Software based Used Car Valuations

Online Car buying companies have sprung up all over the Internet like a rash recently and we've had a fair bit of work thrown our way developing the odd Car valuation tool (Car Arena being our latest).
Much of the work with these websites is much the same as any other website with the exception to when it comes to automatically valuing a vehicle.

 There are no hard and fast rules when it comes to valuing a car as the value of the vehicle is more to do with the desirability of the vehicle than what the vehicle is worth in terms of materials, performance, etc... And so any automatic car valuation needs to be based on some data source. The two most commonly used in the UK are CAP and Glasses Guide, the former being most prominent (for automatic valuations at least).

But before we begin generating a value for a vehicle we need to accurately identify the vehicle in the database. CAP data has around 36,000 vehicles in its 'new vehicle database' and using the wrong vehicle identity, even if it is a close match, can throw the valuation out by a significant amount. Past experience has shown that even experienced users have difficulty 'Capping' a vehicle (selecting the correct identity) so very often the DVLA's data is used to match up a vehicle against the CAP database.
This also makes life easier for the owner of the vehicle as they only need provide the registration and, if the DVLA's data is correct, the CAP identity of the vehicle is easy to determine. Also most of the providers of the DVLA data will determine the CAP or Glasses identity of the vehicle for you, HPI and CarWeb are just two examples that provide this service. Once the identity of the vehicle has been determined, obtaining a basic value is a small matter of a few SQL queries.

 For any one car CAP data will generate 5 values:-

• Cap New
• Cap Retail
• Cap Clean
• Cap Average
• Cap Below

Cap New is the amount the vehicle was worth when it was registered
Cap Retail is the forecourt value of the vehicle now
Cap Clean is the value of the vehicle in almost impossibly good condition
Cap Average is the normal value of the car today
Cap Below is the value of the car if in poor condition

Almost every dealer uses Cap Average as the basic price for a vehicle and will often start with this value and knock amounts off for a number of reasons. A few car valuation websites running at the moment though do use Cap Below as a fail safe if the vehicle can not be reliably valued or if they wish to slow down the number of cars going through their organization.

At this point we would have a basic value for a vehicle which is often fairly accurate but only adjusted for mileage. Some Manufacturers and Models though do perform badly with automatic valuations (Mini for example) as when the car was ordered many expensive options would have been available which are not known when it comes to valuing the car now and CAP data will heavily undervalue the vehicle through no fault of its own. Some other cars tend to be worth less than the CAP data would suggest so often we build in modifiers that allow the dealer to adjust the basic valuation in an effort to correct the problem.

After this the manner as to how the rest of the valuation is done is down to the dealer. Many may increase / decrease values for specific body work colours, previous owners, options, condition, MOT status, etc...