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RPM Blog

The RPM Auto Wholesale Blog provides tips for buying and selling vehicles, humorous stories and narratives from the underbelly of the automotive industry.

10 Factors that Influence the Value of a Vehicle

 

When it comes to the value of a used vehicle, there are many factors that will play a role in determining how much someone is going to pay you for your used car.  Some factors are beyond your control, but, many items influencing the value of your vehicle are squarely on your shoulders.


Age and Mileage:  Typical mileage on a vehicle ranges between 12,000 to 15,000 miles per year.  Any more than that and you are going to see a significant reduction in the price the market is willing to pay you for your used car.  Of course, that doesn’t necessarily mean you won’t be able to sell a high mileage vehicle.  It simply means that the vehicle will have to be priced significantly lower than an identical vehicle with lower miles in order to gain interest from shoppers.  Here's some good news for sellers of high mileage, late model, luxury vehicles. Some buyers who wouldn’t otherwise be able to afford your model will consider the high mileage vehicle because it is now affordable for them.


Condition:  The condition of your vehicle may be the single most important factor that will determine the price a buyer is going to offer you for the car.  It is extremely important that your vehicle is impeccably clean and maintained.  The tires should have 50% or more tread on them.  They should all be the same brand (avoid cheap brands) and the wheels should be clean and complete.  All scheduled maintenance should be completed, any broken or chipped glass repaired, all warning lights extinguished, any needed body repairs completed and the interior should be clean and absent of odors and stains.   Anything less than near perfect and the buyer will automatically start discounting their offer heavily.  Either your price compensates the buyer for the inconvenience of repairs you should perform or they will buy another vehicle.


Accidents:   Nearly every buyer today is aware of CarFax and AutoCheck reports that reveal a high percentage of all accidents sustained by a vehicle.  They are not 100% accurate and many times a simple parking lot ding that was turned in as an insurance claim will bear the same warning as a high speed collision on a freeway with dual airbag deployment.  Yes, we know it’s not fair but it doesn’t change the fact that they are present and pervasive.  As a seller, you need to be aware of them and adjust your price accordingly.  If you are trying to sell a late model truck with a negative report for the same price as another identical truck in your market, you are in for a rude awakening.  Simply deal with it and adjust the price accordingly.  You will be much happier and in the end, sell your vehicle much quicker than if you try to ignore this market fact.  If your vehicle title carries a salvage, rebuilt or other similar notation, be prepared to discount your vehicle as much as 50% below the value of a similar vehicle without this notation.


Vehicle Use History:  CarFax and AutoCheck reports also reveal if your vehicle was used for commercial purposes such as a rental car or taxi, used by a government agency such as police, fire or military.  These factors also play a role in determining how much the market will pay you for your used car.  The discount you enjoyed when you purchased your used vehicle as a former rental etc. will now get passed on to the next owner.   Just be prepared and price your vehicle accordingly.  Many states also require the title to carry a notation of this type of former usage and state laws may require you to disclose the use to a prospective buyer.


Supply & Demand:  This simple concept is often misunderstood by both buyers and sellers.  In the “real world” with “all other things being equal”, supply always equals demand at the market clearing price.  Translated into English, it simply means that when you place the correct price on your vehicle, it will sell quickly.  Learn how to determine the value of your car here.  You will find some notion of supply and demand entering into most of the factors listed here.  It’s that important!  Many folks assume that a quick sale means you priced your vehicle too low but that could not be further from the truth.  You may have to test the market a bit in order to find the correct price (market clearing price) for your vehicle but this has never been easier to do in the history of the world.  Today’s technology and access to information provides both buyers and sellers with the tools needed to properly price anything for sale including an automobile.  Some factors to be aware of, especially if you are selling a late model vehicle include; rebates and special financing incentives.  These factors will pull buyers out of the used car market and into the new car market thus lowering the price you will realize for your vehicle.  Economists call this shift in buyer attitude a shift in the demand curve.  Nothing has happened to the supply of used “Brand X” (insert your car here) automobiles up for sale.  Simply stated there are fewer buyers looking for used Brand X vehicles due to the incentives, therefore Brand X sellers will have to lower their price in order to sell their vehicle.


Style:  If your vehicle is a 4 door convertible, most likely there are fewer buyers than if it was a 2 door convertible.  The same holds true for 2WD trucks in snowy regions of the country and minivans with seating for 5 instead of the standard 7 or 8 passengers.  Being different may do wonders for your personal sense of well being but does little for you when it comes time to sell a used vehicle.  When it comes to selling just about anything, being boring and normal will find more buyers than flamboyance.  A factor completely out of your control occurs when the manufacturer of your vehicle completely revamps the styling of the vehicle the year after you bought your car.  You will be punished particularly hard (in most instances) the newer the vehicle you are selling.  Sometimes the manufacturer reads the market incorrectly as in Old Coke vs. New Coke but don’t count on that to bail you out most of the time.


Equipment:  Certain factors are givens in the vehicle marketplace and equipment is an area where this creed is particularly true.  If you own a vehicle with different equipment than the market is expecting on a vehicle of your type, be prepared to adjust the price accordingly.  An example would be a ¾ ton pickup with a regular cab, short bed and 6 cylinder stick shift.  That truck may be your definition of ideal but falls short of most used truck buyers’ expectations of a serviceable vehicle.  You can sell the truck but the price will need to be adjusted accordingly to find a buyer!


Accessories:  This particular factor influencing value is the most misunderstood in the industry.  It stems from the fact that when you customize your truck to suit your lifestyle, be prepared for most buyers to disagree with your idea of luxury or necessity.  A classic example is the truck with the $6,000 custom stereo and $8,000 lift package.  Quite simply, most truck buyers want a truck for a specific purpose and do not want to pay for your luxuries that they do not want or need.  Point in fact; many buyers will avoid this customized vehicle due to increased insurance costs and greater probability that a thief will target the vehicle.


Season or Region:  Most folks are familiar with the notion of white shoes after Labor Day (maybe not but keep reading to become familiar).  There are certain things in life that one should not do.  One of those would be trying to sell your Corvette convertible on December 1st in the northeast or midwest regions of the country.  Like white shoes, convertibles aren’t used during the winter months.  For most buyers they are second cars, toys or luxuries. Very few buyers are looking to purchase a depreciating asset in December that they aren’t going to be able to use until after the Spring Thaw.  There are fewer buyers at certain times of year for certain types of vehicles.  Try to avoid selling a seasonal vehicle off season or you will end up feeling like Macy’s with a huge clearance sale on your hands.  Ouch!


Color:  According to vehicle paint giant PPG Industries, white was the leading color on new vehicles sold in North America in 2014.  With 22 percent of cars painted white, followed by black (18 percent), gray (16 percent) and silver (15 percent) there wasn’t much room left for the other colors in the rainbow.  In fact, only 29% of new cars sold last year were not one of the top 4.  You may be in love with your two tone teal and gold car with the bold red pinstripes.  And, we are not here to begrudge you this luxury.  But, just don’t expect the market to agree with your sense of fashion and intrigue.  If nobody is calling, the price is too high!  Adjust accordingly.


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