Pre-owned vehicle
Encyclopedia
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
owners. Used cars are sold through a variety of outlets, including franchise and independent car dealer
Car dealership
A car dealership or vehicle local distribution is a business that sells new or used cars at the retail level, based on a dealership contract with an automaker or its sales subsidiary. It employs automobile salespeople to do the selling...
s, rental car
Car rental
A car rental or car hire agency is a company that rents automobiles for short periods of time for a fee...
companies, leasing offices, auctions, and private party sales. Some car retailers offer "no-haggle prices," "certified" used cars
Certified Pre-Owned
A Certified Pre-Owned or CPO, car is a type of used car.Most often late-model, they differ from run of the mill used cars by having been inspected, refurbished, and certified by a manufacturer or other certifying authority. They also typically include an extended warranty, special financing, and...
, and extended service plan
Service plan
A service plan is a contract to purchasers of products for an additional fee. While service plans resemble extended warranties, there are several important differences between the two, often cited by retailers that sell them.-Differences from warranties:...
s or warranties
Warranty
In business and legal transactions, a warranty is an assurance by one party to the other party that specific facts or conditions are true or will happen; the other party is permitted to rely on that assurance and seek some type of remedy if it is not true or followed.In real estate transactions, a...
.
Used car industry
With annual sales of nearly $370 billion, the used vehicle industry represents almost half of the U.S. auto retail market and is the largest retail segment of the economy. In 2005, about 44 million used cars were sold in the U.S., which is more than double that of the nearly 17 million new cars sold.History
In 1898, the Empire State Motor Wagon Company in Catskill, New YorkCatskill (town), New York
Catskill is a town in the southeast part of Greene County, New York, United States. The population was 11,775 at the 2010 census. The western part of the town is in the Catskill Park....
is one of the very first American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
used car lots.
The used vehicle market is substantially larger than other large retail sectors, such as the school and office products market ($206 billion in estimated annual sales) and the home improvement market ($291 billion in estimated annual sales).
Used vehicle retailer
The Federal Trade CommissionFederal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
recommends that consumers consider a car retailer’s reputation when deciding where to purchase a used car.
Vehicle history reports
In the United States, an estimated 34% of consumers (in 2006) are buying a Vehicle history reportVehicle history report
A vehicle history report in the US contains important information about a used vehicle’s past. These reports generally show title records from each state DMV, along with salvage and insurance total loss records and accident records...
for used cars. Vehicle history reports are one way to check the track record of any used vehicle. Vehicle history reports provide customers with a record based on the vehicle's serial number (VIN
Vehicle identification number
A Vehicle Identification Number, commonly abbreviated to VIN, is a unique serial number used by the automotive industry to identify individual motor vehicles. VINs were first used in 1954...
). These reports will indicate items of public record, such as vehicle title branding
Vehicle title branding
Vehicle title branding is the use of a permanent designation on a vehicle's title, registration or permit documents to indicate that a vehicle has been written off due to collision, fire or flood damage or has been sold for scrap....
, lemon law buybacks, odometer fraud
Odometer fraud
Odometer fraud, also referred to as "busting miles" or "clocking" is the illegal practice of rolling back odometers to make it appear that vehicles have lower mileage than they actually do...
, and product recall
Product recall
A product recall is a request to return to the maker a batch or an entire production run of a product, usually due to the discovery of safety issues. The recall is an effort to limit liability for corporate negligence and to improve or avoid damage to publicity...
. The report may indicate minor/moderate collision damage or improper vehicle maintenance. An attempt to identify vehicles which have been previously owned by hire car rental agencies, police and emergency services
Emergency service
Emergency services are organizations which ensure public safety and health by addressing different emergencies. Some agencies exist solely for addressing certain types of emergencies whilst others deal with ad hoc emergencies as part of their normal responsibilities...
or taxi fleets is also made. Consumers should research vehicles carefully, as these reporting services only report the information to which they have access.
In some places the government is a provider of vehicle history, but this is usually a limited service providing information on just one aspect of the history.
Two vehicle history reporting services used to offer the service for free namely InstaVIN and VinCheck. But currently customers need to pay to view vehicle reports through InstaVin. VinCheck became part of AutoCheck and provides very little information for free, and customers need to buy a detailed report. Several of the services, most notably those in the United Kingdom and the United States, sell reports to dealers and then encourage the dealers to display the reports on their Internet sites. These reports are paid for by the dealer and then offered for free to potential buyers of the vehicle.
In the UK, the DVLA provides information (Car check
Car check
-United Kingdom:The Driver and Vehicle Licensing Agency , better known as the DVLA, are an Executive Agency of the Department for Transport . The Agency is accountable to the Secretary of State and Ministers and, through them, to Parliament and the public, for efficient and effective management of...
) on the registration of vehicles to certain companies for consumer protection and anti-fraud purposes. Companies may add to the reports additional information gathered from police, finance and insurance companies. Car check service is available online for the public and motor trade.
Used car pricing
Used car pricing reports typically produce three forms of pricing information.- Dealer or Retail Price is the price you should expect to pay if buying from a licensed new-car or used-car dealer — retail price.
- Dealer Trade-in Price or wholesale price is the price you should expect to receive from a dealer if you trade in a car. This is also the price that a dealer will typically pay for a car at a dealer wholesale auction.
- Private-Party Price is the price you should expect to pay if you were buying from an individual. A private-party seller is hoping to get more money than they would with a trade-in to a dealer. A private-party buyer is hoping to pay less than the dealer retail price.
The growth of the Internet has fueled the availability of information on the prices of used cars. This information was once only available in trade publications that dealers had access to. There are now numerous sources for used car pricing. Multiple sources of used car pricing means that listed values from different sources may differ. Each pricing guide receiving data from different sources and makes different judgments about that data.
Pricing of used cars can be affected by geography. For example, convertible
Convertible
A convertible is a type of automobile in which the roof can retract and fold away having windows which wind-down inside the doors, converting it from an enclosed to an open-air vehicle...
s have a higher demand in warmer climates than in cooler areas. Similarly, pickup truck
Pickup truck
A pickup truck is a light motor vehicle with an open-top rear cargo area .-Definition:...
s may be more in demand in rural than urban settings. The overall condition of the vehicle has a major impact on pricing. Condition is based on appearances, vehicle history, mechanical condition, and mileage. There is much subjectivity in how the condition of a car is evaluated.
There are various theories as to how the market determines the prices of used cars sold by private parties, especially relative to new cars. One theory suggests that new car dealers are able to put more effort into selling a car, and can therefore stimulate stronger demand. Another theory suggests that owners of problematic cars ("lemons
The Market for Lemons
"The Market for Lemons: Quality Uncertainty and the Market Mechanism" is a 1970 paper by the economist George Akerlof. It discusses information asymmetry, which occurs when the seller knows more about a product than the buyer. A lemon is an American slang term for a car that is found to be...
") are more likely to want to sell their cars than owners of perfectly functioning vehicles. Therefore, someone buying a used car bears a higher risk of buying a lemon, and the market price tends to adjust downwards to reflect that.
Canada
In Ontario, Canada, new and used vehicle sales are regulated by the Ontario Motor Vehicle Industry Council (OMVIC).European Union
Used cars have a statutory warranty according to the system of laws of the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, the so-called "Liability for defects", which lasts for 12 months.
See also
- Certified Pre-OwnedCertified Pre-OwnedA Certified Pre-Owned or CPO, car is a type of used car.Most often late-model, they differ from run of the mill used cars by having been inspected, refurbished, and certified by a manufacturer or other certifying authority. They also typically include an extended warranty, special financing, and...
- Vehicle history reportVehicle history reportA vehicle history report in the US contains important information about a used vehicle’s past. These reports generally show title records from each state DMV, along with salvage and insurance total loss records and accident records...
- Lemon (automobile)Lemon (automobile)A lemon is a car, often new, that is found to be defective only after it has been bought. Any vehicle with numerous, severe issues can be termed a "lemon", and, by extension, any product with flaws too great or severe to serve its purpose can be described as a "lemon".-Origin:The use of the word...
- ImportImportThe term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
- Japanese used vehicle exportingJapanese used vehicle exportingJapanese used vehicle exporting is international trade involving the export of used cars and other vehicles from Japan to other markets around the world. Despite the high cost of transport, the sale of used cars and other vehicles to other countries is still profitable due to the relatively low...
- JalopyJalopyA jalopy is a decrepit car, often old and in a barely functional state. A jalopy is not a well kept antique car, but a car which is mostly rundown or beaten up. As a slang term in American English, "Jalopy" was noted in 1924 but is now slightly passé...
- NetcarsNetcarsNetcars.com is the trading name of JLR Digital Ltd and was launched to the motor trade in the UK in January 2011. Netcars is an online motoring portal for buying and selling used cars.- Background :...
- Auto Trader (UK)
External links
- Ontario Vehicle Information Package offers Ontario vehicle registration history
- Saskatchewan Damage Claims History Search provides the status of the vehicle (if any) in Saskatchewan and its damage claims history in Saskatchewan since Jan. 1, 1998.
- Vincheck VINVehicle identification numberA Vehicle Identification Number, commonly abbreviated to VIN, is a unique serial number used by the automotive industry to identify individual motor vehicles. VINs were first used in 1954...
checking in the U.S.