CARFAX – What Are You Thinking?

I first started seeing this on our dealer side of CarFax months ago and asked our rep about it and even then all he could tell us was that it's something that we are working on and the customer won't be able to see it. Ok... well that's great unless we want the customer to see it.

After several tweets and blog posts tonight I went on my website and pulled it up...sure enough a 1 owner car with low miles on it shows a -$140 on the CarFax report....

Is CarFax trying to be the next KBB or NADA? CarFax doesn't even disclose how they come up with their figures....

Guess the phones are going to be hot tomorrow!

The worst part is no one can explain how they arrived at the value.

We considered making the switch from AutoCheck to CarFax. But we were hesitant because it's almost as if CarFax is a household name when it comes to used cars. We also had a rash of erroneous AutoCheck history reports that took a considerable amount of time to resolve.

Matt - I'm with you. We just want to know how they come up with these values before we make a decision on switching to AutoCheck.

WHY do we keep working with vendors who claim to "work for us" when in fact they're just figuring out how to SCREW us? In what other industry would any company in their right mind pay someone to tell customers why they should pay less for their products?


This isn't just for CarFax... this is for every lead provider, and hell, every media outlet in the industry.

oh, and CARFAX links are coming off my site... today!

We switched to autocheck just because they're cheaper. Unfortunately, customers ask for carfax by name and we have to either overcome -another- objection or relent and spend the money for both.

simple question...is the vendor in the b2c biz or b2b?


as to how they derive their values/impact of history... isn't CarFax owned by Polk? they'd know the + and - of the values,no?

Nick and Mike,


Very interesting discussion brewing here. The fact is that some companies can market to the end user and hold those in the middle hostage for revenue. Carfax has done an excellent job of marketing to the consumer, "don't buy a used car without it," this is just another extension of that effort.


This isn't new or exclusive to the automotive industry. Think real estate appraisals to get a loan, legal proceedings requiring a lawyer, federal govt mandates on nearly everything, BBB certification, college education hiring requirements to get a job, all of these industries have an equivalency to this end user marketing practice.


Pay Carfax less for using their logo to advertise, but they will get your money if your customer demands the service in order to do business with you.

I just want to point a few things out for CarFax. Dealers certainly could tell a customer "we factored the CarFax price adjustment into the price of the car", but for dealers using vAuto, FirstLook, or AAX this might not be true.

<b>1. CarFax - did you factor-in how dealers price used vehicles today?</b>

A dealer that uses a pricing tool, like one of the 3 I mentioned above, probably does not have access to this &quot;CarFax pricing adjustment&quot; yet. I have to assume CarFax is working with these companies to integrate this pricing feature. If not, then dealers who use pricing tools should seriously consider whether they retain a partnership with CarFax.

<b>2. CarFax - did you consider the arguments dealers are going to have?</b>

There are going to be arguments for and against CarFax&#039;s latest move, but at the end of the day dealers will have to gauge whether CarFax is just a well-branded synonym for &quot;Used Car History Report&quot; in each market. If the dealer&#039;s sales staff is strong they have the ability to work with or around CarFax. If a dealer has confidence in his sales staff then they&#039;re going to have to internally discuss switching to a cheaper alternative than CarFax. Before this move, this internal discussion was not as rampant.

<b>3. CarFax - who are your customers?</b>

If you make more money off the monthly bills dealers send you, then why didn&#039;t you give dealers more of a heads-up before launching this product?

<b>4. CarFax - where are these values coming from?</b>

How can a dealer be against or for your new pricing feature without knowing how to explain it? Are dealers supposed to take the stance of &quot;because CarFax says so&quot;? Consumers and dealers deserve to know where these values are derived.

<b>5. CarFax - Why?</b>

I guess this one doesn&#039;t matter as much as the other questions. But why did you get into this game? Many of us are scratching our heads right now. The question doesn&#039;t really matter because you&#039;ve done it and now we all have to figure out whether we&#039;re going to stand by your decision.

<b>My advice</b>
Speak up quick. Speak up now. Don&#039;t let another website tarnish your &quot;great new feature&quot;. Publicly respond ASAP!

why not...they&#039;ve gotten away with everything else??? They are allowed to severly de-value millions of vehicles without being required to show proof of damages (however large or small). The reason a dealer HAS TO HAVE IT is because CARFAX is spending so much on advertising and playing on what the customer already thinks the dealer is trying to do. I think it&#039;s unfair and false advertising to make the public think all dealers are trying to take advantage of them.

Switched to AutoCheck about 6 months ago and haven&#039;t looked back. It&#039;s cheaper and the customers have had no complaints. They just want the VHR and don&#039;t seem care about the brand name on top

The bottom line is carfax does not gain anything by getting into the pricing and value segment. They have cornered the market on vehicle history reports and should leave bad enough alone. Where could they possibly be getting accurate pricing info anyway? They claim that they &quot;monitor&quot; million of used vehicle transaction &amp; base the &quot; vehicle value impact on these transactions&quot;. They must then be scoring every carfax &amp; matching it with individual sales???? Doubt it!!! Even if they were doing that where are they getting the retail sales price info???? The only possible way for them to get ACTUAL exact sales prices would be from AUCTION sales not retail sales. I recently ran a carfax on a one owner 2007 BMW 5 series with no accidents, perfect sevice history and only 5K miles!!! A true rare find....guess what... a -$340 vehicle history impact! WTF??? When I asked the rep to explain, I could not get any explanation. Seems to me that this car would be a no-brainer for a positive number in this &quot;new&quot; evaluation tool. I also checked several other cars while on the site and found many with numbers like $-30 or + $40. With such small numbers why even bother with it? If the carfax impacts the cars value less than $300 is it really even important anyway? In my opinion this is a complete FAIL for Carfax. I hope they get enough heat over to reconsider dumping it completely!

Hey Boss &quot;My customers says our CarFax report told me you need to take another $1440.00 off&quot; your already way to low internet price. Don&#039;t they know the pricing tool you used to mark it down is flawed. It can&#039;t take into account all the low ball Used Car listings that state price includes a $2000 cash or trade or doesn&#039;t include freight or state inspection. What other helpful tools can we spend $$ on that will help us give up gross on our hard to come by Used Vehicle Inventory?? What am I missing here??

Hey Bruce,


I appreciate your concern. I want you to know that vAuto has the technical ability to catch listings on-line that require amounts to be added back to the asking price from cash or trade. This is a practice that we&rsquo;ve seen plenty of and made the adjustment for quite some time ago. In other words, if a vehicle is listed for $10,000, but in the disclaimer it requires $3,000 cash or trade, we pick it up as a $13,000 asking price. To this extent, you shouldn&rsquo;t be pricing against invalid competition.


The CarFax price adjustment is a disturbing feature. First, the number they come up with as an adjustment comes from a black box that nobody can understand. Further, it is definitely disruptive to the sales process. I just don&rsquo;t understand what these guys were thinking when they came up with this idea. It seems like somebody invented the concept that doesn&rsquo;t understand the dealership business. In any event, I appreciate your concern and please feel free to contact me directly with any further issues or concerns regarding our system.


Thank you.


Dale

There is no question that CarFax is taking this in the absolute wrong direction. Many dealers post their cars online with a CarFax report (It&#039;s required for most CPO programs) I would guess that Dealers are a large part of their revenue. It seems a bit like biting the hand that feeds you. Not a good move!

I just printed out the carfax reports from our site. 41 devalue our vehicles by a total of $3080. 30 increase the values by a total of $2840. Of course, the customer will be much more passionate about the nagative carfax pricing schemes than the positive ones. I&#039;m giving both stacks to my GSM tomorrow. Call me crazy, but I&#039;m seeing autocheck in our near future.

Had a discussion with GM and Used Car Mgr yesterday.... they thought it was for us, that the consumer didn&#039;t see that. I showed them that they do. Getting auto_check prices. Only problem is we are Certified Honda, Hyundai and Toyota who require carfax....have to work on this one

Carfax is clearly trying to walk a tight rope between client and consumer and so far they are failing miserably.


This new feature was never discussed with me. I think I would remember a conversation where I&#039;m being told &quot;Hey we&#039;ve got this new added value feature that tells your customers how much to knock off the price of your cars. It&#039;ll be great, you&rsquo;ll love it!&quot;


Now there is the element where Cars.com and Autotrader have an agreement with Carfax, so the consumer will see this feature there as well. So Autocheck will not solve the problem completely.


In my opinion, we force Carfax to the table and see if we can get this disastrous experiment over with as quickly as possible. Carfax what do you say? Ready to talk?

This is one of the responses that I got from Carfax.


&quot;The History Impact figure has been on dealer run CARFAX reports for about 3 months now with pretty good reviews. The consumer version launched this week and this is the first response I&rsquo;ve had from any of my groups. It&rsquo;s really no different than the CARFAX expert saying a car is worth $500.00 more because of low mileage, good service, etc. The expert has been on the report for over 2 years telling customers this.


The new version of the History Impact now takes into consideration accidents and other negative indicators so some numbers will/are negative. We&rsquo;re not telling dealers/consumers what vehicles are worth we&rsquo;re only letting them know that based on the history of the car it should be worth +/- more or less. If a car has a negative History Impact I would let a consumer know that we took that into consideration when we priced the unit.&quot;


In my opinion the explanation does not address the root of the problem.

From a number of clients that have called me,, it looks like AutoCheck will be having the best sales month in the company&#039;s history in May 2010.


The fact that CarFax did not respond to Alex&#039;s questions, when they said that they would is telling.


By their actions, some might even say that this forum of passionate dealers is NOT worthy of interaction, comments or engagement.


Now, what else can you feel when they ignore a social media engagement?

They seem to be focusing their efforts on defending the product and how it benefits everyone, instead of opening a dialog. It seemds that they have not learned what most large companies have known for several years, that you cannot ignore blog posts until they go away. Just ask Michael Dell what happens when you bury your companies head in the sand while your customers scream.

@Patrick... you have 71 vehicles that this &quot;devalues&quot; by a grand total of $240 dollars!?


What am I missing here? Either, on average, the cars on your lot are priced right were they should be &quot;on average&quot; and your sales people do not understand the how to handle a third party question/objection OR your dealership will not discount the 71 cars on your lot by an average of $3.08 to sell them.


It looks like CarFax is helping you in this case.

CarFax is just adding value to it services (kind of like we should in the car business). We just want to continue to so the same crap over and over and expect to make more and more money. Then when we see empty bank accounts and small commission vouchers we, like so many of our customers who buy below invoice, point the finger at everyone but ourselves.


I guarantee you that the figure on the CarFax report is way more than a customer would offer on their own most of the time. Then again, I also bet that you will get an offer lower than the number on the CF report 9 out of 10 times.


So really, is the problem the figure on the CF report or the value in the customer&#039;s mind.

@Troy... Sure, if I found a customer to buy all 71 vehicles at the same time for the magical &quot;book value(?)&quot; carfax pricing, then yes, I would surely thank them.


Otherwise, I like to keep brain damage to a minimum, personally.

We&#039;ve been happy AutoCheck customers for some time. The &quot;objection&quot; of showing an AutoCheck report vs. CarFax is quickly and easily overcome, just like if you hand someone a generic tissue when they ask for a Kleenex. What they really wanted was a tissue, just like what they really want is a history report.


eBay switched their integrated reports to AutoCheck - and according to Nielsen net ratings - eBay Motors is the #1 trafficked automotive website - so look for AutoCheck to gain brand recognition ground on Carfax rapidly.


The only real drawback is the exclusive agreements CarFax holds with sites like AutoTrader.

BTW, CarFax is aware of this post - I got a .pdf from an unnamed sales person that included text about &quot;what dealers are saying&quot; about this new product -that was copied and pasted from Troy Shields comments as &#039;unknown dealer&#039;.

@Mark, could you forward me that pdf? I really don&#039;t appreciate CarFax trying to make a case off my post. Although I can handle a pricing tool objection, I still feel that they are acting very Steve Job/Apple -like in not telling dealers and/or buyers where their information is coming from.


I guess if they told us they were using Blue Book, NADA, or other base-line pricing that they would have to pay up on some royalty money like htc did with microsoft last week.


email: [email protected]

Here&#039;s the CarFax spin. We dealers love it according to them:


What Dealers Are Saying About CARFAX&reg; History Impact&trade;

Version: 05/03/10

Dealer Testimonials:

John Donnelly, Findlay Automotive

Jeff Prince, Internet Manager, Lou Fusz Automotive Group

Tim Mort, GM, Chapman Automotive Group

&ldquo;Before putting any car on our lot, it&rsquo;s important for us to know what a customer might expect to pay for

that car. The CARFAX History Impact gives a clear understanding of how information reported to

CARFAX adjusts the retail book value that our customers already use in their research.We&rsquo;re confident

that our vehicles are priced competitively in the market and we&rsquo;re holding gross on each sale.&rdquo;

Dealer Blogs:

Terryville Chevrolet:

This feature is a closing tool and really hurts nobody smart enough to use it that way...

Lets say it says a vehicle is worth $350.00 less than book value.

How does that hurt you at all?

Unless you own the vehicle for way too much $$$ it is not going to hurt to sell the vehicle for $350 under

a book value that does not even exist.

I think this was implemented as a closing tool to get people into a buying mindset and out of a shopping

mindset. It assures them it is a safe bet and a good deal to purchase that vehicle for $x.xx +/- &quot;book

value&quot;.

Park Place Dealerships:

I could not agree more with these statements - This is an opportunity, not an obstacle.

In fact, the last time I checked, a good salesperson welcomes objections so he/she can overcome them

on the road to the sale. If you are the dealer then you have the CARFAX value information at your

fingertips and can plan the proper responses to any objections.

Aren&#039;t most of your cars priced competitively for the market? Can&#039;t you justify/back up the reason your

car is slightly more expensive?

Did you know that you can plug in whichever of the &quot;book values&#039; you select? How many instances will

there be where the CARFAX pricing adjustment is in your favor as a dealer? Don&#039;t you already use the

CARFAX as part of the sales process to enhance value?

Our CARFAX representative has been in constant communication with us about this change for almost

two months, so it is absolutely no surprise to us.

I am surprised by some of the names on this forum who are opposed to this additional bit of information

being supplied to the public - what happened to &#039;transparency&#039; and &#039;openness&#039;?!?

What Dealers Are Saying About CARFAX History Impact Page 2

May 3, 2010

@ Joe - Are you saying that people asking for a Kleenex is a knee jerk reaction to a need to wipe their

noses? I think you might be missing the bigger issue...what is wrong with associating your brand with

another nationally recognized and respected brand?

Unknown Dealership:

@Patrick&hellip; you have 71 vehicles that this &ldquo;devalues&rdquo; by a grand total of $240 dollars!?

What am I missing here? Either, on average, the cars on your lot are priced right where they should be

&ldquo;on average&rdquo; and your sales people do not understand the how to handle a third party

question/objection OR your dealership will not discount the 71 cars on your lot by an average of $3.08

to sell them.

It looks like CARFAX is helping you in this case.

CARFAX is just adding value to it&rsquo;s services (kind of like we should in the car business). We just want to

continue to so the same crap over and over and expect to make more and more money. Then when we

see empty bank accounts and small commission vouchers we, like so many of our customers who buy

below invoice, point the finger at everyone but ourselves.

I guarantee you that the figure on the CARFAX report is way more than a customer would offer on their

own most of the time. Then again, I also bet that you will get an offer lower than the number on the

CARFAX report 9 out of 10 times.

So really, is the problem the figure on the CARFAX report or the value in the customer&rsquo;s mind.

That&#039;s why I don&#039;t believe testimonials. How about putting all the negative blogging going on in their testimonials and give a true picture of what dealer&#039;s actually think? I don&#039;t expect this to cost us any sales and I certainly know our inventory well enough to know we&#039;ll never be hurt by the info shown. That&#039;s not the point. It&#039;s that CarFax took it upon themselves to &quot;add&quot; this value and if we, as dealers, don&#039;t want it, too bad! I also believe the information has no validity in the real world of the auto business. I&#039;m sure the stuffed suits in corporate loved the idea (as long as they never have to be in a dealership dealing with the negative ramifications this WILL eventually bring) Remember, the more information we give the customer the more they think they know. We all, in the actual car business, know that a little knowledge is dangerous and if we don&#039;t know where these arbitrary numbers are derived from, how can our customers know? It&#039;s top secret CarFax information (I see the guy in the lab coat now with his evil laugh just making up numbers as the reports are run)


If CarFax wants to present the truth then they need to put up the negative and not just the positive from the 2 that do out of 10,000 dealers that don&#039;t like this.


Again, do I think this will cost us sales? No! Does that matter to me? No! I just think it&#039;s another layer thrown over what are too many as it is! I am also worried to the fact that as all the vendors try to one up each other with the next great &quot;enhancement&quot; we will see someone posting what customers should pay for each vehicle in the country and we will be watching used car profits go the way of the dodo bird (and the new car department)

@Troy I sent you that pdf although what @Mitchell posted was exactly what was in the file.

Question for the board:


For years some dealers have used the &quot;CarFax One-Owner Car&quot; sticker/designation as a way to justify listing one particular unit higher than another. The conventional wisdom being that if I have a 5-year old car that is a one-owner and dealer &quot;X&quot; down the street has the same make/model with similar miles that has had three owners mine is worth &quot;a little&quot; more because of it&#039;s &quot;one-owner&quot; status. We have all done it. But HOW much more is it worth? $100/$500/$1000?


Who knows? It&#039;s arbitrary.


It seems to me that all CarFax is doing is putting a dollar figure on the data that they are providing; not a value on the car as a whole. If you look at the example the &quot;Book Value&quot; block is blank and CarFax instructs you to go to the vehicle valuation tool of your choice to enter that amount.


So is this tool really valuating your cars or valuating the information that they are already providing?


If they are only monetizing the already available information on the vehicle then I really don&#039;t see what the fuss is about.

@Troy with all due respect, This discussion has never really been about what the feature does or how it works. Based on what you are saying it is further evidence that we (dealers) are left to figure it out for ourselves and try and create our own spin on the product. It&#039;s never been about handling a $300 objection. I can&#039;t imagine anyone on this forum lacking the sales skills to overcome price objections.


The bottom line is that Carfax added a feature to OUR Websites that gives the customer pricing information that is contrary to what we have posted. Their spin is that we can say &quot;Yes Mr. Customer we priced this car based on the - $300 History Impact&quot; Does anyone really believe that is what the consumer is seeing when they see the History Impact figure? They are seeing a discount, a discount provided by a trusted third party right there on the dealers website that contradicts what the dealer has posted as their selling price.


The bottom line for me is that this was an ill conceived product launch with little or no consultation with the people that are paying for it, the dealers.


This discussion has been going on nine days now without any interaction form Carfax other than the company line. I have not heard from my rep and she is aware of these discussions as I am sure all of their reps are. Carfax is playing a waiting game. Pretty soon we&#039;ll all grow tired of this. Some will switch to Autocheck, but most with CPO obligations will not. In any event Carfax should be held to a higher standard. They have left the vendor / partner relationship behind and have become the dictator of our business practices. That is a relationship that I am not comfortable with.

@Rob Thanks and I agree that it was/is ill conceived on CarFax&#039;s part. Unfortunately we dealers are dealing with the CarFax&#039;s, Autotrader&#039;s, Cars.com&#039;s, AutoChecks, etc of the world that have revenue streams from both the end consumer and the dealers.


That, in itself, is a conflict of interest. On one hand CarFax charges the dealer a very big fee for each report that is pulled. Then Carfax advertises to the buyers to go into every dealer and &quot;Ask for the CarFax&quot; which the buyer gets for no addition cost to them( and do not realize that some dealers pay as much as $40 for it).


As I mentioned in my second post on this thread, CarFax is becoming more Apple/Steven Jobs-like by the day. They set up these strategic alliances with the CPO programs and sites like Autotrader.com and once they feel that they are in the driver&#039;s seat enough they do what they please.


Unfortunately this product adds no value to the CarFax report for the customer or the dealer. It&#039;s just something someone at CarFax thought was neat, but it is more something that just muddies the already murky used car waters even more.

Had a great call with CarFax yesterday. I have a better understanding of how this value system works, and on some levels I think it makes sense.


HOWEVER


I still take issue with CarFax getting into this game at all. I say that because we have not had the negotiation issues over CarFax results in the past. Now we have a lot of them. Basically, CarFax has created a whole new negotiation point that was barely there before.


Are our sales people better versed at handling it today: Yes.


Do we feel CarFax needed to take us here: No.

The price of a used car is impossible to be determined by some nation wide service. However, due to the massive amounts of people who try to provide this service the validity of what they are saying, even in the customer&#039;s eyes, is being extremely diluted. Market conditions including availability and demand consistently effect the price of used vehicles far more than many of the things that these companies use to determine the price. I had thought of carfax as a company trying to protect the consumer but I don&#039;t believe that this new product falls upon those lines. CarFax should stick to what they are almost good at.

Rob-

Amen- It isn&#039;t about the pricing objections. But what I can&#039;t stand is how these vendors are constantly trying to win influence of consumers (Autotrader&#039;s trade-in value and the new Carfax fiasco) illustrate to me their marketing departments may not be hitting on all cylinders. The dealers are the ones who pay their bills, and they need to be finding ways to strengthen those relationships, not trying to win over customers (I realize Carfax&#039;s success is largely predicated on being branded as the de facto vehicle history check).

I have been with dealers who have used either system, and for me, the Autocheck scoring system is probably the strongest argument for a premium price for your vehicle when it scores higher than the average vehicles.

As one earlier comment pointed out, customers may ask for the Carfax, but when showed Autocheck, and the differences explained, I have never had a customer decline the Autocheck.

Dale, Thanks for the clarification on the fact that you now have the ability to adjust for low ball listings. My assumption was based on a conversation I had in a vAuto training class over a year ago where I kind of stumped the trainer with that low ball scenario. I will also pass this info to our Used Car Managers and please accept my apology for assuming this issue was not addressed in a timely manor or at all.

It seems we car dealers are once again circling the wagons. i&#039;m fed up with it. I will not be dictated to by these arrogant bastards. I canceled my car-fax account. Imagine if every dealer in America did the same thing.

WHAT IS IS THE VALUE OF MY2008 DODGE GRANDE SE VIN 1D8HN44H688137246 SPORTS VAN 3.3L V6 SFIOV FRONT WHEEL DRIVE

NEED TO FNOW RETAIL PRICE

I'm an Auto Appraiser, I specialize in Diminished Value, I'm in the process of negotiating a settlement with another appraiser using the carfax price adjustment as fact. This is simply outrageous! The value on Crafax for a 10K wreck is minus $450.... this makes no sense whatsoever! http://www.diminishedvalue.co

I have a carfax report on all of my vehicles, and never once has a customer even brought this up. Its not a big deal. Is it stupid? Very. But their price evaluations mean absolutely nothing. Ive had 1 owner vehicles with 15 service records that had the same 'price adjustment' as wrecked vehicles. So yes, its a dumpsterfire for Carfax to be doing, but it hasn't affected anything with my sales.

and if its any consolation, after that 09 Mercedes was sold 2 years later, it now has a +500 price adjustment lol

As a consumer I think it's useful to see what has happened to a car in its history because 90% of the time a sales person isn't going to say this car has been in an accident. Plus carfax only has reported incidents on it. The car could have been through more than anybody knows about. Plus there are tons of appraisal tools out there for figuring out prices for used cars, I don't think this is really a big deal. Edmunds has an app that I think is pretty amazing but I'm curious what the sales people think about it.

Dealers should stop using services like this all together. These "reports" have single handily ruined used car pricing. If there is "mechanical" or "maintenance" history available, this could be useful (but what about the "mechanical" or "maintenance" that is not posted/listed?)

The body damage/accident information is an absolute joke, yet,this is the information that most people seem the most concerned about. This information comes almost solely from police reports. Insurance companies do not report crash information as the auto "check" companies will have you believe. I respect all law enforcement officers, but last time I checked, these guys are not experts in analyzing auto damage and auto damage repair.

Carfax and companies like them are solely responsible for the diminished value placed on vehicles just because they happen to show up on one of their reports. Just because the car was in a crash does not mean that it was not repaired properly. What about the cars that were in a crash (or suffered other damage) and do not show up on a report. Some of these repairs are done "improperly", but some how a car with an improper repair is now worth more than a car with a "proper" repair.

Dealers: Stop using these services! Instead, learn how to appraise cars with excellent repair work vs. poor repair work. (oh, and stop using "lot jockey's" to repair damage....this does not help either)