Why Is NADA Value So Low?

Many times, our readers ask us about the trade-in value and private party value of certain cars, SUVs, and RVs. Particularly trying to understand why the pricing is so different between what offers by a dealership and a private buyer. So, a common question from our readers is “Why Is NADA Value So Low”. Or more specifically “Why is NADA so much lower than KBB?”, “How accurate is NADA?”, “Is NADA more accurate than KBB?” In this article, we propose 2 practical exercises determining the values of the same vehicle by NADA and KBB. We expose the truth about NADA vs. KBB. Who is more accurate? To determine if the NADA value is lower than KBB, Edmund, black book, etc. or if it is just our perception, we have made this comparison when possible. In this article, I explain a pricing comparison to determine if the NADA value is lower than KBB or if it is the opposite.

Why is NADA Value so Low? Wait, Is It?

NADAguides.com and the Kelley Blue Book are benchmarks used by North Americans to price vehicles on the market. Both guides are frequently updated but are based on different market parameters. In addition, they define their price lists differently from each other. Therefore, when comparing the values obtained for a given vehicle quoted by KBB and NADA, we must take into account whether we are actually making an adequate comparison or not.

KBB vs. NADA Value Comparison Experiment

NADA vs. KBB Who is more accurate? We decided to demonstrate by a simple 2-stage experiment whether NADA values are lower than KBB values for a quotation made under the same conditions, or not. For that, we set some variables, to ensure the correct quotation conditions: the same ZIP code randomly chosen (72113, AR), exactly the same mileage (87,932), and date (Mid-August 2022) were used for all quotations.

We chose two vehicles with different market turnover. A 2016-SUV type vehicle with low market turnover and a 2018-Truck with high market turnover. During the assessment, we ensure to choose the same trim level and standard features.

  • Vehicle 1: 2016 Ford SE Escape Sport Utility 4D
  • Vehicle 2: 2018 Dodge Ram 2500 Regular Cab Tradesman Pickup 2WD T-Diesel 8 ft

Let’s look at the results of both quotes and what each of the list prices mean for the KBB and NADA values obtained, before deciding which is lower.

Value Comparison Experiment Results – Part I

Let’s look at the KBB vs. NADA values for the 2016 SUV.

The KBB places the vehicle in question at what they describe as the fair purchase price by defining the vehicle’s good condition as a vehicle that has some repairable cosmetic defects and no major mechanical issues. Although the vehicle is in good condition the KBB defines that the vehicle may need some overhauls. The title history is clean. And the vehicle may need some reconditioning for resale. Under these vehicle conditions, KBB values the vehicle at $11,406.

For the NADA guide, clean trade-in values reflect a vehicle in clean condition. There are no mechanical flaws, and the vehicle easily passes all the examinations. The paint, body, and wheels are in good condition. Although it may have some minor surface scratches while maintaining a high gloss finish. The vehicle has a clean title history. The vehicle will need minimal reconditioning to be ready for resale. NADA values it at $11,975.

If we compare the condition of the vehicle as described by the 2 guides, it appears that NADA’s Clean Trade-In vehicle may be in a better condition, as NADA indicates “minimal reconditioning” versus KBB which indicates “needs some reconditioning” for resale. So, it still seems to me that they are comparing different things. However, in this case, it is clear that the value of NADA is slightly higher than KBB.

Why Is NADA Value So Low? Is It or Not? As you can see in this example, we have not found the appraisal of NADA to be lower than that of KBB. NADA value has been slightly higher.

In the image below we have highlighted with purple boxes the values that are comparable between NADA and KBB. Also included are the definitions of the price lists and vehicle conditions, which is key to understanding whether they can be compared to each other.

why is nada value so low nada higher than kbb
Experiment #1: Left: KBB values 2016-truck selected for the experiment at $11,406. Right: NADA values it at $11,975. The NADA value is slightly higher than KBB.

As for the private party value, we will not make any comparison as only KBB reports this, while NADA does not include values for private sales. If you want to learn more about how to calculate private party value, we recommend this article.

Value Comparison Experiment Results – Part II

Let’s look at the KBB vs. NADA values for the 2018 Truck (Used 2018 Ram 2500 Regular Cab Tradesman Pickup 2WD T-Diesel 8 ft).

Under the same conditions, the KBB values the Ram truck selected in the comparison experiment at $29,754, while NADA values it at $31,100 for the same vehicle. Even discounting $2,000 for the mileage used, the NADA value is higher than KBB.

why is nada value so low nada higher than kbb
Experiment #2: Left: the KBB values the 2018 Ram selected for the experiment at $29,754. Right: NADA values the same vehicle at $31,100. Even discounting $2,000 for the mileage used, the NADA value is higher than KBB in a few thousand.

Conclusion about “Why Is NADA Value So Low?”

So, Why Is NADA Value So Low? Is It or Not?

As we demonstrate in these two examples, NADA values were higher than KBB.

Is the NADA value lower or are we comparing incorrectly when KBB vs. NADA? I am inclined to think that people tend to compare incorrectly and definitely NADA values do not come out lower. NADA may even value vehicles a few thousand above KBB.

This explains why dealers generally quote trade-in value with KBB instead of using NADA guides. Because it leaves them a large margin in favor.

On the contrary, banks use NADA guides.

As exceptions in RV appraisals we can mention that since there is no KBB for RVs and there is only a NADA guide for RVs, dealers rely on the values provided by NADA. However, most vehicle dealerships prefer KBB because of what we have shown in this article.

We hope you have found this article useful to learn more about how to determine the trade-in value of your vehicle and how to compare values using the NADA and KBB guides. We believe that our experiment debunks the myth about “Why Is NADA Value So Low”, and we hope that we have demonstrated it in the best possible way.

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