Used Car Valuation: How do Car Dealers Measure the Right Value of Their Vehicles

Car valuation. Customers might have heard that phrase before, specifically when they’re buying their car online. But is car valuation important for dealers, too? The answer is yes, and we’ll tell you why.

Who would’ve thought that the ways we sell cars dramatically change in just a span of a decade? If you consider this as a good thing, then you have the Internet to thank for. The Internet indeed allowed many businesses, big and small, to gain more access to consumers that make car selling online faster and worry-free.

used-car-valuation couple buying car

But if you’re not as thankful as the others, we totally get where you’re coming from. We understand that having virtually all car dealerships are now online, it’s hard to get a break from everything as the Internet made the competition so tough.

Then again, a lot of businesses already saw this coming. In fact, 80% of Americans went online last year to check out which cars to buy. And if you’re seeing your business go the online direction, it’s probably the best time to consider the tools you need to get ahead of your competition. One of the tools you will need is the car valuation tool.

In this post we will break down what car valuation is, why dealerships should use it, and how to find a car’s correct value.

Read More: Carketa Car Valuation Tool
used-car-valuation keys on car

What Is Used Car Valuation

Car valuation is the process of determining the correct value of the used vehicles being sold. The value of the used car depends on the agreed price estimate based on the present condition of said vehicle. Though most buyers rely on the exterior look, often they do not consider other factors such as engine condition, the status of the title, and other car features. Therefore, just like any other type of investment, a used car or truck’s worth is estimated not just on its condition but also on how much people are willing to shell out.

This is why car valuation is something that many dealerships never really pay attention to. There’s the apparent confusion that some of us don’t have time to waste on. But we will list down the reasons why it is crucial for your business later in the post.

The Different Types Of Used Car Valuation

Both car buyers and dealerships should know the different types of used car valuation. Knowing the right value for the car you’re willing to buy is essential and highly critical as a car buyer. Otherwise, you may pay for a vehicle that is 10x less the value than the price you’re willing to pay. On the other hand, car dealerships should be wary, too. At some point, your business needs to buy vehicles that sell. Each used car can have many different values, depending on the circumstance or the way you buy it. Below are the different types of used car acquisitions based on car valuation.


A trade-in value is the vehicle’s price dealerships estimate and eventually offer to the seller. Depending on the arrangement or the dealership’s policies, the trade-in value can come in two forms. It can either be in the form of cash or a markdown on the price of the vehicle the seller wishes to purchase. Most cars have trade-in value. However, the value depends on the result of the inspection. In the case of dealerships, trade-in value depends on the resellable of the vehicle at hand. Dealerships also have the right to not accept any car they think is not profitable at all.

Suggested Retail Price

This type of valuation applies to cars and most items for sale in the market. Also known as the manufacturer’s suggested retail price or MSRP, the suggested retail price is the product manufacturer’s value recommends for sellers to mark up. In the automotive world, the suggested retail price is used on both new and used car valuation. For the latter, it is the value that the dealers would typically expect to get when they are buying a vehicle from another dealer’s lot.

Private Party Value

Private party value is the price sellers put up when they sell their vehicles through the car classified ads or on other platforms such as Facebook groups. Although some dealerships often buy through classified ads, private property value is a price given by a selling party to another driver. The car value depends on the demand and vehicle condition, although most private sellers don’t follow any specific used car valuation. Most of the time, the price is slightly lower than usual. That is because private sellers usually don’t provide any financing option, guarantee, or warranty. The price is final, and so is the sale.

For the most part, buying through a private party value is not recommended for private buyers and dealerships. Apart from the price not matching the vehicle’s condition, there’s a particular danger when you buy from a private seller directly. This is true, especially if the seller lives far from your location. You can negotiate with one but always be on guard.

Read More: Car Dealers Are Losing Money. Prevent It From Happening
cars in a row

The Importance Of Used Car Valuation

As a car dealership, you are going to both sell cars as well as buy them. That is why it’s doubly critical to get and give informed choices, and a used car valuation can help you with that. When we are in the market to buy products, we have to be careful at all times. But, on the other hand, we also need to be wary to come up with the wisest purchase decision possible. Buying a used car, however, is a different thing. Even though the vehicle is not brand new, many still consider it a significant investment.

Ever since the pandemic began, the demand for buying virtually all stuff online increased with such speed. And it keeps on growing every day. As a result, all types of buyers are now entering the realm of online platforms. And they’re not just there to look for the stuff they need, but they also look for the best deals that can help them save money. And when it comes to vehicles, people are almost twice more likely to buy a used car than a new one. As a used car dealership, this is why providing the right used car value matters in the modern market.

Why Used Car Valuation Is Important For Buyers

We’ve mentioned that car dealerships are both buyers and sellers. As a buyer, dealerships may find the value of used car valuation by way of estimating. The money you will use to buy new cars to sell often comes from your company’s budget. Thus, you have to get the most value so your business can have extra savings. But you cannot estimate the value of the car by just looking at it. Test driving it for once doesn’t even come close.

That’s why you need to use the correct car valuation tool that will determine the correct value for you. When you have the fairest value for the vehicle you want to buy, you can quickly negotiate with the seller.

Why Used Car Valuation Is Important For Sellers

Now, as a dealership, you need to really pay close attention to the correct car value, especially when you offer trade-ins to sellers. In the business of negotiating prices, nothing is sweeter than providing the most affordable yet fairest resale value to a seller, and they’d still say yes. This way, you’d be able to add more vehicles in your inventory with the littlest budget yet be able to earn more.

cas in a row

Used Car Valuation: The Benefits

When selling used cars, car valuation should be the first thing on your mind. By doing so, your business will earn more profit while spending much less. But to dissect all that, here are the benefits of using a used car valuation tool.

Above Everything Else, Best Deals Ever!

Again, this benefit comes in both ways; you as a buyer and as a seller. Regardless of how you’re going to use it, the benefit is still the same. When using the used car valuation as a seller, you will provide the most competitive price in the market. Meaning, it is not too expensive that clients will turn their heads away and not too cheap to cause some serious doubts.

In addition, you can also use car valuation as a buyer. When you’re on the lookout for the next batch of vehicles to add to your inventory, use a car valuation tool so you can get the best deals and build your inventory while saving a margin of your budget for other things.

Protection From Problematic Practices

Not all dealership owners are alike. Some are technical when it comes to cars, while some focus more on the business side of things. But then again, as a car dealer, you need to have some sort of awareness regarding the technical matters of any vehicle. If not, other parties may take advantage of it if they know. Using a used car valuation, however, your business is protected from all these tricky and fraudulent negotiations.

Used car valuation can also protect you the other way around. When you buy vehicles to sell, you would tell which deals are good and which sales are brow-raising.

Do Business With More Confidence

When you know the right price, whether you’re buying or selling, you will feel more assured than before. For example, knowing what’s the fair price before buying a car will not only save you money, but it also makes every transaction faster and smooth-sailing. On the other hand, you can provide your customers the correct price, making them feel at ease and gain more business in the future.

Which Valuation Tool To Use?

Now that you know the importance of knowing what used car valuation is and what you can benefit from, it’s time to understand what car valuation tool you should use. There are various valuation tools online that are available for free. However, most of them don’t have all their features available. In addition, some of them don’t have other features at all. That’s why it’s pivotal to choose the right car valuation tool that will provide the correct value for cars and give you more information about the vehicle. Click on the link to know the right type of car valuation your dealership should use.

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