Demystifying KBB Pulling back the curtain on KBB values & the buyer / seller relationship
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Demystifying KBB Pulling back the curtain on KBB values & the buyer / seller relationship Rob Lange Interactive Dealer Summit rlange@kbb.com
Introduction
• Joined car business in 1980;
Internet sales in 1996
• Candid conversation
• What is important to you?
Agenda 1. KBB market position 2. A look at the KBB.com and online consumer 3. KBB Valuation methodology 4. 3 common ways consumers use KBB Values to validate trade in, new and used car transactions
Top 10 searched auto shopping keywords
Consumer awareness = “in market” shoppers
1. cars
2. auto
3. blue book
4. autotrader.com
5. kelley blue book
6. used cars
7. kelley blue
8. ebay
9. toyota
10. sales
Source: Google Insights Jan – June 2012
KBB.com- the “hub” of the shopping
process
% of competitor visitors % of KBB.com visitors
visiting KBB.com visiting competitor
66% 55% edmunds.com
65% 4% autobytel
64% 9% Craigslist
64% 25% AutoTrader.com
63% 4% AOL Autos
60% 25% Cars.com
59% 6% TRUECar
59% 10% eBay Motors
57% 39% Consumer Reports
55% 10% Yahoo! Autos
2013 J.D. Power and Associates New Car Auto Shopper Study Base: New car AIUs
Q11 and Q12: Please indicate which of the following (“member” in Q11) third-party websites you visited on any device before
5 purchasing your vehicle.
Most used third-party site: KBB.com
Third-party site visitation by AIUs
57%
Used Car Buyers
Autotrader.com 39%
craigslist 28%
edmunds 25%
Cars.com 21%
44%
New Car Buyers
edmunds 36%
Consumer Reports 30%
Cars.com 18%
MSN Autos: 4%
Autotrader.com 17% TRUECar: 4%
AOL Autos: 2%
Source: J.D. Power and Associates 2012 Used Vehicle Market Report
J.D. Power and Associates 2012 New Autoshopper.com Study
EXTENSIVE CONSUMER ADVERTISING
Driving record traffic growth
7
On KBB.com, two-thirds of visits result in a
pricing report
Site Visits Pricing Report Share by Value Type
6.6%
2.8%
No
Pricing
Report 13.4% 30.9%
33% Pricing
Report
18.5%
67%
27.9%
Private Party Value (Owners) Trade-In Value (Owners)
Private Party Value (UC Buyers) Suggested Retail Price (UC Buyers)
CPO Value (UC Buyers) New Car Price (NC Buyers)
Source: Web Analytics - Visitation to key value types July 2012
A look at KBB.com and the online consumer Consumer use of pricing guidance
Consumers are using what they can find
Current usage of valuations
New vehicle buyers Used vehicle buyers
MSRP Asking Price
Estimated Monthly…
Fair Market
Trade-in Value Price
Dealer Invoice Est. Monthly
Retail Asking Price Payment
Average Asking Price Trade-in
Out-the-Door Price
Average Asking
Fair Market Price Price
Resale Value Private Party
Guaranteed Price Sale Value
5 Year Cost-to-Own Resale Value
Private Party Sale…
0% 50% 100%
0% 20% 40% 60% 80%But, they don’t understand it
New vehicle buyers: not Used vehicle buyers: not
understood/understood understood/understood
Guaranteed Price 43%
-57% Average Asking Price 49%
-51%
Average Asking Price 43%
-57%
Fair Market Value 52%
Retail Asking Price 44% -49%
-56%
Private Party Sale Value Private Party
52%
-48% Sale Value 59%
-41%
5 Year Cost to Own 59%
-41%
Resale Value 67%
Resale Value 60%
-40% -33%And when they do, priorities change
New Vehicle Buyers: Hierarchy of Used Vehicle Buyers: Hierarchy of
Importance with Education Importance with Education
Out-the-Door Price Fair Market Price
Fair Market Value
Estimated Monthly Est. Monthly Payment
Payment
Guaranteed Price Asking Price
Retail Asking Price
Average Asking Price
Dealer Invoice
5-Year Cost to Own Retail Asking
MSRP
Trade-in
Trade-In Value
Private Party Sale Value Private Party
Resale Value
Resale
0% 20% 40% 60%
0% 10% 20% 30% 40% 50%
Source: KBB Valuations Survey; May-June 2012
12
©2013 Kelley Blue Book Co., Inc. - Confidential and Proprietary - Do Not DistributeResulting in a disconnect when it comes to
satisfaction with the buying process……….
76%
63%
Offline
62%
57% 56%
52%
47%
43%
37%
Researching Searching Finding info on Finding the best Finding the right Negotiating a Filling out Applying for Receiving a
vehicle features dealership incentives, deal/price dealership purchase price paperwork financing trade-in offer
& options inventory specials &
rebates
2011 AutoTrader.com / R.L. Polk Automotive Influence Study
- 13 - CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership withKBB’s evolving new/ used car strategy… Create consumers who are ready to take the next step through realistic pricing education Help consumers evaluate, connect, and transact with confidence. Provide consumers, dealers, & OEMs a better New /Used Car product • More advertising opportunities & better influencing tools • Consumers that are ready to take the next step (qualified & educated consumers)
KBB valuation methodology
This valuation methodology allows us to:
Remain neutral to the transaction
Be market relevant; timely and local
Provide thoughtful transparency
Remove friction from the process
16Many customers utilizing values….
Dealers OEMs/Portals Integrators
Finance Insurance Government/FleetKBB Wholesale Focused Values
Auction Trade-
Value In Value
Lending
Value
18KBB Retail Focused Values
UC Fair
Suggested
Purchase
Retail
Price
NC Fair
Purchase Price
19Comprehensive view of the market
Retail New Car Transactions
• Approx. 30% market
coverage
•Retail
Approx. 300,000
Used Car Transactions
transactions/mo
Retail New • Approx. 10% market
Car coverage
TIM Cash Retail Used •Wholesale
Approx. 350,000Auction Transactions
Offers Car transactions/mo.
• Approx. 85% market
coverage
•Vehicle
Approx. 400,000
Listings
transactions/mo.
Vehicle Vehicle • Full ATC New & Used Listings
Appraisals Listings from vAuto
250+ Data Sources •Macro
Daily feed of approx. Factors
Economic 4M / C&I
active listings
50+ Terabytes • Fuel prices, interest rates
2.9 Trillion Data Points • Incentives, rebates, offers
Vehicle Wholesale Base Vehicle Data
Registrations Auction • Year, make model, trim
• Major equipment, options,
specificationsBehavior
Consumer
Macro • Website activity, leads,
Consumer
Economic advertising
Vehicle Registrations
Behavior
Base Vehicle Factors / C&I • Includes transaction price
Data
Vehicle Appraisals
• Daily feed from vAuto
dealers
TIM Cash Offers
• Approx. 7,000 offers weekly
- 20 - CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. from BBT In partnership withKBB field analyst – data collection
Northwest
Central Northeast
id
WA
ME
MT ND
MN
OR VT
NH
ID WI MA
SD
NY CN
WY MI RI
IA PA NJ
NV NE
OH DE
IN
UT IL
WV MD
CO
VA DC
CA KS MO
KY
NC
TN
AZ OK
NM AR SC
MS AL GA
Western LA Southeast
TX
FL
Auction Field Analyst Location & Assigned ZoneDetailed Vehicle Data Capture
Field Analysts
• Detailed Vehicle
Data Capture
Condition
Equipment
Mileage
Color
• Sophisticated
Hand-Held
Computer
• Nationwide
PresenceComprehensive view of the market
Retail New Car Transactions
• Approx. 30% market
coverage
•Retail
Approx. 300,000
Used Car Transactions
transactions/mo
Retail New • Approx. 10% market
Car coverage
TIM Cash Retail Used •Wholesale
Approx. 350,000Auction Transactions
Offers Car transactions/mo.
• Approx. 60% market
coverage
•Vehicle
Approx. 400,000
Listings
transactions/mo.
Vehicle Vehicle • Full ATC New & Used Listings
Appraisals Listings from vAuto
250+ Data Sources •Macro
Daily feed of approx. Factors
Economic 4M / C&I
active listings
50+ Terabytes • Fuel prices, interest rates
2.9 Trillion Data Points • Incentives, rebates, offers
Vehicle Wholesale Base Vehicle Data
Registrations Auction • Year, make model, trim
• Major equipment, options,
specificationsBehavior
Consumer
Macro • Website activity, leads,
Consumer
Economic advertising
Vehicle Registrations
Behavior
Base Vehicle Factors / C&I • Includes transaction price
Data
Vehicle Appraisals
• Daily feed from vAuto
dealers
TIM Cash Offers
• Approx. 7,000 offers weekly
- 23 - CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. from BBT In partnership withComprehensive Valuation Portfolio
Kia Optima SX – New & Used Values
Certified New Car
Residual 5-Year
Trade-In Auction Private Lending Used Car Fair Suggeste Pre- Fair
Vehicle Model Value – 36 Cost to
Value Value* Party Value Value* Purchase Price d Retail Owned Purchase
mos. Own
Price Price
2011 Kia Optima
$16,650 $17,750 $18,405 $18,950 $20,505 $21,205 $21,655
SX
2014 Kia Optima
$24,166 $13,546 $38,752
SX
24 * Industry values not disclosed to consumersForecast model data preparation – normalize transactions and trim outliers Each transaction normalized for data analysis.
THE ART AND SCIENCE OF VALUATIONS
PREDICTIVE ANALYTICS TEAM
(QUALITATIVE)
• Review Forecasts
• Set Values
• Team of 9 Automotive
Industry Analysts KBB
Valuation
Portfolio
PREDICTIVE ANALYTICS TEAM
(QUANTITATIVE)
• Develop Models
• Produce Forecasts
• Team of 5 Statisticians
27Reflect the market, not make the market
3 most common ways customers use KBB Values?
NOW DISPLAYS CONDITION BASED VALUE RANGE RATHER
THAN SINGLE POINT VALUE
32 32A simple tip to diffuse trade value pressure Question: How often do you get tangled up in conversation about trade value prior to settling on specific vehicle to purchase?
It’s All in the Presentation • “We recently traded ___ cars similar to yours and were able to allow them _______.” • “We had our used-car manager look at your car, made a couple of calls and are able to allow you a trade allowance of __________. These examples instigate pushback!!!! CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership with
Stop winning the battle, but losing the war.
The point is to set appointments to sell a
car, not justify why their car is worth less
than they hoped.
Presentation Sets Expectations
CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership withDiffuse trade value pressure… I understand you are considering trading in your vehicle? “To allow the greatest trade allowances we handle trades a bit differently than most places. I think you’ll like it … Would it be OK if I shared it with you?” (Desire to win) “To fully grasp the market value of any vehicle at any given time we rely on 4-5 different sources ...one of them being you since you are most familiar.” (Level the playing field) “Since I find that most of my internet customers’ focus is to save time and make a comfortable educated decision, we help do the leg work so you don’t have to.” (Save time/ reduce stress)
Diffuse trade value pressure…
The values we gather come from:
1. You (engage)
2. Several independent buyers to see who has the most interest
3. Our own valuation expert
4. Trusted third party consumer resources like (use their source),
Kelley Blue Book, TIM, Edmunds (level the playing field)
(ask them to use evaluate the vehicle as if they were going to buy it)
– Easiest way is to start by seeing your car and you’ll be able to drive the new
one during the evaluation
– Based on the total feedback we’ll find the most that anyone will be willing to
pay for a particular vehicle at any given time
– Customer’s appreciate receiving top dollar /ease of getting it.
(solve problem/desire to win)SET REALISTIC PRICING EXPECTATIONS AND DIFFUSE DOWNWARD
PRESSURE……..
The KBB.com Price Advisor
New Car Experience: Used Car Experience:
Launched: Launched:
Oct 15 2013 Feb 12, 2014
38We quant tested 5 concepts…
3 new concepts
Trim Compare
Simple Bar
Gauge
A B C
Competitor Baseline
Reality Check
Brand X
D EGauge outperformed
other designs/competitor
Overall Score Price Pressure
Gauge 25
$20,936
Simple Bar 14 $20,792
Trim Compare -7 $20,867
Competitor -32 $20,301
Composite Quantitative Score Avg. Price Expected to Pay
40
CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership withGauge outperformed other
designs/competitor MSRP:
$22,670
Avg/FPP:
$21,106
Factory Inv:
$20,692New Car Pricing Competitive Benchmark
Average Discount from MSRP
42BUT, IT IS ABOUT MORE THAN PRICE
Seek Dealer Information Ready To Connect
77% 40%
Would Seek Ready To Connect With A
Dealership Information Dealer From The Market
From The Market Report Report*
Get a price quote from a dealership
Print & take to a dealership
Find a local dealer to contact using this site
Write it down and take it with me to a dealership
Q69. How likely would you be to search for dealership information from this tool?
Q63. What would you do next with the pricing information?
Source: 2012 KBB New Car Concept Test, Keynote
- 43 - CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership withMarket Report flows to Dealer Pages - 44 - CONFIDENTIAL - Copyright 2012 Kelley Blue Book. All Rights Reserved. In partnership with
Dealer Pages
Centered in Price Context
• Allows consumers to learn about the
dealer before connecting
Matching Shopper Needs
• Integrating listings outside of
classifieds
• Reviews, Ratings, Specials,
Inventory, Services Amenities, etc...
KBB positioning
• Market Report Continuity
• Leveraging KBB’s brand
• Values, content, reviews
Specials Inventory Rating & Review Social Feed About Us
45
45EXPLAINING OUR ENHANCED
Used Car experience
46REVAMPED BUYERS EXPERIENCE
47 47KBB Cost to Market (Gap to Used Car FPP vs. Retail Listing) 48
Questions? Rob Lange rlange@kbb.com Interactive Dealer Summit
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