Does Carfax have a Monopoly?

Carfax has a very unique business model. Tell the consumer they need to ask for a “free” Carfax report from their dealer (who then pays a hefty fee). The exclusivity contracts with Cars.com and Autotrader helps keep would be competitors at bay. i.e. Autocheck.

While Autocheck is up to one third the price of Carfax, with virtually the same data, it does not hold the same clout with consumers that Carfax has. The worst part is that we, the dealers help perpetuate this condition by providing Carfax (who is owned by Polk by the way) with our service data. I too am guilty of this practice. As we continue to provide Carfax with vehicle service histories without charging them at the same time as we allow them to sell the data back to us at higher and higher rates.

Carfax seems to feel they are irreplaceable and non-negotiable. I am surprised to hear our rep put the Carfax brand ahead of their data quality and quantity when justifying the April 1st price increases. In fact the data is what we all count on and pay for to protect ourselves and our consumers from damaged goods.

I am curious as to what the dealer body thinks of this situation. Do you freely give them access to your service data? Are you able to negotiate their monthly fee? What have you found about their attitude and values? Is this part of a bigger trend toward Polk owning all automotive related data? How do customers respond to dealers using just Autocheck? Does the dealer body have any leverage to protect ourselves from the ubiquity of Carfax and their ability to extract money from us?

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Comment by Jay Prassel on March 3, 2012 at 2:29pm: ....continued:

Carfax costs about $35 (Retail) and has done a great job of selling itself as the "gold standard" on vehicle title reports, but we don't think it is enough if you want to know the most you can know about a used car before you take a chance on it. Carfax only uses some sources and not all that are out there.

AutoCheck, which costs about $30 is another company that does the same thing and they reportedly use some of the same and some different sources of data.

Another little known but highly accurate one is NMVTIS which is actually a web site resource that was set up with federal government assistance and guidelines because of the problems with data holes in Carfax and AutoCheck - and it is the cheapest of the bunch.

Prices for NMVTIS reports (Prepaid)

$3.00/report for 100
$2.50/report for 500
$2.00/report for 1,000
$1.75/report for 5,000
No setup fee or monthly fee

Call or email me for additional information or to sign up. If you want to try 5 VIN's for FREE, click here. Scroll down to "Register Now".

Comment by Chad Reeser on March 3, 2012 at 2:29pm: I believe Carfax has a great marketing scheme to "force" auto dealers to pay for the consumer's "asking" for a vehicle history report. Since, this can be obtained other places for less $... Or for free, a consumer would accept any of them if a dealer doesn't object to providing them with something that details the vehicle's history. I am sure that if all dealers banded together and utilized the less expensive options Carfax would have to change their strategy!

Comment by Jay Prassel on March 3, 2012 at 2:29pm: For the two guys who asked for more info on NMVTIS, follow the article to the end and try 5 VIN's for free:
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VinAudit Introduces Vehicle History Reports with Real-Time Data for a Fraction of the Price of a CARFAX® Report & AutoCheck

The National Motor Vehicle Title Information System (NMVTIS) is administered by the U.S. Justice Department and, under federal law, all insurance companies, salvage and junkyards, salvage auctions and towing companies are required to report to NMVTIS. The System is intended to ensure key vehicle history information is available accessible, and affordable to consumers. NMVTIS provides a unique service in terms of the source of its data and timeliness in which its data is received.

Unlike information available from private vehicle history databases, NMVTIS data is based on federal legal requirements and therefore reduces risk to a searching agency because of its completeness and accuracy.

California AB 1215, starting on July 1, 2012, California new and used car and truck dealers will have to check a National Motor Vehicle Title Information System (NMVTIS) report before selling any used vehicle. NMVTIS vehicle history check information contains the most up-to-date DMV title information from participating states, along with the industry’s most complete salvage auction, junkyard and insurance company sourced total loss information. Carfax and Autocheck do NOT qualify as of today, but have asked to have the Bill amended to be included.

Currently all 50 states are involved with NMVTIS at various levels of participation, representing nearly 90 percent of vehicles on the road. (Map) Some states participate fully with NMVTIS (provide data to the system as well as make title inquiries before issuing new titles.) Other states provide data only or are developing the capacity to participate fully with NMVTIS. The following state are still in development, but are expected to be in accordance in the near future: CO, DC, HI, IL, KS, ME, MI, MS, NM, OR, RI, VT.

What is included in an NMVTIS Vehicle History Report (File Attached)

NMVTIS reports provide data on the five key indicators, intended to prevent auto fraud and theft:

Current Titling State & Last Title Date
Verifies the validity of the title presented for the vehicle.

"Brand" History
Brand information, applied by state motor vehicle titling agencies, including "junk," "salvage," and "flood." helps protect consumers and dealers from unknowlingly purchasing a damaged vehicle. Without knowing the brand history, a consumer or dealer may pay more than the vehicle's true value or even purchase a vehicle that is not safe to drive.

Odometer Reading
Odometer fraud may result in paying more than the vehicle's fair market value or at worst, the purchase of an unsafe vehicle. Checking the odometer reading also helps consumers and dealers identify discrepancies in the vehicle's history.

Total Loss History
Knowing whether a vehicle has been declared a total loss helps consumers avoid purchasing a potentially unsafe vehicle.

Salvage History
Similar to a vehicle with a total loss history, a vehicle with a salvage history has had severe damage. Salvage history helps consumers avoid purchasing a potentially unsafe vehicle.

The NMVTIS website: http://www.vehiclehistory.gov

From the Consumer Rights Blog:

Who's best? Carfax or Autocheck or NMVTIS?

Carfax costs about $35 (Retail) and has done a great job of selling itself

Comment by Jay Prassel on March 3, 2012 at 2:17pm: Ebay Motors provides an AutoCheck report when a vehicle is listed. Adam makes an excellent point, it's the "vehicle history report" the consumer is interested in seeing.

There is only one true Vehicle History Report and that comes from The National Motor Vehicle Title Information System (NMVTIS) which is administered by the U.S. Justice Department and, under federal law, all insurance companies, salvage and junkyards, salvage auctions and towing companies are required to report to NMVTIS. The System is intended to ensure key vehicle history information is available accessible, and affordable to consumers. NMVTIS provides a unique service in terms of the source of its data and timeliness in which its data is received.

The new law in California starting July 1, 2012 requires every new car and used car dealer to provide the NMVTIS report. Carfax & AutoCheck do NOT qualify as of the point in time. My guess other states will soon follow.

Comment by Bill Gasson on February 28, 2012 at 7:28am: Adam,

Carfax has the branding in the consumers mind,due to the advertising over year's. Auto ck ,actually as you probably know is a more extensive data,but the public eye is unaware of that product ?

Comment by Adam Barish on February 27, 2012 at 1:53pm: I have gotten some interesting responses on Linkedin and ADM. One dealer had a point that when a customer asks for the Carfax (and we show it to them before they ask) they are actually asking for a vehicle history report. Much like we ask for a coke when all we really mean is a Cola. The key seems to be not responding "We don't have carfax" and justifying and explaining....The response should be "absolutely we have the vehicle history report" and explaining it just the same. The best practice seems to be pulling it out early and going over the VHR and avoid brand names all together.

Comment by Stan Sher on February 27, 2012 at 11:45am: Carfax has become a necessary evil. Not to say that they are good or bad since that is debatable. However, the thing about Carfax is that they have positioned themselves in the marketplace to a level of transparency where consumers are looking for them. They have marketed themselves which allowed them to become a dominant force in the industry. I was at a dealership not too long ago where a customer asked for the Carfax but we were dealing with AutoCheck. I told her they are very similar and that is what we use. I then had to overcome the objection of why do we use AutoCheck and not Carfax. Consumers are savvy and they buy into the propaganda of what to look for and where to shop because companies like Carfax advertise heavy and make a huge presence on the TV. Commercials sometimes become the "go to guide". I believe that Carfax leveraged consumer activity to allow them to charge higher fees and do some of the good and not so good things that they do.

Comment by Marsh Buice on February 25, 2012 at 12:15pm: Adam, I believe Carfax sold out years ago when they began to give "Impact prices" on their report. My theory is for them to report the facts and let us sell the cars-dont merge the two. When I expressed my dissatisfaction, they were like, "Yea, well..." We still have an open Carfax account and only use it when a customer requests it specifically. We use Autocheck 99% of the time. Your market may be different than mine. The South is pretty easy going. Carfax is not a player in my book-they sold us dealers out.

Does Carfax have a Monopoly?

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What is included in an NMVTIS Vehicle History Report (File Attached)