29 March 2019 Concept Car
Car valuation is big business. And Parkers is one of the biggest players in the car valuation business. When it comes to used cars, millions of potential buyers around the world rely on the Parkers price guide for free valuation.
But what justifies this leading status? And how does the company even arrive at its numbers?
In this feature, we take a deeper look into one of the automobile market’s biggest mysteries.
Parkers started out as a car magazine. Founded in 1972, the Parkers Price Guide was one of the leading publications listing pricing information for the UK market.
Although the physical magazine is still in print, Parkers only really broke through after launching its website. Today, this website is arguably the UK’s leading source for car valuation.
Although Parkers’ used car prices are considered influential, there is no such thing as a single ‘correct’ used car valuation. In fact, there are always three equally valid prices:
First, it calculates a theoretical price. Although the specifics of this process are a well-kept secret, it most likely uses advanced algorithms.
In a second step, Parkers then compares this theoretical price to actual sales prices across the UK. Parkers relies crucially on data provided by software provider CAP HPI, which processes a vast amount of trades each single day.
By putting these two values together, Parkers arrives at an estimated average value.
This will forever be a point of contention. In our article below, we present research which proves that the differences in price between different buyers can be immense. If you compare the highest bid with Parkers’ valuation, the disparity is remarkable.
At the same time, for many daily transactions, their free online price guide offers very valuable hints at a realistic price.
You can also improve the accuracy of Parkers’ prices by …
Parkers remains a useful tool for buyers and sellers alike. In the future, however, it will need to adapt. Dealers are already experimenting with software which can gauge demand for specific models in real time and reflect this in prices accordingly.
Parkers is one of the biggest names in the online car community. Its website offers a plethora of used cars for sale. It offers a free and useful car history check. And the articles by its editorial team are usually extremely insightful and in-depth. In a world, where car reviews face a lot of criticism, it is a valuable and trustworty source of information.
Parkers is probably best known for its car valuations, however. All it takes are a few clicks. You can get an overview of typical sales- and purchase prices for almost every single car ever built after 1972. Most of this information is entirely free. No wonder Parkers is held in the highest esteem by many potential buyers.
And yet, Parkers is not without its critics. Many have argued that its car valuation system is simply not accurate enough and nudging consumers into wrong expectations.
We’ve taken a look behind the curtain to uncover the truth. Can you really trust Parker’s car valuations?
Parkers, today, is an online marketplace and website packed to the brim with pricing information on cars. In terms of its visitors, it is one of the UK’s biggest car themed websites and one of the biggest worldwide. According to their own statistics, more than 2,5 million people visit the platform each month, generating almost 300 million page impressions per year.
These numbers are impressive. And indeed, Parkers is one of the few traditional pre-digital institutions to benefit from the advent of the Internet. In 1972, Parkers started out as a print magazine listing pricing information on most available cars on the UK market. In 1988, the company went online. Since then, it has quickly established itself as the UK’s leading valuations outlet.
Curiously, the magazine is still in print and continues as the UK’s only printed car valuations publication. Only recently, it was updated to include “road tests, buying guides and more deals-specific content”.
That’s a very good question. It certainly feels somewhat bizarre to be flicking through the pages of a traditional magazine, when you could just as well get all the information – and more – a lot faster on the Parkers website.
According to bauer Media, the publishing house behind the Parkers Guide to Used Cars, the website has 2 million unique visitors each month. But unfortunately, there is no indication of how many copies of the print edition are being sold. One thing’s for sure: Just like essentially all other car magazines, Parkers Car Guide Magazine has lost a lot of readers over the past decades.
So why still use it? Because, in terms of getting a quick overview, print is still king. It allows you to flick through the offerings far quicker in some respects, and it is never offline. Especially if you intend to come back to certain pages from time to time, nothing beats the convenience of a classic print publication.
Ideally, of course, you’ll be using both the print- and the online version of Parkers. That way, you can combine the advantages of both formats.
Although Parkers has built a sizable online market place for used and almost new cars, its primary area of expertise still lies in car valuations.
There are two tiers. On a first level, you can access all valuations for cars built after 2004 for free. For most buyers, this information will be more than enough.
If you are looking for older cars or if you want more detailed buying information, you can pay a small tribute and access the full database built over decades.
You’d think that a car’s value should be straight-forward. Not a lot to talk about, is there?
Curiously, there is, in fact, quite a lot to talk about or even to discuss.
The more you immerse yourself in the topic, the more you realise that there is no such thing as a single car value. Instead, there are many different price levels. And Parkers’ used car value is only one of them.
This doesn’t devalue Parkers as a tool in any way. What it does mean is that you need to take other sources into consideration as well, if you want to arrive at a realistic estimate.
Even if we forget about the questionable accuracy of a car valuation, there could never be a single universal price level.
For one, there are regional differences. As many surveys have repeatedly found, the same car can fetch wildly different prices in different parts of the UK. In fact, the difference can be so big that it can pay off to take a long trip to another part of the country, buy the car there and drive it home. We’re not saying that’s what you should do. But this does give a pretty good indication that what you’re paying depends on where you’re buying.
And then, there are three different ways to sell your car. Each one has its distinct pros and cons. And each has its own price level. This is a universal fact. And there is very little that you can do to influence this.
This is the price you would get if you sell your car to a private buyer. So, you place an ad in a newspaper or on an online platform like eBay or Gumtree. Potential customers will take a look at the car, take it for a test drive and then make you an offer. Once the deal is sealed, you pocket the entire profit and the buyer drives home with what is now no longer your vehicle.
If you want to get a better idea of the private sale price, you will need to look on the aforementioned websites. You can also check the Parkers Guide to Used Cars, as it includes plenty of private sale offers.
Parkers used car value, however, is not a suitable gauge, as it is based on dealer prices. That’s precisely what you don’t want.
It is often said that the private sale price is the highest price on the market. This is, however, not actually true. The highest price is always the dealer (retail) price. The private sale price will usually be considerably lower.
That said, if you’re a good haggler, a private sale can get you more money than a trade-in or a part exchange.
With a trade-in, you sell your car to a professional car dealer. This gives you a bit more safety, since dealerships can’t disappear overnight (as a rogue private seller or buyer could). Price levels will also be a bit more predictable. Most dealers will only take a quick glance at the car to estimate its condition and then use sales data to arrive at an offer.
This means that the price of a trade-in will be lower than a private sale price. It need not be a lot lower, though. Something like 10% seems reasonable.
Many people dislike talking to dealers directly. Also, a trade-in can be a lot of work, as you may struggle to find a dealership willing to buy your car. That’s why websites like WeBuyAnyCar have picked up pace over the past years. They all but guarantee you’ll be able to sell your car and there is very little haggling involved, typically.
At the same time, the prices offered by WeBuyAnyCar are all but automated and will usually be a little lower than the best possible trade-in price.
And then, there’s the price a dealer will pay you for a part exchange. The part exchange has remained surprisingly popular over the years. This is because it combines the WeBuyAnyCar concept with traditional dealership services.
In a part exchange, a dealer promises to buy your current, old car if you pledge to buy a new (or a second hand) vehicle with her. As part of the exchange, the dealer may buy a car she would not otherwise take on. In return, you’ll need to lower your expectations a bit and accept a lower price.
It is often said that the part exchange price is the lowest on the market. Strictly speaking, however, it doesn’t even make sense to look at it like that. The part exchange value is always connected to the price of the car you’re buying or the conditions of the contract in general. So the dealer can give you a really low part exchange price, but in return offer you a price reduction for your purchase (quite common with factory new cars) or throw in a few extras.
What really matters in these transactions is not the isolated part exchange number. But the overall cost of changing. Which is why you should focus on that instead of worrying too much about getting the best possible price for your banger.
In an ideal world, a car valuation service would compile data on every single sales transactions in the UK. Using this data, it could create exact averages for all models from all generations.
This, needless to say, is unfortunately an impossibly complex task.
Instead, Parkers mostly relies on intelligent software algorithms to do the task for them. These programs are capable of estimating realistic car prices using a wide range of variables. Age and mileage are the most important of these.
To verify their prognoses, Parkers also samples actual sales prices at retailers and private party sales. Each month, their team collects information on hundreds of transactions, comparing the data with the calculations in the Parkers database.
By thus combining complex statistical tools and representative sales feedback, their valuations aim to get the most out of what is practically possible.
Very few car valuation companies have allowed outsiders a glimpse at the process leading up to their numbers. Which is quite understandable. It would be like Coka Cola allowing journalists to take a look at its secret recipe or McDonald’s opening up about the ingredients to their hamburger sauce.
And yet, in a rare moment of openness, CAP HPI allowed esteemed car publication AutoCar into its premises. From its report, we can understand a few basic elements of car valuation.
Even if we have no exact data on how parkers sets its used car value for the Guide to Used Cars, the underlying process will most likely be very similar:
Parkers may well be the most well-known car valuation service in the UK. It hasn’t earned this position for nothing. On many models, its prices are pretty accurate, as thousands of buyers will gladly confirm.
And yet, many have complained about the sometimes vast differences between the car valuations by Parkers and the actual price they got from their dealer. In some cases, these can amount to thousands of Pounds!
To some critics, this devalues the usefulness of the Parkers car valuations as whole: What good are they, if you ultimately end up paying a lot more than expected?
One thing you’ll notice is this: Parkers’ valuations tend to be more accurate the more recently a car was built. Beyond the latest crop of cars, there is a lot of leeway in the market. As many car dealers emphasise, their showroom prices are not based on Parkers’ valuation, but on their perception of the condition of the car, the repairs they’ve made and the general price level in their area.
Parkers is not a bible, where every price is set in stone. For one, its prices are
a) averages.
b) based on calculations from a wide range of factors and dealers.
Its valuation system is not designed to replace the market pricing, but to give you a rough idea of what you may have to fork out. Ultimately, a dealer will ask as much for a car as he can get. And she won’t change her mind, just because you’re shoving your recent Parkers guide under their nose.
Finally, the price of a car depends vitally on the financing that goes with it. In fact, a great financing offer can more than make up for an otherwise mediocre price. So you could be paying slightly more than Parkers’ estimates and still get a great deal.
That said, you can improve the accuracy of Parkers car valuations considerably. To do this, simply compare its valuations to those by its main competitors: mycarcheck.com (formerly wisebuyers.co.uk) and autotraders. Add to that local offers on ebay and select dealerships in your city and you have a far clearer picture of the kind of price you’ll have to pay.
In the past, the Glass guide was a serious alternative to Parkers. In fact, Glass was and continues to be the most reliable source for car professionals. Its services, however, are not available to private individuals.
If used intelligently, it really helps to make full use of the information provided by Parkers:
Is Parkers useful? Absolutely. Is it always spot on? Not really. But if used in combination with other sources, it can give you a pretty good first impression about the right price for your future car.
These days, there’s a calculator for just about anything. An online car finance calculator, for example, can be extremely helpful in deciding on the terms of your car loan.
When it comes to used car valuations, however, things are not quite as simple. The most important reason is that no two cars are alike. Let’s imagine you have a red Volkswagen Polo from 2006, which you’d like to sell. Couldn’t you just type in a few numbers into a used car valuation template and get a workable result?
The thing is that this leaves out one of the most important things of all: The condition of the car. Although age and mileage usually are even more important in setting the value of an automobile, condition is a crucial third variable.
That said, there are a few websites which will give you an almost instant appraisal of your used car’s value. To help you along the way, we tested them.
On our mission to help you get the best possible second hand car deals, we compared the offers from different car selling websites. The differences were quite shocking. Which only goes to show that you should never ever accept the very first price that’s offered to you.
In our example, we took that aforementioned red Polo to a few websites and checked what their valuation for it might be.
Here’s what we found:
So, the difference between the best price and the worst is roughly £1200.
Google’s algorithm is one of the biggest secrets of the industry. But Parkers’s certainly isn’t trailing far behind. Just how the company, exactly, arrives at its used car valuations is anybody’s guess.
Part of the process includes talking to hundreds of dealers across the country. These are considered particularly representative of the overall price level. Meaning: By scanning their current price levels, Parkers can then estimate the overall price level for the same cars across the UK.
In the end, the Parkers price is a theoretical value, composed of many dealerships and as interpreted (probably) by an algorithm. So it will, by default, be different from what your dealer just around the corner will offer you.
Parkers is often chided for its supposedly ‘wildly inaccurate‘ car valuations. This is unfair. As we’ve mentioned before, you need to be aware of what Parkers can actually tell you. As long as you understand its limitations, it is actually remarkably accurate and helpful.
Still, the company is working hard at becoming even better. Parkers knows very well that printing up their Guide to Used Cars once a week will not work forever in a world which updates itself every minute. In fact, experts have started discussing the possibility of setting dealer prices in real time using deep databanks and artifical intelligence networks.
But as experiments with real time petrol price changes in the Netherlands prove, it may perhaps not be. And so, car valuation will have to adapt.
Parkers has therefore introduced a new calculation concept, away from its used car value and towards the so-called True Price. True Price is an updated version of the old model, and also includes data from actual sales collected from 1000s of dealerships. Needless to say, this should make Parkers’ valuations a lot more hands-on and precise. (Although in our example of that red Polo, the difference between the traditional Parkers valuation and True Price was mostly negligible)
Needless to say, car valuation is a lucrative business. With the UK’s second hand market continuing to grow, there is a lot of money to be made by those with the best price data.
And so, Parkers is definitely not the only provider out there. In fact, although it is leading in the consumer end of the market, other companies are clearly more relevant on the professional end of things.
Two, in particular, are especially noteworthy: Glass and CAP. According to insiders, “Parkers is nowhere near as accurate as these two”, but that may be because dealers simply like the prices set by Glass and CAP better and use them to fix their own levels, not Parkers.
Glass is generally considered the trade bible. It is not seldom that a dealer will show you the price quoted in the Glass guide to back up their own bid. That said, they will use both interchangeably, depending on which offers them the best possible deal.
d surely, that can’t be a bad thing.
Right now, Parkers Guide to used cars is still in a strong position. But as you might expect, it will have to keep at it to sustain that position. In their article, Autocar already hints at the fact that the big data companies like CAP are coming under fire from smarter alternative services.
One of them is Retail Check, a service provided by Auto Trader. Says car dealer Tony Anderson:
“It compares my cars with similar ones and tells me where, price-wise, they sit in the market. It takes into account details such as colour and options. Using it, I’ve had a BMW sell for £1000 more than Cap suggested it would. Today, when customers can compare lots of prices at the click of a mouse, the game’s about getting them through the showroom door at prices that are not only competitive but which, for me, reflect the unique appeal and value of each car.”
It could definitely be a potential source of trouble for an established player like Parkers. For decades, trades on the car market have been dictated by a system which essentially locks prices at a certain level. Dealers will always be able to use Glass, CAP and Parkers to justify their offerings, without actually paying attention to regional specifics.
If concepts like Retail Check take hold, the focus could once again return on the actual car and the supply and demand situation at a particular location. Whether or not this is good for you depends on these details. But one thing’s for sure: Car valuation is bound to become a bit more flexible, open and exciting again.
As we’ve argued in this article, Parkers remains a useful and mostly accurate source for used cars. Its price guide may no longer be authoritative, if it ever was. But on a market marred by great uncertainty, it is one of the few constants you can rely on.
At the same time, car valuation will never turn into a science. And even if Parkers should ever come up with the best possible algorithm, it would still make imprecise predictions. Also, remember that dealers don’t have to follow Parkers’ advice. They can choose to offer cars for a lot more or offer you a lot less when buying. As evidence from the market shows, they are already doing just that.
The best you can do is probably to use Parkers for its advantages, while keeping its imperfections in mind. As a first indication, very little beats a visit to Parkers free online valuation.
CAP, which provides the raw data which Parkers then transforms into its valuations, also offers its own car valuations. So does Glass, which has traditionally been a service used by dealers rather than consumers.
Both have a reputation for being more accurate. Whether or not that is true is open to debate. There have been no studies so far, so you’ll have to take the word of the few industry experts who have gone on record on the subject.
Since CAP and Glass are not readily available to regular drivers, this is more of a theoretical point anyway. That’s not to say you can’t get additional information elsewhere.
One of the most obvious examples is ebay. It deals with huge amounts of cars each day, and it doesn’t just offer estimates but actual sales prices. By comparing prices on many similar sites, you can get a fairly realistic picture of the right price.
Things obviously get even more complicated if you are in need of a bad credit car loan. Quite often, these deals can not be separated from the act of buying a car. So what you get is a combined deal of
Parkers is obviously not very helpful in these cases. If you’re in such a situation, it makes more sense to simply scan the market for what’s on offer and to go with the dealer with the best prices, the best selection and the best reputation.
29 March 2019 Concept Car
