Hey Cool Car Fans,
I decided to start 2017 off by writing an article about the plethora of car websites online with “information” about getting a deal on vehicles and online reviews. There is a popular old saying, “there’s a sucker born every minute” and this is really true when it comes to what you read online. Granted, I have an online blog here, so people could probably say the same thing about me, but the difference is that I am actually licensed to buy, sell, trade and lease vehicles for a living and I’ve been doing it for the past twelve years.
ONLINE REVIEWS
Let me start though by talking about online reviews. What a joke most of this information has turned out to be. I know of a dealership that rips people off constantly and they earn a ton of money selling cars. They “inspect” their cars, advertise their cars as “inspected”, but most of their vehicles are rusted out from the East Coast and they don’t actually fix them.
They just advertise that they have a “90 point inspection” done on the vehicle, which is true, but they don’t pay to repair them. In some cases, they don’t even do an oil change or they may only do an oil change on the vehicle. When a person goes back to complain they tell them that they purchased the vehicle “as-is” and to have a nice day.
Some disgruntled people will go and write a bad review about them, but they don’t care. The salespeople have their friends and family write reviews for them or they write them on their own under an alias. Their good reviews outweigh their bad reviews, so they look like a great place to buy a car. How is the online website like Google going to monitor that? They can’t and do they really care? Think about it. The reality is that you could buy a car that is a piece of junk if you buy from that particular dealership based on their reviews.
On the flip side, you see people who are extremely unreasonable write negative reviews about repair shops or car dealerships that are really quality businesses. I know of a repair shop in Denver that has been around for 40 years and they specialize in doing clutches at a pretty reasonable price. They will even use upgraded materials like Kevlar that can last longer for only about $100 more than an OEM clutch.
Recently, I read a review online that blew my mind. Some disgruntled guy wrote…
The quality was excellent–HOWEVER they tried to charge me sales tax on MY components which were brought in for reconditioning, which is labor only. This is NOT legal under Colorado State Law, and they IMMEDIATELY developed an attitude when informed of this fact. Will NOT use them again.
Really? This guy brought in his own parts for “reconditioning” and they charged him sales tax of 7.65%? I bet his bill was about $200, so he had to pay about $15 in sales tax and he took the time to rate this shop one-star on a popular website. He even said, “The quality was excellent”.
This guy failed to realize that most shops won’t even let him bring in his own parts. The repair shops want to use their own parts, so it’s amazing this shop did that for him and then he pounds them online over sales tax? Wow. How many people won’t bother reading the actual review to realize that an unreasonable guy gave this long-term shop a one-star rating and they will miss out on using a really good shop for their service. Once again, I take online reviews with a grain of salt because most of them are B.S.
CAR PRICING ONLINE
Let’s shift gears quickly and talk about one of my favorite things that you will see online today. There are so many websites now telling people what they should be paying for a vehicle. And most of the time it’s really comical. I’m not going to mention the websites directly because I don’t need the heat from their lawyers, but you will know who they are. The websites that tell you whether you are getting a fair market price or a value price or what the dealer price should be.
I ran an Internet company for three years before becoming The Cool Car Guy twelve years ago. Guess how we made our money on the Internet? We sold ads. And the more visitors we would get to our site the more ads we could serve up and the more ads we served up the more money we made. Do these sites actually sell cars? No. Do they really care if they tell you that you should be paying $25,000 for a $30,000 car? No. Why would they? They have zero risk for giving you poor information. It’s on the same level as fake news.
These websites often pull data from the dealer auctions for example or previous sales on their website, but that really means nothing. Does their algorithm that they are using stop to say, “This vehicle had frame damage we need to adjust the price and notify our visitors.” or “This vehicle was in two accidents and was priced less.” or “This vehicle has $5,000 in hail damage that wasn’t repaired.” or “This same vehicle is missing a front fender and the tires were bald and the sunroof was cracked and leaking water.”? Do their websites take any of this information into consideration? No. They can’t! It’s simply taking an average of all recent sales data and telling the visitor that they should be paying $25,000 for that $30,000 vehicle because they have all the “data”. It’s ridiculous because the data isn’t completely accurate.
It can’t be because sometimes a dealer will low-ball someone on a trade and the person will take their low-ball offer. Now, they paid $16,000 for a vehicle that is running through the dealer auction for $22,000 that they can sell for $20,000 and earn $4,000. Does this now mean that these vehicles that are retailing for $25,000 should be selling for $20,000? This is the brain damage that these websites are creating in the marketplace because of mis-information and just spitting out “data”. Ever watch Pawn Stars on television or some of the car shows where someone wants $10,000 for their vehicle and they offer them $5,000 and they take it? It happens quite a bit nationally, but it’s not reality because some dummy gave away their vehicle.
You get to run around trying to buy a $30,000 for $25,000 and telling the local dealership or a private party, “Website so and so says I should be paying this, so that’s the most I am going to pay.”. Does website “so and so” own that vehicle you want? No. Does website “so and so” actually sell cars or just advertise cars for sale? How does website “so and so” get paid? They sell advertisements or you have to pay a fee to list your vehicle on their website.
Are all cars that are the same make, model and year the same? Ever been in a used car that looked like a family of rats lived in it or was a rust bucket compared to one that is car show worthy? Are they worth the same? Do these websites really care if the vehicle sells or if the visitors get the wrong pricing information? No. It’s not like you are buying the vehicle from them. They have absolutely no skin in the game and there are zero regulations to make sure that their information is accurate.
What should you really do to get pricing for a vehicle? See what the vehicle is really selling for online and if it fits your budget great. If not, you probably have to adjust your budget based on the actual condition of the used vehicle. You are far better off going to NADA.com and KBB.com and pull the data with the options to see what the retail and wholesale value is for the vehicle. This is what banks use to loan money on vehicles, so it’s much more real data. If you are under retail and close to wholesale than you’re probably getting a good deal. You should compare both book values though because sometimes even they miss it. Some banks use Kelly Blue Book and some use NADA, so if you are financing the vehicle, find out which your lender is using.
In the end, a vehicle is worth what the owner is willing to pay. A few years ago there was an article about a 1956 Mercedes-Benz 300SL Gullwing that was unrestored and it sold at auction for $400,000 more than a restored one brought. What’s the website that the buyer could have gone to see if he got a good deal on that vehicle? You can see details on this vehicle purchase at Gooding & Company’s website.
Obviously, the vehicle was worth what the buyer was willing to pay for it. This is one of the reasons why I often enjoy selling historical or classic cars more than more modern vehicles to clients. Most of the time the buyers and owners are much more reasonable about the vehicles they are looking to purchase and sell.
_________________________________________________________________________
Auto Consultant – John Boyd: The Cool Car Guy
John is an auto consultant who owns CoolCarGuy.com that is a licensed car dealership in Lone Tree, CO. He can help you save time and money on any make or model, new or used, lease or purchase – nationwide! Call or email John about your next vehicle! jboyd@coolcarguy.com or Twitter @coolcarguy