How Do You Value A Used Car?
Thursday, 9. June 2011
What’s my car worth? I’m often asked this question by drivers who have the option to buy the car that they have been driving for the last 2 or 3 years from the leasing company. I have to say there is no definitive answer, to think that you can simply open a book, check the model and year, adjust the value for a higher or lower mileage than average mileage and Bob’s your uncle you have the value is simply dopey. Not least of which there are two ‘trade’ books that car traders have been using for years, CAP and Glass’s and they differ by miles (get it). CAP is the traders bible but invariably, whilst the prices shown should reflect the average achieved price in auction the vast majority of cars are sold ‘behind book’ or less than trade value.
So how can I give an accurate answer to the question other than whatever the car is worth to you or a buyer, whatever you’re prepared to pay? I’ve been to auctions and seen two cars go through the block (notice how I have a command of the jargon), both cars were registered at the same time with virtually the same mileage and yet one car fetches £500 more than the other.
There is no specific reason why. Maybe a bidder already had a retail customer for the car, maybe the colour of one was much more desirable or possibly there were two retail punters in at the same time on the first car bidding up the price.
This is the problem, nobody really knows so what is the trade value? Oh and here’s a really crazy story I heard about fleet disposals. Leasing companies set a minimum price at 95% of CAP trade value as the lowest they will take. The bids are all low on the day and the car doesn’t sell so the auction house stores the car to the next auction.
By then CAP has issued a new guide and dropped the trade price to 92.5% of the previous month’s figure. The car goes through auction and sells a week later at say 97.3% of the revised CAP value and everyone seems happy. To put some real figures on this the CAP trade value is say £4,000, the leasing company sets a reserve of £3,800 (95%) but cars are being sold at £3,700 or 92.5% of CAP trade (known as CAP clean – more jargon).
That’s the best offer on the lease car so it doesn’t sell and goes into the next auction. But CAP has now reduced the CAP clean figure to £3,700 to reflect the auction prices. The best bid is £3,600 but as that is 97.3% of what is now CAP trade the car is sold, how daft is that? What’s your car worth? Whatever you’re willing to pay! How have you put a value on your end of lease car? By Graham Hill
