The Red Book Information Service consists of one or more computer files provided to corporations for loading into their databases. These computer files allow users to identify and value motor vehicles.
Obviously, a vehicle must be accurately identified and described before a price can be attached to it. Once a motor vehicle is properly identified, its details and price can be utilised throughout the corporation's systems. Price information includes the new price, the wholesale price, and the retail price.
For example, a finance company would need the value of a vehicle (new or used) as part of the loan approval process. The description of the vehicle (provided by Red Book) would be printed on the contract and other documents.
Another typical example is insurance. When a client purchases a new vehicle its new price would be used to calculate the first year's premium. After one year, an automatic renewal notice would be issued, using the vehicle's current used price (supplied by Red Book) to calculate a new premium.
The Red Book Service is also an integral element of the operations of automotive manufacturers in Australia, New Zealand and Thailand.
The identification and pricing of used vehicles in the motor markets in these countries – together with the residual value predictions – play an important part in the marketing of their new products.
Many of the automotive manufacturers have dealer networks which need information about the prices of used vehicles – both their own brand and those of their competitors and many of the “dealer management systems” installed in these dealerships use the Red Book data to bring vehicles in and out of inventory and so on.
When pricing levels have been set, Red Book's pricing experts set their predictions for future retained values of the vehicle (residuals) for one, two, three or more years ahead by various kilometres travelled. This information is "audited" each month for accuracy (comparing predicted values against present actual used values in the marketplace). The results show that Red Book's predictions are consistently accurate.
Retained values (residuals) information is used by the major finance houses in setting their finance terms and by fleet managers and others.
Historic Values/Price Trends
As part of Red Book's research and database development, it produces a "price history" file which maintains a record of a vehicle's value at any point of time over the previous three years.
This is especially valuable to insurance claims departments to establish a vehicle's current value at the time of the accident.