Son: Nice car Dad. How much did you pay for it?
Dad: Ten thousand dollars.
Son: I think that’s too much.
Dad: Really? How much do you think I should have paid?
Son: Four dollars.

There are only so many harsh Ottawa winters a car can take. A few months back, I took my 1992 Honda Accord to my mechanic who delivered the bad news: the car has roughly six months left before it will need significant repairs to keep it in running condition. So with a heavy heart, I turned in my old car to the Retire Your Ride program and went looking for a replacement. I wasn’t interested in getting a brand-new car — the initial depreciation hit is large and I live in a rather rough neighbourhood — young kids zipping around on bikes and if they can get away with it, climbing on cars. I started looking at private sales on Kijiji and Auto Trader but still turned to the trusty Canadian Red Book, which is available in most public libraries in the reference section, for guidance on pricing.

But there is an easier way. A website called VMR Canada provides an easy way to look up Canadian used car values for most makes, models and years. You can also refine the search by picking a trim, options such as leather seats and the number of clicks. I found the wholesale and retail values to be close to the Canadian Red Book for the various Honda Accords I looked at. Another useful pricing resource is the Black Book trade-in estimators available at many car manufacturer websites. Our 4-year old son obviously hadn’t checked out any of these sites, which probably explains why his estimate of car values is a bit on the low side.

This article has 21 comments

  1. This story just made my day.

    Thanks for this.

    Myke

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  3. Cute. Kids say the darndest things. I’d recommend taking a trip to the library to check the Lemon-Aid guides for the model and year you are considering. This can be a real eye-opener.

    • Canadian Capitalist

      @Michael: My mechanic is my lemon guide :) All I have to do is to give him a make and a model and he tells me if the car is worth considering.

  4. I trust my mechanic as well. However, I find he tends to give relative judgements among the makes of cars he sees regularly. So, he will be positive about a middling car because it is so much better than the lemons he see regularly. That’s why I look at the lemon-aid guides as well.

  5. I suppose you can tell your son that you can go around like Fred and Barney for four dollars :P

    Those are good resources; I wasn’t aware of all of them. Thanks for sharing…

  6. Excellent link! thanks!

  7. Any thoughts on the make? Will you be sticking with Honda?

  8. Canadian Capitalist

    @MDJ: I purchased a 2004 Honda Accord. The conversation with my son at the top of the piece happened after I brought the car home.

  9. I just bought-out a 2007 Toyota Yaris that I had been leasing. My buy-out price was within $5 of the wholesale value calculated by that VMR site. That’s pretty darn accurate.

  10. Isn’t Bill Miller considered a type of value investor, similr to Warre Buffett? I’ve always been led to believe that value investing was generally the more superior, at least historically. If so, isn’t it possible, Mr. Miller has just hit a.rough patch, similar to Berkshire Hathaway during the recent market slump.

    Gaby

    • Canadian Capitalist

      @Gaby A.: Yes, Bill Miller is a value investor. But just because someone calls himself a value investor doesn’t make his investing strategy superior. It all comes down to stock picking skills because defensive investors can invest in the value portion of an index if they wish to.

      I was one of those who thought that Bill Miller possesed genuine skill. But now I’m not so sure. I wonder if Bill Miller’s track record could be due to luck. Looks like investors in the Legg Mason Value Trust are wondering the same thing as they are dumping the fund en masse. It is still possible that Bill Miller has just struck a really bad patch but investors don’t seem to want to stick around to find out if he can still work his magic.

      I can’t think of Buffett hitting a similar bad patch. Yes, he has trailed the index badly at times but I can’t think of a time when Berkshire lost 50% of its value. That’s a huge hole to dig out of.

  11. Just realized I posted the question on the wrong article…that’s what you get for using a phone to browse. Sorry. :-)

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  15. Kids can be brutally honest. They always provide a “different” point of view if I may call it. :) I wish there truly was a car worth $4 though. LOL.

  16. I used to use vmrcanada.com and I think it is useful for cars under $7000 but any higher than that the prices seemed to be skewed. The black book is close in price for lower priced cars but not as close for the higher priced ones. Just my experience with it.

  17. The best way to guage the market value of a used car is the Canadian Black Book which is the same book car dealers use to value your trade-in. I am a CAA member in manitoba and I can access the book on-line on their (CAA’s) website.

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