Mileage Thresholds

I love finding a researched backed answer to a “common sense” observation.

Does 100 miles make a difference on the wholesale value of a truck?  Not really would be most of our answers, most of the time.

So why does a truck with 39910 miles bring more $ that the one that has only a 100 more miles?  Same truck, same condition, same owner...one driven just a few more times.

For the same reason you see sales for $7.99 at the grocery store and not $8.  Or on the other end of the pricing spectrum a house is listed at $499 000 and not $500 000.

It’s called “left-digit bias”  It is the consumer's tendency to focus on the further left digit of a number while pretty much ignoring all the other #’s.

This left digit bias works for the same way for odometer readings.  

Basically, when the retail consumer sees (online or on the lot) the mileage on a vehicle, if it is close too but below a 10000 mile threshold they only pay attention to the first # and end up paying more than vehicles that have crossed over.  

Research shows by as much as $300.00.  Estimating the Effect of Salience in Wholesale and Retail Car Markets

Because professional wholesale buyers realize this, they step up and buy the ones close too but not over these mileage thresholds.  Inexperienced buyers assume the jump to a different bracket is smooth but then have tougher time selling.

It’s on average a $173 wholesales spread between thresholds. Heuristic Thinking and Limited Attention in the Car Market?

Three takeaways:

1. Watch for thresholds when taking in trade-ins
2. When advertising, even 1000 mile marks on the lower side are looked at more favourably
3. According to the research, fleet/lease sellers don’t pay attention as much to mileage thresholds and won’t hold out for more $ if the unit is on the lower side.  So there is opportunity when buying.

Oh, and for Canadian dealers… the average is $184 per 10000 km threshold.

Note from Robert Hollenshead, Accu-Trade founder & world’s largest wholesaler:  “We've done this for many decades, looking at which car to drive to be sure where we are going won't make it "flip" miles.   From 9,879 to 10,000, and so on. Might be paranoia but we've done it for decades.”

Turns out, it isn’t!

Sean Liptay's Bio : This is the story I get to tell...

Every VIN on every vehicle has a wholesale value attached to it...from the latest model to the vehicle on its final trip back to the smelter. The sooner the relevant value is known the more efficient the market becomes. Eventually, buyers and sellers should be able to meet their expectations without any time delays or difficulties. From the consumer trading in their vehicle to the disposing/sourcing of wholesale vehicles.

I truly believe that Accu-Trade has the best chance to make commoditization of the VIN happen. 

I am Accu-Trade's "drum beat" between explaining what the current state of price discovery in the automotive industry is and what it will look like in the future.