.

The service attributes the sustained strength of used-car prices to a gradual decline in new-car sales dating to 2008, as well as a drop in the number of leased cars becoming available at the end of their contract terms.

The report said that the price of the average one- to three-year-old used vehicle was rising 15.8 percent per year. In 2008, the average cost of a one- to three-year-old vehicle was $15,042, but now the average is $23,353, according to the report.

Many in the industry, Kelley Blue Book included, had claimed that used-car prices peaked late this spring. Forecasters had said that healthier new-car inventories, aided by the recovery of production capacity in Japan after the March earthquake and tsunami, as well as lower fuel prices, would lead to a sales uptick in showrooms and, subsequently, more trade-ins and private sales of used cars.

But showroom sales remain sluggish, and analysts now are concerned that volatility in the financial markets and sustained high unemployment may encourage potential buyers to hang on to their vehicles rather than buy new ones.

Daniel F. Akerson, the chairman and chief executive of General Motors, expressed skepticism earlier this week that total new-car sales, across brands, in the United States this year would reach the company’s forecast of 13 million vehicles. July sales suggested an annual selling rate of about 12.2 million units.

For those who can afford to part with their cars, particularly compact and midsize models, the selling environment is optimal.

Manheim Consulting, which follows used-car sales, says the average price of a small car rose 16.7 percent in July compared with the same period a year ago, while the average price of a midsize car was up nearly 12 percent.

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Toyota Returns To Top In Kelley Consideration Study

Toyota is once again the most considered auto brand among new-car shoppers, according to a new Kelley Blue Book study.

The third-quarter Market Intelligence Brand Watch study indicates that 25 percent of new-vehicle shoppers who visited kbb.com showed interest in Toyota. The Ford and Honda brands followed close behind with 24 percent and 23 percent interest, respectively.

Between the first quarter of 2007 and the third quarter of 2009, Toyota topped all other brands in all vehicle segments, but then fell to second place between the fourth quarter of 2009 and the second quarter of 2010. This coincided with the start of the company’s global recall crisis — which ultimately involved more than 15.4 million vehicles over a year — and allowed Ford to take the top spot, reported Automotive News.

For the third quarter of this year, Toyota also was most considered in the nonluxury sedan/coupe/hatchback category and in the nonluxury SUV/CUV category. Toyota’s trucks also have gained considerable attention, although they still trail Ford, which has seen a surge in interest since the second quarter of this year.

Bob Carter, sales chief for the Toyota brand in the United States, said in statement today that the study is a “strong indication that consumers recognize our commitment to earn their confidence in the safety, quality and value of our vehicles.”

James Bell, executive marketing analyst for kbb.com, says the numbers support Toyota’s recovery from its “public perception crisis,” but it may not mean a complete turnaround.

“Whether Toyota will ascend as high as it was before the recall crisis remains yet to be seen,” he said in a statement. “Hot competition from the likes of Ford, Honda, Chevrolet, Nissan and Hyundai could make it very hard for Toyota to keep a strong lead moving forward.”

Factors to consider

The brand watch study also asked new-car shoppers to rank their top five factors when considering a vehicle purchase. For the third quarter of this year and regardless of segment, shoppers are most interested in durability/reliability, fuel efficiency, driving comfort, driving performance and safety. Interest in these factors changed depending on the vehicle segment.

For nonluxury sedans, coupes and hatchbacks, the brands that generate the most interest are Toyota, Honda, Ford, Hyundai and Nissan. For the first time, Mitsubishi was the top-rated brand for vehicle image or “cool factor.”

For the nonluxury SUV/CUV segment, Nissan and Jeep saw interest increase during the third quarter, while Subaru made its first appearance as a top-ranked brand for safety and versatility/flexibility.

For luxury sedans, coupes and hatchbacks, BMW took the top spot, followed by Lexus, Audi, Acura and Mercedes-Benz. Despite its fifth-place ranking, Mercedes-Benz continues to take top honors in most of the factors important to people looking at this segment. These include driving comfort, safety, interior design/layout, luxuriousness/sophistication, prestige/brand status and family friendliness.

For luxury SUVs and CUVs, Lexus remains at the top, even though consideration of the brand has been lessening in the past few quarters. Trailing Lexus are Acura, Cadillac, Lincoln and BMW.

In the minivan segment, Honda continues to reign, but domestic automakers Chrysler and Dodge saw a slight increase. They were the only minivan brands showing increased interest from the second quarter of 2010.

In the truck segment, the most important factors were durability/reliability, fuel efficiency, towing/hauling capacity, driving comfort and safety. This was different from the previous quarter, when shoppers were more interested in driving performance than safety.

The study surveyed more than 2,700 in-market new-car shoppers on kbb.com between July 8 and Sept. 23. Kelley Blue Book has been conducting the brand study since 2007.

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KBB Launches Free App for Android

IRVINE – Kelley Blue Book has launched its free, interactive app for Android mobile devices, which provides Android users with car-buying and –selling information. Since November 15, the app has received more than 50,000 downloads and is currently among the top 10 free lifestyle applications.

Kbb.com’s app also features a widget that can be positioned on users’ home screens to track their vehicle’s value. Whether users want to track their trade-in value prior to buying a car or stay updated on their vehicle value’s performance in the marketplace, the widget provides this up-to-date information, reported F&I and Showroom. The widget can be accessed after downloading the app. Configure the widget by long-clicking on an empty space on the Android desktop, choose “Android Widgets,” and then select the kbb.com widget from the menu.

As a fun added bonus for its Winter 2010 launch, there is a winter-themed “Easter egg” within the kbb.com Android app, featuring snow and a sledding child.

“Kelley Blue Book took the Android app a step further in creating a pricing widget, giving consumers the information they need at their fingertips,” said Justin Yaros, executive vice president of product design and development for Kelley Blue Book. “The information found in the app and widget can help car buyers and sellers make more educated decisions with a better understanding of their current ride’s value and what is considered a great deal for a new vehicle. With the all-new app, kbb.com provides trusted valuation information not currently found within the Android Market.”

Users also gain access to new- and used-car Kelley Blue Book values, including MSRP, invoice, fair purchase price, certified pre-owned, suggested retail, private party and trade-in values. Wherever they may be, car buyers and sellers can use this information in vehicle transaction negotiations.

In addition, car shoppers can find a local dealer with detailed maps and directions, and view vehicle photos and new-car video reviews from the expert editors of Kelley Blue Book’s kbb.com. The app for Android also features kbb.com’s Twitter feed, giving insight into the latest in automotive news and information from Kelley Blue Book.

To download the latest kbb.com app, visit http://market.android.com/details?id=com.kbb.mobile on any Android device. For more information about the app and other mobile offerings from Kelley Blue Book, visit www.kbb.com/company/mobile.

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Autotrader.com Buys Kelley Blue Book

Autotrader.com is expected to announce the $500 million-plus acquisition of venerable Kelley Blue Book Co., the best-known provider of information about the value of new and used cars, The Wall Street Journal reported .

The deal will unite two closely held companies in an effort to create the leading player for car buyers using the Internet to research purchases. The companies garner at least 13 million unique visitors each a month, according to the companies.

AutoTrader.com acts as a middleman for car sellers and buyers, aggregating sales information from auto dealers and private sellers. Sellers can also advertise vehicles on the website.

Originally known for its blue-bound guides, Kelley Blue Book now does most of its business on the Internet, where it provides new and used vehicle information, including up-to-date resale values and what buyers are paying for new vehicles.

By combining, Autotrader’s management hopes to garner more industry advertising dollars. More than 80% of car buyers shop online, but only 25% of auto-industry ad revenue is geared toward online, company officials said.

Buying Kelley Blue Book presents opportunity, and risks. Users prize the guide for its independence. To help mitigate those risks, Kelley Blue Book will operate as a subsidiary of AutoTrader.com and maintain its headquarters in Irvine, Calif. Kelley Blue Book President and CEO Paul Johnson, along with other executives, will remain at the firm.

As part of the deal, AutoTrader.com will also acquire Kelley Blue Book’s sister companies CDMdata, which provides hardware and software for the auto industry, and CDM Dealer Services, which offers inventory-management software. The deal is expected to close by the end of the year.

Overall, Autotrader.com will continue to focus on the transaction side of auto sales, while Kelley Blue Book will be the information resource on vehicles.

“We can accelerate the ability of the Internet to be a more powerful shopping tool,” said Chip Perry, Autotrader.com president and chief executive.

The deal will make Autotrader.com’s classified listings available on the Kelley Blue Book website. A separate service that allows customers to receive offers for their used vehicles will also be made available on Kelley’s site.

Kelley Blue Book also plans to capitalize on Autotrader.com’s 900-member sales staff to help sell Kelley Blue Book products. Kelley Blue Book currently has less than 15 salespeople.

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Kelley Blue Book Is For Sale, Reports Say

Kelley Blue Book, the California-based authority on used-car values, is up for sale, according to published reports.

According to a Financial Times report cited by a New York Times blog yesterday, two unidentified bankers claim to have an inside scoop on the potential sale. One banker says JPMorgan was hired to manage the sale. The other says Kelley Blue Book is valued at between $500 million and $1 billion.

Although the first edition of the Kelley Blue Book was published in 1926, founder Les Kelley had been producing a list of automobile values since 1918.

The Kelley family sold it to Charlie Cook, a family friend, in the1960s. A Kelley family member managed it through 2000, when Paul Johnson was named president. Charlie Cook died in the 1990s.

The Blue Book, initially published for auto dealers, launched a consumer edition in 1993 and its Web site kbb.com in 1995. The Financial Times said a third banker speculated that a recent lack of traffic to the company’s Web site and a rise in capital gains taxes may have played a part in the decision to sell the privately held company.

Kelley’s top potential bidders, according to the reports, are AutoTrader.com, Kohlberg Kravitz Roberts & Co., eBay and Google.

Kelley Blue Book spokeswoman Robyn Eckard declined to comment, as did JPMorgan.

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Conservative Consumers to Challenge Dealers, F&I Departments, Says KBB

IRVINE, Calif. – Consumers are expected to remain conservative in today’s still struggling economy, with most in-market shoppers expected to spend a relatively small amount of money on their next vehicle purchase, according to a recent survey. In fact, most respondents said they are more like to buy used vs. new.

The expectations highlighted in Kelley Blue Book’s latest Market Intelligence survey also point to a challenging time for F&I departments, with more than one-third of respondents indicating that they plan to pay the entire cost of their next vehicle purchase in cash. Incentives, according to the survey, aren’t having much influence, either.

The study, which surveyed 338 in-market car shoppers on kbb.com from June 18-21, also showed that nearly three-quarter of those surveyed plan on purchasing within the next six months, with a majority of consumers (67 percent) saying they are more interested in a used vehicle than a new one (33 percent). In addition, 42 percent of used-car shoppers and 20 percent of new-car shoppers said they plan to pay the entire cost of their next vehicle in cash.

“In-market car shoppers are taking a decidedly conservative approach to car buying right now, which we think can be directly attributed to low consumer confidence in the current economy,” said James Bell, executive market analyst for Kelley Blue Book’s kbb.com. “It seems people are re-assessing their financial situations and deciding to spend less, buy used and pay more often with cash.”

Most used-car shoppers (62 percent), according to the study, said they plan to spend less than $15,000 on their next vehicle purchase, while half of new-car shoppers (50 percent) said they plan to spend $25,000 or less on their next vehicle purchase.

Additionally, a majority (82 percent) of used-car shoppers and more than half (51 percent) of new-car shoppers said that incentive offers have no effect on the timing of their next vehicle purchase. In addition, 81 percent of used-car shoppers and 48 percent of new-car shoppers said that the availability of incentives have no effect on their specific vehicle choice (make/model).

And of those who intend to finance their next vehicle purchase, zero-percent financing was listed as the most appealing incentive offer at 30 percent, followed by low monthly payments at 21 percent. In addition, women were twice as likely to find low monthly payments the most appealing incentive offer when compared to men (32 percent of women vs. 16 percent of men).

“Incentives have loosened their tight grip on the American consumer, with more people deciding to purchase what they can truly afford versus what they can get with over-extended credit lines and incentive offers on the hood from manufacturers,” added Bell.

By far, the most popular loan term was 60 months, with 42 percent of respondents indicating they prefer to finance over five years. The second most popular term was 36 months at 21 percent, followed by 48 months at 20 percent. Only 11 percent preferred 72 months, and just five percent cited 24 months.

Researching before buying is also expected to pick up, with 57 percent of respondents indicating that they intend to research vehicle financing options online. Fifty percent of respondents said they plan to obtain pre-approval through a bank or credit union, while only 34 percent indicating that they plan to obtain financing at the dealership at the time of purchase.

Shoppers also cited control in negotiations as the top motivator (44 percent) behind financing through a bank or credit union, followed by low interest rate (34 percent). Shoppers, however, did acknowledge the convenience of in-dealership financing, with 54 percent of those surveyed saying it is the primary motivator behind financing at the dealership, followed by low interest rate (32 percent).

According to the survey, the average shopper has three vehicles in his or her consideration set and 83 percent of all survey respondents said they are still undecided on the make and model of their next vehicle. Younger car shoppers (age 34 and under) are more open to buying either a domestic or import brand (45 percent), compared with shoppers age 55-plus who are more likely to have decided upon either a domestic brand (39 percent) or an import brand (32 percent).

Among both new- and used-car shoppers, price and durability, reliability and quality tied at 33 percent as the top two deciding factors when considering a vehicle to purchase. The next-highest deciding factor was past experience with the brand, rated at 12 percent.

Shoppers also indicated that negotiating remains a crucial part of the car-buying process, with 62 percent indicating that they prefer negotiating to having a single set price. That number increases more among younger car buyers when examining the data demographically, as 73 percent of respondents age 34 and under feel that negotiating is a crucial part of the process, compared with 59 percent of respondents in the 35 to 54 and 55-plus age categories.

Additionally, 40 percent of respondents use the average transaction price as the starting point for vehicle negotiations, while 32 percent begin negotiating with the dealer invoice price. Only 9 percent of shoppers indicated they began negotiations with the manufacturer’s suggested retail price (MSRP). In addition, most consumers (38 percent) said that if they pay the average transaction price, they feel they have gotten a good deal.

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