NADA vs. KBB: What is Your Car's True Worth?

People have relied on Kelly Blue Book (KBB) and National Automobile Dealers Association (NADA) Guides for accurate new and used car prices for years.

Both sources have guided buyers and sellers on accurate retail values and trade-in values for the used car market. But there are occurrences when these premier publications have issued different pricing information for the same car model.

The discrepancy can confuse individuals who base their businesses and consumer practices on KBB and NADA evaluations.

Other authoritative car evaluation sources are entering the market, including Edmunds, another publication that independently evaluates car prices.

If you can’t decide which car evaluation source to trust, EchoPark is here to help you with your decision. We have thoroughly analyzed the differences and similarities between KBB and NADA.

If you use KBB and NADA Guides as your reference, you must first understand how both publications compute their car prices.

For instance, KBB tends to focus on the car’s condition, warranty, popularity and demand from consumers. KBB evaluates car prices according to these criteria using data points, predictive analytics and field analysis.

Similar to KBB, NADA also uses data points. These points are geared toward wholesale transactions, auctions and retail transactions.

Terms You Need To Know When Valuing Your Car

When you are using NADA Guides and Kelly Blue Book as your reference, you must first understand the terms they use in evaluating the vehicles. If you are buying or selling cars, knowing these terms is crucial in determining the fair price.

Some terms may be confusing for customers, which is why we recommend that familiarizing yourself with them before making a transaction with a dealership.

The following list consists of terms that can help you benefit from NADA Guides and Kelly Blue Book values:

MSRP

MSRP stands for the manufacturer’s suggested retail price. In some cases, it is known as the “sticker price.” Carmakers recommend the MSRP, which is used by some dealers to determine car pricing.

Transaction price

Although the carmakers provide the MSRP for each vehicle, not all dealers necessarily follow the suggested price. Some dealers’ prices depend on market demand, current asking price of private sellers and inventory. 

After calculating the value according to these factors and the MSRP, the dealers come up with a retail price.

Invoice price

The invoice price is the amount on the invoice that a manufacturer sends to a dealer when a new car is delivered.

The invoice price is crucial in determining the true market value of a particular vehicle. It lets you know if you are getting a good deal.

Trade-in Value

The trade-in value is the price a dealer is willing to offer for your car in exchange for a new one. During a trade-in, a dealer will evaluate the current market value and condition of your vehicle.

Wholesale price

The wholesale price is a value that a dealer would pay a carmaker. The dealer would then add value on top of the wholesale price to earn a profit.

Blue Book

Blue Book is short for Kelly Blue Book. In the United States, car dealers and buyers use the Blue Book as a trusted source for the current car values.

How Does Kelley Blue Book Value Cars?

Car dealers and car buyers have been referring to KBB for new and used car prices since 1926.

KBB evaluates cars based on data points collected from actual sale transactions, auction prices and market trends.

If you are selling your car to buy a new one, you have two options that you can consider: sell the car privately or trade it in for a new one. KBB’s evaluation of your vehicle determines the private party value and trade-in value.

The private party value is the amount expected to be paid during a private sale. It may also represent the amount you expect to be paid for your used vehicle.

The term trade-in value refers to the value of the car when you’re trading it to a dealership in exchange for a new car.

Private party values are usually higher than trade-in values. You can make a significant profit (around 15 to 25% more)(1) if you sell your used vehicle privately. But privately selling a car may require extra negotiating and making personal calls.

Meanwhile, trading-in your vehicle also has benefits, such as faster transaction time, convenience and lower tax payments on the new car. Trade-in transactions also spare you from spending money on listings and advertising.

The bottom line is timeline and resources should be considered before deciding whether you would sell your car privately or trade it in.

Visit KBB.com to learn more about your car’s value.


Why Is My NADA Value Different Than KBB?
 

“How much is my car worth?” may sound like a simple question. But it can only be accurately answered by evaluation tools going through massive amounts of data. 

These data are analyzed according to current developments, economic conditions, and a buyer’s location. 

Like the Kelly Blue Book, the National Automobile Dealers Association uses a proprietary algorithm that computes vehicle values based on many factors. 

KBB and NADA may be similar in several aspects. Both sources are considered the most authoritative car evaluation tools in the United States. 

Still, buyers and sellers sometimes encounter discrepancies when referring to both NADA and KBB for the car’s selling price. 

The KBB price and NADA price are based on different data points. 

NADA determines automotive pricing based on retail sales, auction transactions, wholesale, and dealer pricing. These data points are collected from 1.5 million vehicles each month(2)

NADA is known for being the main price reference for most banks and dealerships. 

Meanwhile, KBB uses a fair market price analysis for their evaluation. The fair market price is determined by how much buyers are willing to pay for a car.

KBB’s evaluation is patterned to how buyers would analyze the vehicle during a transaction. Several factors, such as mileage and the car’s condition, are considered. The price is not necessarily based on what the car was worth when it was brand new.

If you come across a discrepancy between KBB and NADA’s pricing, know that both are considered accurate. You should only be concerned if there is a major discrepancy between two authoritative sources.

It is your discretion whether you would use KBB or NADA price during a private or dealership transaction.

How To Protect The Value Of Your Car

If you have plans to sell your car, truck or SUV in the future, use KBB and NADA to know how you can maintain the car’s market value.

Start by purchasing a vehicle that has been known to retain its value. Do not be tempted by a reasonable purchase price. Before deciding on what car to buy, review which makes and models have slow depreciation rates.

During sales transactions, buyers will always ask about the mileage, so if you plan to sell your car in the future, consider how much mileage you accumulate.

Also, avoid wear and tear situations. Towing boats and other vehicles or putting excessive weight on the car can lead to wear and tear.

Keeping your car clean can prevent corrosion. If you live in areas that experience harsh winters, wash your car regularly to remove salt deposits.

If you can, always store your car in a garage. Exposing your vehicle to the sun can damage the color, while rain can lead to some rust.

Lastly, conduct regular maintenance on the engine and motor. Regular checkups, oil change, fluid replacement and other upkeep can help protect your car’s value.

Having the car cleaned and repaired before showing it to potential buyers can lead to a smooth transaction.

Choosing The Right Vehicle

One thing that is hard for either of these pricing tools to determine for you is the condition of the vehicle at hand. That’s why you need to use a dealership that has a reputation for quality service and good prices. 

EchoPark definitely fits the mold there. We have a wide selection of nearly new used vehicles that our customers can rely on. Find a location near you and get started with us
today.