Buying a car is a major expense for several people; no one wants to make a mistake and end up with the wrong one. Access to all vehicle data is very important in this process as it helps consumers understand that they are secure and making the right choice.
With Carfax and their vehicle history reports, consumers can gather as much information as possible on any vehicle and feel more confident about their decisions. But how does Carfax work?
This article explains how Carfax works and serves as a guide for businesses looking to enter this space, and provides vehicle history reports. Let’s get started.
History of Carfax
Carfax was founded in 1984 by Edwin Barnett III. It started as a way to verify odometer readings and reduce fraud. Soon after, it had a database of around 10,000 vehicle records and decided to sell reports based on this.
It didn’t take long for Carfax to grow, as in nine years, the company was receiving vehicle records and data from across all states in the US. By their tenth anniversary, they already has more than 100 million records and they have continued to grow ever since.
How Does Carfax Work When Buying a Car?
The thing with Carfax is that consumers do not need to provide so much information to get history records. All they need is the VIN.
The Vehicle Identification Number is a unique code that is assigned to every vehicle during manufacture. This code serves as an identifier and can be used to find specific vehicle data for specific vehicles.
So, Carfax works by decoding these VINs and providing vehicle records that are stored in its database. However, Carfax has some limitations. For instance, It is limited to vehicle records of modern VINs with 17 characters. Its tool can only decode the VINs of vehicles manufactured after 1981.
How Does Carfax Get its Information?
Carfax gets vehicle records from around 139,000 different sources. With partnerships with auto businesses, they can get access to vehicle records to generate reports for all vehicles.
Some of their main sources are:
- U.S. motor vehicle agencies
- Canadian Provincial Motor Vehicle agencies
- Auto auctions
- Collision repair facilities
- Service/ maintenance facilities
- Insurance companies
- Salvage auctions
- Automotive recyclers
- Body shops
- Rental/fleet vehicle companies
- State inspection stations
- Extended warranty companies
- Fire departments
- Manufacturers
- Law enforcement agencies
- Car dealerships
- Import/export companies
With several vehicle data sources, Carfax can easily build comprehensive reports for any vehicle in the used car market. Speaking of reports, what exactly can be found in a Carfax report?
READ ALSO: Car Data API: Why is the vehicle data API important? (Explained)
What does a Carfax report contain?
This is the part most car buyers are concerned about, and businesses should note it, too. If you plan on starting up your own business in this line, you must ensure that your reports cover everything a consumer wants to see.
What information does a carfax report provide?
1. Car Accidents and Damage Records
With a VIN check, anyone can tell if a vehicle has been involved in any car accidents and whether it sustained severe damages, too. A vehicle history report should show the number of car accidents a vehicle was involved in, the severity of damages, areas affected, location of the accident, and more.
Sometimes, however, minor accidents are not recorded and may not be found on a report. It’s essential to understand that only records that are officially reported can be found in a report. For example, a minor fix in the garage could never wind up on a history report.
2. Title Status
With title fraud and the rest going on out there, it is important to know the status of a vehicle’s title, and a Carfax vehicle history report provides this information. With a VIN check, car buyers and sellers can verify if a vehicle has a salvage title – meaning its been totaled in the past, or probably a rebuilt title.
There are several title brand records that could be spotted with a VIN check, including flood brand, junk title brand, lemon title, and more.
3. Market Value
Another important component of a car’s report is the market value. A report shows the vehicles current worth as well as past sales and auction records, if available. With this information, car buyers can discover the actual value of vehicles based on their records.
4. Maintenance Records
A vehicle with a good service and maintenance history is usually a good purchase, so consumers look for these records. A vehicle history report provides users with records of all routine maintenance, major repairs, and service intervals. It also shows where the vehicle was taken for repairs and maintenance.
Note, however, that maintenance records may not include activities done at home and not reported to a dealership or repair shop.
5. Vehicle Recalls
Vehicle recalls are also important to note as they show a vehicle’s safety. What components were affected? What are the consequences? A vehicle history report can help answer these questions.
It can also help sellers and dealers fix and repair vehicles they have for sale.
6. Ownership History
Having an idea of how many times a vehicle has changed hands can help you understand its reliability. A vehicle that has had several owners within a short period of time definitely has some hidden problems, and car buyers don’t want to end up with those.
If you are a used car buyer, you should prioritize vehicles with fewer owners. Also, pay attention to vehicle usage. Was it used for business? Was it driven locally? A report can provide all of these.
7. Warranty Status
A Carfax report can help users determine whether a vehicle is under warranty and what type of warranty is available.
Find out about any existing factory warranties, including the remaining coverage period.
8. Odometer Readings
Accurate odometer readings are essential for verifying the mileage of a vehicle and detecting potential fraud. A vehicle history report shows mileage readings taken at various points in the vehicle’s history.
You can also check for discrepancies that might indicate odometer rollback or tampering.
Now you know what information can be found on a Carfax report. If you are planning to start your own business and provide reports to interested parties, take note of the above information.
Now let’s check out how Carfax makes profits and keeps their business growing.
Carfax Business Model and Revenue Stream
Carfax’s business model revolves around providing comprehensive vehicle history reports to consumers and businesses. Their primary revenue streams include:
- Selling vehicle history reports directly to consumers, with prices ranging from $39.99 for a single report to $99.99 for unlimited reports over a year.
- Offering subscription packages to auto dealerships, which provide access to Carfax reports and dealer tools to help make informed buying decisions.
- Partnering with websites and services to integrate Carfax reports, earning a commission on each report accessed through the partner. This affiliate marketing model helps expand Carfax’s reach.
- Tiered pricing for businesses, with basic reports and premium packages that include additional data and features. This allows Carfax to cater to different customer needs and price points.
By monetizing vehicle history data through consumer sales, dealer subscriptions, and partnerships, Carfax has built a successful business model around its comprehensive vehicle data assets.
You can do so, too. If you have a business and would like to provide reports to your customers or you want to start a Carfax business, first, you need to think about how to get access to vehicle information as often as you require.
And how can you get this information? With a Carfax API alternative.
READ ALSO: Do insurance companies automatically report to Carfax?
The Carfax API Alternative For All Business Data Needs
Since Carfax doesn’t offer APIs for businesses, it’s difficult to get reports for your business as seamlessly as you may want. However, with access to a vehicle data API, the story changes.
An API (Application Programming Interface) can access a database, collect vehicle information, and provide it to you or your customers. With our Carfax API alternative, you can gain access to the following:
- Vehicle specifications
- Title history
- Accident history
- Mileage records
- Ownership history
- Service and maintenance records
- Recall information
- Structural damage report
You can provide even more records using our Auction history API, Sales history API, and classic decoding API – specially designed for older vehicles.
One of the most important features of this Carfax API is that you can integrate it easily and get access to information on your website or VIN scanner apps. You can also use it to generate Carfax-like reports from your app in HTML form (fully customized) after registration.
With easy access to a vehicle database with over 80 million records, you can improve your business efficiency and sales. Sign up today and grow your business.
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