When they first debuted about six years ago, online trade-in calculators “came across as a novelty,” says Juan Flores, Kelley Blue Book’s senior director-product management.
That’s changed. “Now, they are a requirement for successful dealers to have on their websites,” says Flores, who since its beginning has overseen KBB’s calculator called Instant Cash Offer.
The digital tool lets consumers calculate the value of their potential trade-in vehicles. Users answer specific questions about their vehicles, including its trim level and condition. In return, they get KBB-data driven information showing their vehicle’s value.
A precursor of determining that was the practice of thumbing through a vehicle value guide book. But Flores says it’s different today, and not just the digital aspect of it.
“Back then, it was more of an estimate,” he says. “Today, it is much more specific.”
That’s largely because consumers provide vehicle identification numbers that in turn provide exact descriptions of specific vehicles. “It offers preciseness,” Flores says.
About 3,100 participating dealers have the KBB Instant Cash Offer tool on their websites. About 4.2 million people used the tool to trade in vehicles and put the money toward the purchase of a new one.
That number is expected to reach 5 million this year. And that’s just for Kelley Instant Cash Offer. Various providers have their own versions. “If you add up all the others, it might be double that amount,” Flores says, pointing to the popularity of the tool in general.
As is often the case, tech-savvy Millennials spearheaded the popularity “but now people of all generations use (the tool) and have come to expect it,” he says. He credits national auto chains such as “the AutoNations and DriveTimes of the world” for leading the way as early adopters.
Some dealers still look sideways when it comes to the do-it-yourself vehicle- valuation technology for consumers. Their fears typically center on perceived loss of control. Another concern among skeptics is that consumers will mispresent the condition of their vehicles.
Flores rebuts that. “Dealers never really give up control,” he says. “Leveraging these tools doesn’t mean the negotiating process goes away. It means customers know how the process works.”
And safeguards are in place to prevent users from trying to misrepresent their clunkers as pristine vehicles worthy of high trade-in values.
Vehicles must pass a mandatory inspection by participating dealerships. If the inspection report differs from a consumer’s online assessment of the vehicle, it likely will result in a valuation adjustment.
Online questions include:
· What is the vehicle color? An offbeat color can knock hundreds of dollars off the value.
· Is a full set of keys or key fobs available? If not, expect a lower valuation, as much as $350.
· Have people smoked inside the vehicle? It’s another reason not to light up.
· Is there mechanical or structural damage? An onsite inspection at the dealership will be on the lookout for that.
· Do maintenance records exist? Such documentation helps the valuation cause.
· Are you the original owner?
In a way, the last question seems inconsequential. After all, if a vehicle is in great condition, has low mileage and comes with proof of regular maintenance, what’s it matter how many people may have owned it?
“The one-owner car always has been more desirable” on the used-vehicle market, Flores says, acknowledging it’s more a perception issue than anything else. “It’s a beautiful thing about human behavior,” he quips.