Brains steal money? How so?
According to recent study by The University of Chicago's Booth School of Business and published in American Economic Review, human brains have a bias to pay attention to the first digit in a number, like the mileage of a car, and if you understand it, you can use it to your advantage when buying or selling a vehicle.
The study set out to determine whether car buyers exhibit a heuristic observed in other arenas called the left-digit bias. This would mean that car buyers focus on the first digit in an odometer reading, such as the "4" in 49,100 miles, when deciding how much to pay for a car. Having studied +20 million car sales, it turns out car buyers are focusing on that first digit, and will pay an additional $150-200, on average, for a car that's just below the next mileage interval, such as 50,000, than one that's just above it.
The authors found prices fall at each 10,000-mile interval from 10,000 to 100,000 miles. "Cars with odometer values between 79,900 and 79,999 miles are sold on average for approximately $210 more than cars with odometer values between 80,000 and 80,100 miles, but for only $10 less than cars with odometer readings between 79,800 and 79,899." The study found prices also drop at 1,000-mile thresholds, though the decline is smaller.
The rest of the world might be wondering if the same held true for odometers that measure kilometers instead of miles, like we Americans use. Using a smaller sample, the Booth team analyzed Canadian data and found the same phenomenon. Regardless of the unit of measure, human brains lead us to pay more for a car with a lower left digit, though it's not a truly rational choice.
So, how can you use this information to your advantage when selling or purchasing a vehicle?
This won’t be easy because we are all susceptible to left-digit bias. Just think how many times you bought something that was $1.99 and you liked that better than a similar product at $2.10. Remember this bias the next time you're shopping for a used car, and don't let your brain steal $200 from you!
Ever wondered what it's like being on the other side of a car sale? If you've purchased a car, you probably know the consumer side pretty well. But what's it like being a car salesman? Or a dealership manager?
What pressures are they under from dealer owners, OEMS, and their own peers on the sale floor? Meeting sales goals is much more than just wishful thinking on the whim that people come walking into the door to buy a car. Dealers have strategies to generate leads, and convert these leads into sales. Yes, it often involves blowing up several balloons to draw your attention into their lot, but to close a car sale and meet the numbers takes a lot more than balloons.
Earlier this month, NPR's "This American Life" broadcasted an hour long story of how one Jeep Dealership on Long Island soldiers through the hyper-competitive business of selling cars. As fair warning, you will hear high-quality four-letter Anglo Saxon words. More importantly, you'll hear this team in the trenches, celebrating victory, and then being wrested back down by defeat.
Selling cars is like a roller coaster. You're up, you're down, and then back up. And when the month's over, no matter how well you did, you're back in line getting ready to start all over again with the new month.
So we encourage you to learn how it works on the other side. Who knows, you might actually have some sympathy for the guy selling the car, and find reasons to believe him when he says, "I'm not making one dime off of this sale." It's not beyond the realm of reason that he's telling you the truth.
Old man winter is setting in, especially on the East Coast of the United States. We’ve seen several storms blow through the area dumping snow up and down the I-95 corridor.
If this continues through the holiday season, travelers will find themselves in tough driving conditions or even worse stranded on the side of the road. So as you start preparing for your road trips to visit family and friends, we wanted to provide you with a list of items we think you should have ready at hand:
While we joke about how you might use these items, these are serious goods that can help you out of a tight spot. What are you waiting for? Get to the store now, and start packing a car survival kit!
Autoremarketing.com posted an interesting blog dissecting used car sales last month across 21 states. This blog sparked a question here at vinsnap. Which of these 21 states bought the most used cars as percentage of total state population? Using the data they posted, which came by way of Cross-Sell Reports - a division of Dominion Dealer Solutions, and 2010 U.S. Census Data we were able to determine...drum roll please...Iowa was the winner with 1.9% of the population buying a used car in November. Five states tied for second: Mississippi, Montana, Arkansas, Idaho and Indiana. Next month, we'll work to get data across all 50 states to see if Iowa will remain the champion.
We'd like to thank Tech Cocktail for the wonderful piece they recently wrote about us. They did an excellent job of explaining Vinsnap's history and introducing Vinsnap's Co-Founders. So much so, we're not sure we'd have done it better ourselves...
Marc Hoecker and Chris Coad are car guys, plain and simple. At one point, Hoecker actually went on a four-day stakeout and car chase to reclaim his stolen 1985 Pontiac Parisienne. Coad grew up in the automotive industry, and while he has too many cars to list, he remembers his 1994 Mercury Sable: it blew up in a parking garage while he was at a black tie event.
It really wasn’t surprising to learn that their startup revolved around cars and the automotive industry. They believe that cars are personal, and when they started Vinsnap, they wanted car shopping to be just as personal.
They design, develop, and deploy web and mobile consumer-focused vehicle shopping and service solutions to help car shoppers organize their experience. We let them take the wheel for a little while and give us a guided tour of Vinsnap.
Tech Cocktail: Vinsnap is pretty niche; where did the idea come from?
Chris Coad: I was hanging out with my friend, Marc, and was acting as his advisor while he was shopping for a new car. Bouncing between Craigslist, dealerships, and countless websites, he bemoaned to me about how unpleasant and seemingly disorganized the auto-shopping experience was – especially in this new smartphone era.
Therein the idea of snapping VIN numbers was born and ultimately expanded into a full business plan that we entered into the Harvard Business School Alumni New Venture contest. Ultimately, we competed and made it to the 2011 International finals in Boston. With momentum at our back, we decided to build Vinsnap, which debuted in app stores in Q4 2012.
Tech Cocktail: How are you defining your space in the automotive industry?
Coad: We believe cars are personal, and we believe the car shopping experience should be too. Vinsnap personalizes the shopping experience by providing consumers with the important data they need to organize their search to purchase a vehicle, new or used, and across any brand.
We help consumers personalize their search even more by providing them with the functionality to add their own custom vehicle photos and notes. These two features are important, especially if you think about shopping for a used car.
Let’s say you’re looking at a vehicle and worried about a scratch in the back door. Snap a photo, take a note, and upload them to Vinsnap so you can remember it. Share all of this information with your body shop or mechanic to see if the vehicle should stay on your shopping list.
We’re not beholden to any inventory listings. You can put any VIN into Vinsnap, and we’ll provide you with the information you need to make a smart purchase decision. You can truly use Vinsnap anywhere and anytime.
Tech Cocktail: What about challenges?
Coad: There were several challenges in getting Vinsnap off the ground. We first had to find out if the technology was going to work, and during our first few pitches, we didn’t know if you could take a picture of a VIN number and decode it. We finally stumbled on a partner that was able to help us turn a picture of a VIN into the format we needed to decode it.
But after that, we needed to determine how and where we were going to source the data we needed to build Vinsnap. We had a bit of luck when we met the Edmunds API team, and they’re currently one of our largest partners, and we are thrilled to be working with them.
Everything came together at the right time: momentum, technology, partners, and team. If all of that hadn’t happened, we likely would have never gotten Vinsnap off the ground. We think being based in Atlanta really helped bring this all together because the startup community is so strong.
Vinsnap was featured at Tech Cocktail’s Atlanta Mixer & Startup Showcase on October 7th.