Kelley Blue Book establishes vehicle values using a proprietary process that the company does not disclose. Factors such as historical trends, industry developments, current economic conditions, seasonality and location play a major role. The company also compares new vehicle information with real used transaction information.
The used car transaction information that influences Kelley Blue Book prices comes from a variety of sources, including wholesale auctions, sales from independent used vehicle dealers, sales from official franchise dealers such as Ford and Honda, rental car auction prices, and auction prices from original equipment manufacturers. Kelley Blue Book also obtains public information from financial institutions about leases to which they are a party, and it uses this information to determine the value of various used vehicles.
Through the company's proprietary process, the average prices for used cars obtained via auction are compared with new prices from official channels. The company adjusts the resulting prices according to environmental factors, using an enormous amount of sales data to analyze the used car market on a national scale. Kelley Blue Book then adjusts prices for the fact that private individuals are not required to meet basic certification standards for any of the cars they sell, resulting in prices often lower than those of official dealerships.