but god is it painful!

Last edited Fri Sep 7, 2018, 05:14 PM - Edit history (2)

1) Autotrader is NOT a Seller of used cars. They are not a dealer. They are basically an information platform. They hold no inventory and have no stake in the sale of the cars advertised on their website. If anything, they are a broker, in that they join buyers and sellers, and their commission is the fee they charge to advertise. He claimed that they intentionally inflate car prices because "that's how they make money". Wrong. He goes on to point out that Autotrader was bought by Cox, but failed to mention the obvious connection; Manheim Auto Auctions, one of the two major used car 'dealer only' auction companies in this country.

2) The car values in the NADA and Blue Book guides come from these automobile auctions held around the country, NOT from some figure Autotrader pulls out of its corporate ass. That STILL does not mean those publications set the prices they print, because "open outcry" auctions are by definition, the most honest way of determining the market value of an item. The people that bid on the cars set the price, not the auction company or the publisher of the guides.

3) J.D. Power and Associates is a Marketing Research firm, NOT a public relations firm. The two business lines may intersect, but calling JD Power a "PR Firm" is disingenuous.

4) His comparison with diamonds is patently "ABZURD" for any number of reasons, but mostly that the secondary market on automobiles is not largely controlled, and the inventory intentionally restricted by one company (De Beers).

He is right about buying with cash, but the fact is, the overwhelming majority of people looking to buy a car do NOT have the thousands of dollars on hand in order to do so and as a result they need to finance.

If all car transactions were in cash, from dealerships to buying one from a guy out of his driveway, then sure, car prices would be lower. But that's not reality. Also, prices would be cheaper if people stopped paying what they are paying now. If sales dropped through the floor, prices would fall. Simple law of supply and demand.

So if car sales fall to 2 million a year, who will pay the cost of producing the publication and maintain the website? They do get the money to support their business from somewhere. "Their commission is the fee they charge to advertise." So higher car prices enable them to charge more, or sell more ads, because there's more money flowing through the system.

I would say "open cry" auctions are the most visible way of determining prices being paid in that specific market of buyers and sellers. They can vary location to location, day to day, and month to month. As for the value of what's changing hands, that depends on the condition and mileage of the merchandise involved.

Debeers controls, or did control, the primary market in diamonds. The secondary market on used diamonds is not controlled, and the example he cites seems genuine to me. An appraisal is tweaked to suit who's paying for the appraisal, and the range can be wide, $1,000 to $2,000 for example. A buyer wants to make money, and wants a low price. An estate wants a lowball price for tax purposes. A taxing authority wants a high price for revenue streams to embellish their importance in the state budget. An appraiser will ask you why you want the appraisal. As long as you don't tell him what to do, or name a specific price, he likely goes along with your wishes. Price is a number pulled out of a range based on experience, market conditions, supply, demand. It's also an opinion by an expert. It's not real until the money changes hands.

If J.D. Powers were a market research firm, no one would ever have heard of them. They would quietly serve their customers instead of propagating the headlines - like a PR firm.

which consists of over 15 years transporting cars, both new and used, junk and salvage, new from plants and rail yards or ports and used from auctions across this country. I've been to and hauled cars in to and out of at least 25 different major auction facilities, both Manheim and Adesa, have hauled cars out of at least 20 different assembly plants in the US and delivered to literally hundreds of dealerships.

I spent 12 years working in the motor racing industry in the marketing and brand awareness segment, operating display and technical support vehicles representing various major automobile manufacturers.

The reason I mention all this is so you can know that I have a modicum of experience in the marketing and movement of automobiles and as such, I kind of know what I'm talking about.

Fair enough?

Autotrader via the fees they charge to advertise on their site. If they can not maintain enough revenue from the fees they charge, they'll go under, it's that simple. However, that's not a likely scenario and you know it. And FWIW, the vast majority of their traffic is via the internet now, not a paper publication.



Asked and answered.


Perhaps, but not likely. They have to compete for advertising dollars with several other online venues including Craigslist and now, Facebook Marketplace which allows people to put up an ad for just about anything for free and the ads will be specific to your chosen geographic area.


EXACTLY!! And Autotrader, KBB and the NADA guide all account for geographic location as well as every other parameter you mentioned. There is no doubt that a guy in North Dakota selling an 8 year old F-150 with 45,000 miles on it could expect a different price than the guy selling the exact same unit in Dallas. Autotrader will tell you all this if you set up a search parameter to include those specifics. So will Kelly and NADA.


Fair enough. But it is a fact that Diamonds as a commodity are SERIOUSLY overpriced when purchased new, and a stone that retailed for say...$2,000 wouldn't bring HALF that if sold back to the original retailer. The rest of that paragraph could possibly be argued to the extent of it's accuracy, but I am not a jeweler and have bought exactly ONE diamond in my 59 years on this planet. My expertise in this subject is admittedly non-existent.


Except that people HAVE heard of them because they do what they do; Conduct surveys, provide reports and information gleaned from them and give awards.


Ever heard of Proactive Worldwide? How about Radius-Global? Or any of the DOZENS of MARKETING firms that come up with a simple Google search? The point is, I said specifically "The two business lines may intersect, but calling JD Power a "PR Firm" is disingenuous." I do not think that is an inaccurate statement and that is based on reading JD Powers own website. They do marketing research. They are not in the business of Public Relations.

have a vested interest in inflating prices. I can believe that. That's why prices are lower when buying from a private seller. At every point of sale a piece of the action is paid to those involved. Not really surprising, they are professionals who won't participate without being paid for their efforts. Price is everything when you buy anything. How much of your money goes into the product and it's intrinsic value, and how much goes to profit? Learning to narrow that equation in your favor can pay off significantly over your lifetime if it becomes a minor consideration on every item you buy. Lots of products are generic, so you can substitute sale-priced items for those selling at full retail price. You learn after awhile that there is no fixed "price". It's the cost of production, transportation, marketing, carrying, plus return on all the capital involved. Pricing power is when they can push all that on you and show no flexibility. Resist being put in that situation. The greatest power as a consumer is to walk away, not put yourself into a "must-buy" or "must-buy-now" mentality. Always haggle, and always have the ability to walk away. It takes a long time to learn that equation. You can't often wring every last dollar of profit from a deal, but you can get a price that is good for you and fair to all involved.

Also, new cars supposedly lose a lot of their value the moment they are driven off the lot, which seems to be mainly true of American cars, not so much for German or Japanese ones.