Instant market price and what it means

Asked by Jul 19, 2012 at 02:48 PM about the 2011 Mazda MX-5 Miata Grand Touring

Question type: Shopping & Pricing

If you list the depreciation of cars (i.e. Mazda Miata as $9500 first year, then about $1500/year
thereafter) how is it that you have a instant price which does not reflect this?  In most of your ads, the
price stated by the dealer (nearly $22,000 for a 2011) is way above the depreciation rate??  Your
instant value is therefore far higher than your researched and proposed actual depreciation of the car.  
This ends up supporting higher asking prices for the dealers and works against the consumer.  So, for
the Miata, if the list of the car was $27000 in 2011, it is now at least one year (soon to be 2 years
out), the depreciation should be $9500 + $1300, so the instant value should be on the order of
$16,000, not the $22,000 that you show.  What's up?

2 Answers

135

Dealer Profit = Purchase Price - (Cash Price Paid for Vehicle + Reconditioning and Inspection Costs). KBB.com is a good resource to find out what finance and insurance companies use to determine a vehicles value (blue book value), but to determine what the actual cash value (what a dealer paid or will pay) I would suggest Edmunds.com (black book value). The instant market value is based on the average price for a particular vehicle listed on the internet. Dealerships and individuals are allowed to list vehicles at whatever price they choose to, price is ultimately determined by what the purchaser is willing to pay. In this equation emotion is the dealership's greatest ally and the consumer's worst enemy, if you fall in love with a car chances are you will wind up paying more for it.

2 out of 2 people think this is helpful.
80

This is the best answer I have seen to this question. I had always assumed (yeah I know) that instant market value was based on what the cars were selling for, not what the dealers decided to list the cars for. This puts a whole new light on things, especially since the dealers pay car gurus every time they get a contact though the cargurus website. Found out about this in a Newsweek? article. So this site is more about helping dealers than it is about helping buyers.

1 out of 1 people think this is helpful.

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