LAWRENCEVILLE, Ga. — Next to receiving a sale price drastically different than originally offered, consumers said a vehicle trade-in quote that’s far from expectations was the second most likely scenario. That’s according to a new white paper, “Trade Appraisal: How to narrow the gap to close more deals,” from Black Book (a div. of Hearst Business Media), which surveyed roughly 2,500 U.S. consumers.
Many consumers surveyed by the firm cited specific frustrations with the valuations they often receive from a dealer, with 36% of respondents indicating their researched quote was $1,001-$1,500 apart from the dealer’s offer, according to the white paper. Another 27% said their quote was more than $1500 apart, while nearly half (47%) said they need the dealer’s offer to be between $501 and $1,000 of their research quote for it to be acceptable.
“Naturally, the dealer is looking to gain as much profit as possible on the trade,” the paper states, in part. “However, this can often come at the expense of the transaction, particularly if the dealer’s offer is significantly lower than the consumer’s expectations.”
The white paper explores what’s at stake when a consumer introduces a trade-in as a part of the transaction, with 46% of consumers polled indicating that getting the right trade appraisal was either “very important” or “extremely important” to their decision on their next vehicle purchase.
The white paper also offers new insight into the role advanced analytics and data now play in appraising a trade, Black Book noting that advanced data, analytics and mobile technology now team together to help build in more profit potential on conquest trades while elevating confidence levels on behalf of that new customer. For instance, mobile technology allows dealers to quickly scan a vehicle and access trim level specific to tap into their regional or national network of buyers to aid in realizing the best appraisal for that specific collateral piece.
“We’ve known for a long time that the trade valuation process can mean the difference in profit margin for a dealer,” said Jared Kalfus, senior vice president of sales at Black Book. “This paper reinforces the true importance of the trade, it will hopefully show dealers that there’s a better way to valuate trades today so they can maximize their profit potential on every transaction, which also has a spillover effect for future revenue opportunities with the customer.”