WO2007002684A1 - System and method for tangible good valuation - Google Patents

Abstract

An improved system for valuation of tangible goods, such as automotive vehicles includes isolation processes configured to discern the valuation of specific vehicle elements in real time, thereby enabling physical (vehicles that do exist) and hypothetical (vehicles that do not exist) new as well as used vehicle valuations, using transaction data being electronically updated as transactions occur in an electronic marketplace. The processes generate a current base value (100) and plural current constituent values (100) corresponding to characteristics of the vehicle affecting value such as trim level, package options, unit options and the like. A regression model embodiment determines a current based value (lOO)and one or more current constituent values (100).

Description

SYSTEM AND METHOD FOR TANGIBLE GOOD VALUATION

Cross-References to Related Applications

[001] This application claims priority to pending U.S. Provisional Patent Application Serial No. 60/694,318 filed on June 27, 2005, the entire disclosure of which is incorporated herein by reference.

[002] Further, the following co-pending and commonly-assigned PCT Patent Applications which designate among other countries, the United States, have been filed on the same day as the present application. Each of these applications relate to and further describe various aspects of the embodiments disclosed in the present application, as well as the above-referenced Provisional Application. Consequently, the contents of each of the following patent applications are hereby incorporated herein, by reference, in their entireties, in the present application: (1) "System and Method for Distribution of Wholesale Goods," filed on June 27, 2006, listing Wess Eric Sharpe as the Inventor, and accorded U.S. Application No. , PCT Application No. ; (2) "System and Method for Inventory Control," filed on June 27, 2006, listing Wess Eric Sharpe and Eric Burton Schorvitz as Inventors, and accorded U.S.

Application No. , PCT Application No. ; (3) "System and

Method for Facilitating the Sale of a Tangible Good Through an Auction Process," filed on June 27, 2006, listing Wess Eric Sharpe as the Inventor, and accorded U.S.

Application No. , PCT Application No. ; (4) "System and

Method for Controlling Dealer/Consumer Interaction," filed on June 27, 2006, listing

Wess Eric Sharpe as the Inventor, and accorded U.S. Application No. , PCT

Application No. ; and (5) "System and Method for Control, Distribution and

Purchase of Wholesale Goods and Related Interactions," filed on June 27, 2006, listing Wess Eric Sharpe and Eric Burton Schorvitz as Inventors, and accorded U.S. Application No. , PCT Application No. . BACKGROUND OF THE INVENTION

Field of the Invention

[003] This invention relates to the valuation of a tangible good, such as an automotive vehicle, having characteristics that may have an effect on its total market value.

Discussion of Related Art

[004] Inefficient distribution has been a long-standing problem for many types of goods. This problem is particularly acute with respect to vehicles. The number of possible configurations for a specific year, make and model based on available colors, various options, and various configurations is more often than not greater than a billion. Conversely, vehicle dealers can stock only a small percentage of the configurations given space and cost constraints on maintaining inventory. The relatively small local inventory of a vehicle dealer relative to the numerous possible vehicle configurations makes it highly unlikely that the dealer will be able to offer the exact vehicle desired by a customer. Local inventories of used vehicles have an even lower probability of meeting actual consumer demands given additional variables such as mileage, cosmetic condition, etc. Dealers and consumers therefore often settle on a less than perfect new or used vehicle transaction reducing sales, consumer satisfaction, prices and profits and requiring increasing incentives while also creating a high pressure sale process disliked by consumers. The depreciation in dealer to consumer sale prices of used vehicles also affects the amount dealers are willing to pay consumers on trade-ins of used vehicles, further decreasing the consumer's purchasing power for new vehicles sales and creating an unfortunate cycle of depreciation.

[005] In addition to sales price and profits, the inability to match consumer demand with inventory harms financing operations because it (i) reduces the amount individuals are willing to pay up-front and in monthly payments; and (ii) makes it even more difficult to match low credit buyers with appropriate vehicles. Further, the inefficient distribution of vehicles also has negative effects on the freight transportation industry. In particular, freight carriers are not provided with information sufficient to optimize freight transport and many transporters waste significant resources. [006] A variety of solutions have been considered to make vehicle distribution more efficient. At the manufacturing level, build to order and late customization of orders have been attempted. In addition to their relative ineffectiveness, these efforts are unrealistic given other factors that require advance planning for optimal use of manufacturing assets and low cost production. Further, manufacturing level solutions such as these actually increase vehicle costs given requirements for parts storage and movement away from lean manufacturing.

[007] Several e-commerce based systems for improving product distribution have also been proposed or attempted. Some systems — such as direct order manufacturing- would eliminate the dealer network. Dealers, however, provide important functions such as distribution of information and product, trade-in opportunities, indirect financing, and servicing and also provide a face to face relationship that is an important aspect of the retail sale of goods such as vehicles.

[008] One existing e-commerce based system that leverages the existing dealer structure for improved distribution of new vehicles is the electronic dealer trade system developed by vehicle manufacturers. Using this system, dealers can locate vehicles at other dealers (or in production for, or transit to, other dealers) and initiate a trade. Dealer trade systems, however, are disadvantageous because they consume significant time of the dealer that may turn out to be a wasted effort — there is no certainty the dealer will be able to obtain the vehicle they have located, much less at a desired price (no price mechanism exists in the dealer trade system). Arranging trades can also be difficult because one dealer (the dealer with the vehicle) is typically in a much better negotiating position than the other dealer (the dealer who wants the vehicle). The dealer looking to make a trade also does not have an easy mechanism for identifying the dealer that will offer the greatest possible return. Finally, even if a trade is consummated, the dealers must spend additional time arranging for freight transportation.

[009] For used vehicles, auctions have provided improved distribution not only between dealers, but also between dealers and remarketers (e.g., corporate and government fleets, rental car companies, etc.). Physical auctions bring more buyers and sellers together for increased value, but are disadvantageous because they require transportation and storage of product (time and cost) and active participation of buyers and sellers (travel time and cost). Further, physical auctions often fail to convey adequate product information to enable buyer confidence and still significantly limit the pool of available participants.

[0010] Recent auction improvements include the use of internet video to bring more buyers and reduce participant costs. More significantly, several auctioneers and remarketers have developed or implemented e-commerce based systems for used vehicle wholesaling such as Manheim Online (www.manheim.com), ATC (www.autotradecenter.com), Adesa (www.adesa.com) and General Motors (www. gmonlineauctions . com). Car manufacturers have also adopted electronic systems for wholesaling used vehicles to their dealers and allowing dealers to exchange used vehicles. The limited number of participants in these systems, however, fails to optimize value. Further, these systems also do not integrate freight delivery resulting in buyer uncertainty regarding delivery costs and timing. The inability to guarantee freight cost and delivery in these systems creates uncertainty thereby decreasing potential sales, satisfaction, and profits.

[0011] In addition to representation and freight, accurate valuations are critical to vehicle wholesale trade. Current valuation systems are simply inaccurate due to poor methodologies. In defense of current systems, known as guides, accurate and real time vehicle value is challenging and unlikely in the current structure. For example, the value of one mile on one model is different than the value of a mile on another model while the value of one mile at one point on the same model will be different than at another point. Moreover, vehicle values will change with time. Thus, real time systems are the only valid means of calculating accurate values and thus, a real time market is the best source.

[0012] The inventors herein have recognized a need for a system and method for an improved method for valuing tangible goods, for example automotive vehicles, that will minimize and/or eliminate one or more of the above-identified deficiencies. SUMMARY OF THE INVENTION

[0013] The present invention provides a system and a method for tangible good valuation.

[0014] A method for valuation of target tangible good in accordance with the present invention includes the step of establishing a transaction database containing a plurality of transaction records. Each transaction record reflects a transaction involving a tangible good — a tangible good that is of the general type as the target tangible good to be valued. Each transaction record includes at least (i) a transaction price and (ii) one or more characteristics of the tangible good. The characteristics of the tangible good are of such nature that variation in the characteristics of the good may affect the value of the good. The next step includes electronically updating the database as transactions involving the tangible goods occur in an electronic marketplace. Next, defining, using the information in the database, (i) a current base value and (ii) one or more current constituent values that respectively correspond to the one or more characteristics of the goods. Next, determining the characteristics of the target good to be valued. The final step involves calculating a target value for the target good to be valued by adjusting the current base value as a function of the characteristics of the target good in view of the corresponding current constituent values. The target value provides a useful, concrete and tangible result corresponding to or representative of the market value of the tangible good being valued.

[0015] In a preferred embodiment, the tangible goods are automotive vehicles and the transaction records each include at least a year, make and model (YMM) of the vehicle. The characteristics in the transaction record include, but are not limited to, a body type, a trim level, a mileage level, an exterior color, an interior color, an individual option, an option package, a reconditioning cost, a history condition, and an incentive value. The present invention is applicable to and has particular value for both new and pre-owned vehicle transactions.

[0016] A system for valuation of a target tangible good is also presented.

[0017] A system and method for valuation of a target tangible good in accordance with the present invention represents a significant improvement relative to conventional valuation systems, which are at most "guides". First, the system operates in real time or near real time, as transactions involving the tangible goods are automatically, electronically updated in the transaction database, which feeds into the inventive system and method. In certain embodiments adjustments in the valuation are made in accordance with time-based methods so as to account for appreciation/depreciation effects. Overall, the accuracy of the valuation is accordingly improved over conventional systems. Second, in a preferred automotive vehicle embodiment, the invention has incorporated improved analysis tools as to certain valuation factors such as the economic effect of repair and/or reconditioning costs yet to be made, which are neither translatable dollar for dollar against the target vehicle value nor linear over an entire range of repair costs, even for the same vehicle, as conventional systems have assumed. Other improved analysis tools include those pertaining to vehicle condition history, interior/exterior color variations and the valuation effect of mileage (especially on a used vehicle).

[0018] These and other advantages of this invention will become apparent to one skilled in the art from the following detailed description and the accompanying drawings illustrating features of this invention by way of example.

BRIEF DESCRIPTION OF THE DRAWINGS

[0019] Figure 1 is a diagrammatic view of a system for distribution of tangible goods in accordance with the present invention.

[0020] Figure 2 is a diagrammatic view of a component of the system of Figure 1.

[0021] Figures 3-4 are screen displays illustrating the operation of a system and method in accordance with the present invention.

[0022] Figure 5 is a flow chart diagram illustrating a process for valuation in accordance with the present invention.

[0023] Figure 6 is a simplified diagrammatic view of a transaction database including a transaction record with exemplary fields.

[0024] Figure 7 is a simplified diagrammatic view of a first embodiment of the present invention. [0025] Figure 8 is simplified diagrammatic view showing, in greater detail, the operation, in tabular form, of the repairs engine in Figure 7.

[0026] Figure 9 is simplified diagrammatic view showing, in greater detail, the operation, in tabular form, of the mileage engine in Figure 7.

[0027] Figure 10 is simplified diagrammatic view showing, in greater detail, the operation, in tabular form, of the history engine in Figure 7.

[0028] Figure 11 is simplified diagrammatic view showing, in greater detail, the operation, in tabular form, of the colors engine in Figure 7.

[0029] Figures 12 is simplified block and flowchart diagram showing a second embodiment of the present invention employing a regression model.

[0030] Figures 13-16 are simplified diagrammatic views showing, in greater detail, elements shown in Figure 7.

[0031] Figures 17-28 are simplified diagrammatic views showing various aspects of the invention. '

DETAILED DESCRIPTION OF EMBODIMENTS OF THE INVENTION

[0032] Referring now to the drawings wherein like reference numerals are used to identify identical components in the various views, Figure 1 illustrates a system 20 for distribution of tangible goods in accordance with the present invention. System 20 is particularly adapted for use in distributing types of goods that are tangible (i.e., have a physical structure) and in which each of the goods is unique in some way. hi particular, system 20 is adapted for use in distributing vehicles such as automobiles. Vehicles are unique in that each vehicle has a unique vehicle identification number (VIN) that allows information about the vehicle (e.g., prior repair history, ownership history, etc.) to be tracked. Although system 20 is particularly adapted for these types of goods, however, it should be understood that system 20 may be used for distribution of a wide variety of tangible goods.

[0033] System 20 includes a computer system 22 or central computing architecture. System 22 includes one or more microprocessors configured in accordance with the present invention by programming instructions (i.e., software) to perform one or more of the functions described herein. In particular, system 22 establishes an electronic wholesale marketplace for a type of tangible good in which wholesalers can sell and purchase the goods and further establishes an electronic freight marketplace for the goods in which freight haulers can accept contracts for the transport of the purchased goods. In this connection, system 22 is designed to allow a variety of participants to interact with the wholesale marketplace and the freight marketplace including dealers 24, remarketers 26 (e.g., in the case of vehicles, rental car companies, corporate and government fleet owners, leasing institutions, etc.), freight haulers 28, manufacturers 30, financial institutions 32, and third party product and service providers 34 (e.g., third party inspection services, storage and distribution services, auctioneers, information providers, etc.). The number and type of marketplace participants — and the type of interaction of those participants with the marketplaces—will vary depending upon the type of good and other factors. System 22 will also assume a wide variety of computing configurations depending on the type of good and other factors (e.g., type of marketplace participants). As such, system 22 may include a plurality of computing devices arranged in one or more of a plurality of known computing architectures. System 22 may, for example, include servers, such as servers 36, 38, 40 and may include one or more supercomputers 42.

[0034] As used herein, the term "server" refers to a computing device coupled to a network and configured by programming instructions (i.e., software) to provide services to other computing devices (including other servers). Referring to Figure 2, the architecture of each server 36, 38, 40 may be described as a series of layers including an operating system layer 44, a database layer 46, an application layer 48 and an interface layer 50.

[0035] The operating system layer 44 of each server 36, 38, 40 may include a conventional operating system such as one of the operating systems sold under the registered trademark "WINDOWS®" available from Microsoft Corporation of Redmond, Washington. It should be understood, however, that other conventional operating systems such as those based on the Linux or UNIX operating systems or operating systems for the Apple computer system (e.g. OS X) may alternatively be used.

[0036] The database layer 46 is configured to provide a static and dynamic contact structure for each server 36, 38, 40. Database layer 46 is used to provide both intermediate information while each server 36, 38, 40 executes operations and long- term storage of data. Database layer 46 may employ a database management system (DBMS) such as the DMBS sold under the trademark "SQL SERVER" by Microsoft Corporation of Redmond, Washington.

[0037] The application layer 48 is configured to communicate with and between database layer 46 and interface layer 50 and configures the server 36, 38, 40 to perform the functions described in greater detail hereinafter. Application layer 48 may be implemented using conventional software development components and may further include a combination of JavaScript, VB Script and ASP (Active Server Pages) and other conventional software components to provide required functionality.

[0038] Interface layer 50 provides a graphical and communications interface between the servers 36, 38, 40 and between the servers 36, 38, 40 and supercomputers 42 and the computing devices used by dealers, remarketers, freight haulers, financial institutions and third party service providers. Interface layer 50 may be configured to be extensible Markup Language (XML) or Simple Object Access Protocol (SOAP) compliant.

[0039] Referring again to Figure 1, servers 36 may comprise web servers or application servers running application server software (and/or a combination of the two). Servers 38 may comprise database servers running database server software that provides database related services—including access, retrieval from, and storage to databases 52— to servers 36, 40 and supercomputer 42.

[0040] The information stored in databases 52 will vary depending on factors such as the good and the marketplace participants. In the case where the good is a vehicle, databases 52 may include information relating to the market participants. For example, databases 52 may store information about each participant such as business entity information (name, addresses, identification information, SIC classification, etc.), contact information (identification of primary contacts and their titles, phone numbers, email addresses, etc.) authentication information, relationships {e.g. linking dealers by a shared characteristic such as common ownership), controls on marketplace participation (defined by the dealers 24 themselves or by manufacturers 30, financial institutions 32, etc.), licenses, insurance coverage, etc. Databases 52 may also include valuation information used in valuation of the goods. For example, databases 52 may include information regarding specifications for the goods and each dealer's labor rate for repair of the goods (flat rate based on type of repair or time-based (hourly) rates) to assist in providing a proper valuation, and estimated time for repairing predefined defects in the goods {e.g., a cracked windshield in a vehicle). Databases 52 may also include information about previous marketplace transactions for each good. The above examples of the type of information stored in databases 52 are not meant to be exhaustive, but rather illustrative. It will be evident from the subsequent description that databases 52 will hold a wide variety of information for use by system 22.

[0041] Servers 40 and supercomputer 42 may be used to provide distributed computational resources within system 22 and to perform intensive computational and processing functions. Supercomputer 42 may comprise a computing device including a plurality of microprocessors configured to engage in parallel processing such as those offered for sale by IBM Corp or Cray, Inc.

[0042] Servers 40 and supercomputers 42 may be arranged in any of plurality of distributed computing architectures such as a two-tier (client-server) computing architecture, or a multi-tier (n-tier) computing architecture, or a grid computing architecture or a peer-to-peer computing architecture. Servers 36, 38, 40, or other servers (not shown) may also perform conventional distributed computing functions such as load balancing among the servers 36, 38, 40.

[0043] Servers 36, 38, 40 and supercomputers 42 communicate with one another over a telecommunications network 54. Network 54 may, for example, comprise a local area network (LAN) or wide area network (WAN) and may comprise an intranet or an extranet and may utilize the public internet. An enterprise service bus (ESB) may be used to control communications (including messaging and routing) over network 54 between servers 36, 38, 40 and supercomputers 42.

[0044] The marketplace participants—including dealers 24, remarketers 26, freight haulers 28, manufacturers 30, financial institutions 32 and third party product and service providers 34~will use a variety of computing devices to connect to system 22 over a telecommunications network 56. These devices may include, for example, local servers 58, wireless access points (WAPs) 60 and personal computers 62 such as desktop or laptop computers and handheld computers such as personal digital assistants (PDAs). Network 56 preferably includes the public internet and may include both wired and wireless networks. For example, freight haulers 28 or other market participants that may be located remotely from wired computers or sites may invoke cellular, satellite or other wireless technologies as part of network to enable communication of their computing devices with system 22.

[0045] Servers 58 may comprise webs servers or application servers or a combined web/application server. Servers 58 may provide a variety of functions depending on the application. In accordance with one aspect of the invention, however, servers 58 may be configured to communicate with an inventory management system 64 for a dealer 24 of tangible goods (e.g., a vehicle dealer's DMS system) for inventory control. Server 58 may receive information pertaining to the dealer's inventory from system 64 and provide it to computer system 12.

[0046] Wireless access points (WAPs) 60 are provided to enable communication between wireless computing and communication devices and may comprise conventional structures known in the art. For example, WAPs 60 may be used to allow inspectors to inspect the goods located at dealerships (e.g. outside storage lots) or other locations lacking access to a wired network and to send information to and receive information from system 22.

[0047] Personal computers 62 are provided to perform a wide variety of functions, many of which are described hereinafter, depending on the market participant. Personal computers 62 may function as client in a client-server configuration with servers 36, 38, 40 of system 22. In particular, computers 62 may run client software to access system 22 such as an internet browser (in the case of a web-based application) or a customized graphical user interface.

[0048] Servers 58, WAPs 60 and computers 62 may communicate with one another at a market participant's location or locations over a private telecommunications network 66 such as a local area network (LAN) or wide area network (WAN). Servers 58, WAPs 60 and computers 62 may further communicate with system 22 through network 56. Again, an enterprise service bus (ESB) may be used to control communications (including messaging and routing) over network 56 between servers 58, WAPs 60 and computers 62 and system 22.

[0049] In accordance with the present invention system 22 is configured to establish an electronic wholesale market in which dealers 24 of tangible goods can offer goods for sale to other dealers 24 of the goods from local inventories and can purchase goods in transactions with other dealers 24 of the goods from local inventories of the other dealers 24. By establishing the electronic wholesale market, system 22 enables dealers to leverage the inventories of other dealers 24 in making sales to retail customers. The ability to leverage these inventories provides a significantly greater chance that the dealer 24 will be able to provide the identical good desired by the customer thereby increasing customer satisfaction, purchase price and profits and reducing inventory pressure on the dealers 24.

[0050] System 22 is further configured to establish an electronic freight marketplace for the goods in which contracts for transport of purchased goods between locations are offered for acceptance to freight haulers 28 of the goods. The integration of the electronic freight marketplace with the electronic wholesale marketplace is significant. By integrating the two marketplaces, system 22 is able to provide accurate information on delivery times and costs for purchase of goods in the wholesale marketplace prior to transactions in the wholesale marketplace thereby facilitating sales in the wholesale marketplace. Further, freight haulers 28 are better able to identify available freight for transport and reduce inefficiencies (e.g., less than full loads). These are just some of the advantages that will be apparent from the description hereinafter. [0051] Valuation. As indicated in the Background, in addition to representation and freight, accurate valuations are. critical to vehicle wholesale trade, among many applications just within the realm of vehicles. Before proceeding to a detailed description of the system, it warrants describing some of the valuable uses to which these improvements may be put. For example, accurate valuations may be used by sellers of vehicles in selecting an asking price on the wholesale electronic marketplace described above, may be used by buyers in selecting a bid price for a vehicle on the electronic marketplace, may be used by a suitably configured computer system to provide intelligence for inventory management (such as inventory valuation, market indices, etc.), and may be used in defining a value for a used vehicle that is offered for trade-in by a retail customer.

[0052] Figure 3 is a screen display illustrating an interface 68 as viewed by a user of the system on a computer 62 during a process of assessing of possible purchase of a new vehicle on a new vehicle exchange (electronic marketplace). Indicia 70 ("New Vehicle Exchange"), which is emphasized in interface 68, provided visual confirmation to the user of his navigation throughout the overall system. As will be described in greater detail below, the present invention is configured to decompose a vehicle into its base model configuration and option combinations, and further, isolate and define values for the base model configuration as well as for the individual options. This is also shown in Figure 3. The current valuation for the base model configuration (i.e., year, make, model and basic trim level) is displayed in interface 68, and is enclosed in dashed-line box 72. The valuation for the various options available for a particular model (or perhaps on the vehicle under consideration, as in Figure 3) is also displayed in interface 68 and is enclosed in dashed-line box 74. The interface 68 is also configured to automatically display the current, total value for the vehicle, which is enclosed in dashed-line box 76. Through the foregoing, a potential buyer is provided meaningful and accurate guidance as to his selection of a "STARTING BID" and bid "INCREMENTS", respectively enclosed in dashed-line boxes 78 and 80.

[0053] Figure 4 is a screen display illustrating an interface 82 as viewed by a user of the system on a computer 62 during a process of assessing a used vehicle. The present invention is configured to generate and display the real-time or near real-time value of pre-owned (i.e., used) vehicles as well. As further background, one type of user, such as auto dealers, presently tend to rely on inaccurate guide books for vehicle values and a rather ambiguous as well as incomplete vehicle inspection to appraise consumer trade- ins. Because the trade cycle is a component of industry growth, consumer trade-in appraisals, when not reflecting true market, may impact all industry participants regardless of whether they are directly involved or not. Moreover, an under appraisal of a trade-in vehicle's value may result in a lost retail sale by the dealer. Additionally, over appraisal of a trade-in vehicle directly cuts into a dealer's profit. Accordingly, the importance of an accurate valuation of used vehicles for which trade-in is sought is considerable.

[0054] With continued reference to Figure 4, interface 82 displays a real time market price for the target, used vehicle, which display is enclosed by dashed-line box 84. Interface 82 further readily emphasizes that the display valuation information is for a particular make ("CARMAKER" in interface 82), model ("USED MODEL 14" in the interface 82) and model year ("YR MODEL 04" in the interface 82)_s referred to herein throughout as year, make, model, or YMM. The YMM display in interface 82 is enclosed by dashed-line box 86. In one embodiment, all of the parameters make, model and year are selectable by the user of the inventive valuation system, as indicated by the drop-down menu (i.e., down-arrows) shown in interface 82 for each make, model and year.

[0055] Interface 82 is further configured to allow the user to select via a drop-down menu for example (i) an option package available for the selected YMM vehicle, as shown, enclosed in dashed-line box So₁ and (ii) whether WHOLESALE or RETAIL vehicle valuation is desired, as shown, as enclosed by dashed-line box 86₂. As described above, the inventive valuation system isolates and determines values for both the base model configuration as well as the available options, as shown, enclosed by dashed-line box 88. Interface 82 further shows value variation as to exterior and interior colors for the particular year, make, model (YMM), enclosed by dashed-line box 90. Interface 82 still further shows value variation as to mileage for the particular year, make, model (YMM), enclosed by dashed-line box 92. Interface still further shows value variation as to reconditioning costs for the particular year, make, model (YMM), enclosed by dashed-line box 94. As will be described below in greater detail, the present invention features improved processing as to assessing the economic impact on the value of a vehicle arising from (i) repairs or reconditioning costs; (ii) mileage; (iii) history of the vehicle; and (iv) and vehicle colors. With this additional background, a detailed description of the various embodiments of the present invention will now be set forth.

[0056] Figure 5 is a simplified flow chart diagram illustrating a method for valuation of a target tangible good. The invention begins with step 96.

[0057] Step 96 involves establishing a transaction database containing a plurality of transaction records. Each transaction record reflects a transaction involving a tangible good and respectively includes (i) a transaction price and (ii) one or more characteristics of the tangible goods.

[0058] It warrants noting that the inventive valuation system, in alternate embodiments, implements processing to handle complimentary and substitute vehicle characteristics. Each will be addressed in turn. In the inventive system, complimentary characteristics are redefined so that no compliments exist. For example, if option A can be purchased by itself, but option B must be purchased with option A (making option A and option B compliments) then the inventive system will only recognize the following options: option A and option C where option C is the combined selection of option A and option B. The system is preferably configured not to value option B by itself as there would never be an instance where a YMM would have just option B. In an alternate embodiment, however, the inventive system may be configured (e.g., via an econometric model) to allow for the valuation of option B by itself, which valuation may be useful in certain other contexts.

[0059] The inventive system is additionally configured to accommodate substitutes. For example, consider a YMM group where there are two wheel options: (1) a 19" 5- spoke wheel (option A) and (2) a 19" 10-spoke wheel (option B). You would never have a vehicle in the YMM group with both option A and option B. The inventive system is configured to restrict a user from attempting to value an automobile with both option A and option B since having both options on one automobile would make no sense.

[0060] The characteristics of the tangible good are of such nature that variation in any particular characteristic, or in more than one or a combination of characteristics of the good, may affect the value of the good. The method then proceeds to step 98.

[0061] In step 98, the method involves electronically updating the database as transactions involving the tangible goods occur in an electronic marketplace. The electronic marketplace may include the exchange described above in connection with Figures 1-2. The method then proceeds to step 100.

[0062] In step 100, the method involves defining, using the information in the database, (i) a current base value and (ii) one or more current constituent values that respectively correspond to the one or more characteristics of the goods. This step involves decomposing the total transaction price by isolating the various, individual contributions that each characteristic may have on the total value. The method proceeds to step 102.

[0063] In step 102, the method involves determining the characteristics of the target good to be valued. While this step may be performed manually, in a preferred embodiment, the step receives input from a computer-assisted inspection block 104. The method then proceeds to step 106.

[0064] In step 106, the final step involves calculating a target value reflecting the present valuation for the target good by adjusting the current base value (determined in step 100) as a function of the characteristics of the target good (determined in step 102) in view of the corresponding current constituent values (determined in step 100). The target value provides a useful, concrete and tangible result corresponding to or representative of the present market value of the tangible good being valued.

[0065] In a preferred embodiment, and for the remainder of the detailed description, the tangible goods involved are automotive vehicles. It should be understood, however, that the present invention is not limited to only automotive vehicles, and may find broad applicability across a range of tangible goods of the type that are unique and have value characteristics as described above. [0066] Figure 6 is a simplified diagrammatic view of a transaction database 108 including a plurality of transaction records designated 11O₁, HO₂, HO₃, . . . , 11O_n. In a automotive vehicle embodiment, each transaction record HO₁, 110₂, I IO3, . . . , 11O_n includes a variety of fields, including at least a model year field 112, a manufacturer or carmaker field 114, and a vehicle model field 116, collectively defining the year, make and model (YMM) of the vehicle involved in the transaction reflected in the record. Each of the records 11O₁, 11O₂, 1 IO3, . . . , 11O_n may further include a trim level field 118, a body type field 120, a transaction price 122, an actual transaction date 124, a reconditioning cost field 126 (e.g., in the case of pre-owned or used vehicles), a history field 128, an interior color field 130, an exterior color field 132, a mileage field 134 (e.g., especially in the case of a used vehicle), and one or more individual options or option packages fields, designated for clarity only by single field 136. Each of the records HO₁, I IO2, I IO3, . . . , 11O_n additional contains a vehicle identification number (VEST) field 137 that identifies the vehicle to which the transaction relates. Each of the records 11O₁, 11O₂, HO₃, . . . , 11O_n may optionally contain additional fields (not shown) containing other information relating to the transaction or the involved vehicle (e.g., prior usage as part of rental fleet, lease vehicle, etc., manufacturer incentives).

[0067] Figure 6 further illustrates in exploded fashion that transaction price field 122 may contain one or more individual subfield corresponding to a retail transaction price 122_ls a wholesale transaction price 122₂, and a manufacturer-to-dealer transaction price 122₃. Which ones of these fields will be populated will depend on the underlying nature of the transaction reflected in the record itself. The present invention is applicable to determine a valuation with respect to any of the foregoing transaction types (i.e., retail, wholesale, manufacturer-to-dealer). Accordingly, the vehicle characteristics in the transaction record therefore include, but are not limited to, a body type, a trim level, a mileage level, an exterior color, an interior color, an individual option, an option package, a reconditioning cost, a history condition, and an incentive value.

[0068] Transactions may originate from a variety of sources. As to new vehicles, retail transaction records may originate with various dealer systems, since dealers are the entity making retail sales of vehicles to end-consumers. Moreover, further as to new vehicles, wholesale transaction records may originate from a dealer-to-dealer transaction, from a dealer trade system, or from a wholesale electronic vehicle exchange such as described herein.

[0069] It should be understood that while Figure 6 illustrates the transaction database as a unified database having the described fields, that this representation is for understanding purposes only. In a constructed embodiment, several databases may be involved to develop the described information. Moreover, the database structure need not be in the form of a flat file (as shown for simplicity), but rather may take any number of implementations known in the art (e.g., such as a relational database, as described above). Figure 6 further shows a grouping of transaction records HO₁, HO₂, 1 IO₃ having the same YMM to form of group 140 of YMM transaction records. Grouping 140 will be discussed in greater detail below in connection with the embodiment of Figure 7.

[0070] Figure 7 is a simplified diagrammatic view of a first embodiment of a valuation system, designated 142, in accordance with the present invention. Valuation system 142 includes a central processing core 144 configured to perform a plurality of functions to be described in greater detail and generate a present vehicle value as an output using information from transaction database 108, among other sources. As illustrated, database 108 can be included in the main database cluster 52, which as shown in Figure 1 and described above, may contain information regarding previous marketplace transaction for each good.

[0071] Central processing core 144 is configured to perform a plurality of functions, which will be described in turn herein as "engines". It should be understood that usage of this terminology should not be taken to require physically separate computing structure, or even separate or distinct computer software modules to accomplish this functionality. Processing core 144 includes a category engine 146, an incentive engine 148, a pricing engine 150, a factoring engine 152, a standard engine 154, a current engine 156, a repairs engine 158, a mileage engine 160, a history engine 162, a colors engine 164, an isolation engine 166, an unbiased engine 168, a normal engine 170, and a vehicle valuation engine 172. [0072] Category engine 146 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, category engine 146 is configured to group transaction records HO₁, HO₂, HO₃, . . . , HO_n reflecting transactions involving vehicles having the same year, make and model (YMM) as the target vehicle to be valued, thereby defining a group 140 of YMM transaction records. This is best shown in Figure 6 as group 140 as including grouped YMM records HO₁, 11O₂, and 11O₃. The relevance of transactions, however, diminishes with time as market conditions change. Therefore, in an alternate embodiment, category engine 146 is configured to group for evaluation purposes a preselected number of the most recent transactions. For example only, the preselected number may range from about 30 transactions (i.e., to be statistically significant), to about 100 transactions or more. In an alternative embodiment, category engine 146 may group for evaluation transactions occurring with a preselected time interval, more preferably the most recent preselected time interval, and most preferably, the immediately preceding preselected time interval. For example, category engine 146 may group, for evaluation, transaction data where the immediately preceding preselected time interval is 14 days. Alternate embodiment may include 50 days, and 200 days worth of transactions. Both embodiments (i.e., the transaction number embodiment and the transaction during time interval embodiment) define a rolling window wherein as new transactions occur, the oldest transactions are removed, thereby maintaining the relevance of the transactions subject to processing. This aspect is important in maintaining real time or near real time performance in valuation of an automotive vehicle. Conventional valuation systems do not incorporate this aspect of "transaction relevance" into any of their systems.

[0073] Incentive engine 148 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, incentive engine 148 is configured to periodically measure the value of vehicle incentives (e.g., typically manufacturer incentives) to set a net product cost (NPC) and retail product cost (RPC) for every vehicle (and each option per vehicle). This function is performed for each group of YMM transaction records. The first step is to establish a net dealer cost (NDC) for wholesale and retail transactions, identify a representative retail transaction to establish retail product price. The next step involves measuring the value of such incentives, for example manufacturer incentives, for YMM type vehicles (i.e., those having the same YMM as the target vehicle to be valued). The final step involves adjusting, for each group of YMM transaction records, the respective net dealer cost (NDC) and retail product price (as the case may be — either wholesale or retail incentives) in accordance with the measured incentives so as to establish a respective net product cost (NPC) and retail product cost (RPC). Accordingly:

[0074] NPC = NDC - dollar value of incentives (because incentives can sometimes be non-dollar values such as free gas); and

[0075] RPC = a retail product price (e.g., recent transaction) — dollar value of incentives.

[0076] In other words, an incentive given by the manufacturer (e.g., a $500 rebate) on an offered manufacturer-to-dealer transaction) drives down the wholesale to wholesale (i.e., dealer to dealer) market price since every other dealer can enjoy the same manufacturer incentive. The dollar value of the $500 rebate may or may not be $500 in the wholesale market as other economic factors may impact this wholesale market incentive value (e.g., purchasing in the wholesale market may imply a 2 day delivery time and purchasing from the manufacturer may imply a 30 day delivery time. There may be a case where a dealer is willing to forego the $500 incentive to get the automobile quicker). This effect is taken into account by virtue of the operation of the incentive engine 148.

[0077] Figure 13 is simplified table view showing, in greater detail, the general operation of one embodiment of incentive engine 148 (sometimes alternatively referred to herein and in the drawings as "products engine" or "products valuation engine").

[0078] As shown at 300, this engine 148 factors net product cost (NPC) and retail product cost (RPC) for all year, make, model (YMM) combinations based on new vehicle costs and sales. This determination is done periodically. In one embodiment, periodically means daily. It should be understood that other time intervals may be chosen and fall within the spirit and scope of the present invention. [0079] Turning now to the lowermost box, a list containing the type of incentives {i.e., the column designated "Incentives"), "Value", "Sales" and a prorated incentive amount ("Incent"). As shown at 312 in Figure 13, the value of an incentive can be the actual dollar value or the value of interest reduction or OEM promotion, or even non- monetary incentives {e.g., "free" gas) so this engine will determine an equivalent dollar value. Information regarding the type of incentives and their value may be obtained most typically from the manufacturer, who may provide them upon request or may publish them.

[0080] As also shown at 312, this engine tracks the actual retail sales use of the values. That is, the "Sales" column indicates how frequently the incentive is actually used. The engine 148 preferably is configured to analyze retail transactions in order to arrive at these figures.

[0081] As shown at 314, this engine 148 adds the value of all incentives based on use and also adds the value of dealer holdback to calculate the total reduction of dollars from the invoice. The "Incent" column is the product of the "Value" column and the "Sales" column (on a row by row basis).

[0082] As shown at 302, this engine, for each YMM combination, factors the base vehicle, all trim options, OEM packages, vehicle options, and the dealer invoice cost for all factors.

[0083] Turning now to the uppermost box in Figure 13, and as shown at 302, for each YMM combination, the base vehicle, all trim options, OEM packages, vehicle options, and the dealer invoice cost for all factors will be produced. In particular, the first column, designated "Cost", lists the dealer invoice prices for the base vehicle, trim, packages and options. This information may be obtained from a dealer, for example.

[0084] As shown at 304, for the base vehicle and all options, this engine calculates three parameters: "Factor", "Sales" and "Weight". The engine 148 determines the values in the second column ("Factor") by calculating cost as percent of total cost. For example, the base vehicle ($18,863/$24,818 = 76.01%), Trim Option A ($1,274/$24,818 = 5.13%), etc. The engine 148 determines the values in the third column ("Sales") by analyzing retail transactions {i.e., what the engine 148 sees in the retail transactions) to determine what percent of the retail sales included that trim, package, option, etc. The engine 148 determines the values in the fourth column ("Weight") as the product of ( Sales% x Cost ).

[0085] As shown at 306 in Figure 13, engine 148 determines the values in the fifth column ("Incent") by dividing the Weight of each factor (i.e., base vehicle, trim, package, option, etc.) by the total weight to discern a percentage of incentive distribution per factor and calculate a net product cost (NPC) for each. For example, the percent of the total incentive to allocate to the base vehicle portion is (18,863/20,783 = 90.76%). Thus, the product of the total incentive, $3530, and the "Incent" percentage, 90.76%, equals roughly $3,203, which when subtracted from the invoice $18,863 equals the NPC for the base vehicle, $15,659. Note that the difference between the dealer invoice, $24,818, and the NPC, $21,288 is equal to the total incentives, $3,530. The NPC is, as shown, a set of values for the base vehicle, trim, package and options. Also, it should be understood that the NPC is evaluated as per a certain date and accordingly it has a date associated therewith. This aspect of the NPC will become more apparent below. Moreover, in one embodiment, the NPC for a YMM is defined as the lowest NPC. That is, while the NPC may vary over time, the lowest NPC is used until supplanted by a still lower NPC.

[0086] As shown at 308, the column designated "Retail" reflects the retail transaction price, preferably, for the last {i.e., most recent) transaction for the YMM being processed. In alternative embodiments, however, an average retail transaction price over a preselected number of transactions may be employed (e.g., for less fluid markets). In the example, the actual retail price was $23,111. The engine 148 calculates the "Retail" column as follows: Retail = factor cost + ((actual retail price — total dealer cost) x factor percent). Thus, for Unit Option I, for example: Retail = $309 + (($23,111 - $21,288) * 1.25%) = $309 +($1823)*(1.25%) = $332. Note, that the $1823 corresponds to dealer profit. This calculation is repeated for all the factors (i.e., base vehicle, trim, package and options). Additionally, the Retail Product Cost (RPC), for each factor, is determined as follows: RPC = retail factor price - (total incentive * incent percent). Thus, for Unit Option I, for example: RPC = $332 - ($3530 * 0.16%) = $326. [0087] As shown at 310, the function of this engine 148 is distribution of incentives and holdback based on dealer cost and market factors to discern actual cost/price of all factors.

[0088] Figure 14 is simplified table view showing, in greater detail, the general operation of one embodiment of pricing engine 150. Pricing engine 150 is also configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, pricing engine 150 is configured to adjust the transaction price 122 by adding back the reconditioning cost 136 (see transaction record in Figure 6). As background, in the wholesale marketplace, a vehicle, typically a used vehicle, that is being offered for sale has been inspected for needed repair/reconditioning, and that an "estimate" of such work is included with the details of that used vehicle. Such repair work is typically not done prior to the completion of the wholesale transaction. A wholesale buyer (e.g, another dealer in a dealer-to-dealer transaction) has the description of the needed reconditioning cost and can take that into account in either accepting the asking price, or formulating a counter-offer. In most cases, it is the buyer not the seller who, in the wholesale market, makes or directs the needed repairs/reconditioning. Accordingly, it should be understood that in the wholesale transaction records, the transaction price reflects a projected reconditioning cost (if provided). That is, the buyer will likely have already subtracted that reconditioning cost from the "value" of that used vehicle. The underlying rationale for this engine is that by adding the respective cost of repair/reconditioning back to all vehicles (i.e., all vehicles in the group of YMM transaction records), you are normalizing or making equal in terms of condition (i.e., state of repair) all the vehicles in the YMM transaction group, which improves the accuracy of the downstream calculations. In other words, all vehicle values are at a "retail ready" standard.

[0089] With continued reference to Figure 14, as shown at 316, owing to the pre-trade transparency of vehicle reconditioning cost and time that is provided by the inspection, buyers will naturally add costs to price. [0090] As shown at 318, all transactions are sorted based on the time/date the transaction is received and the objective is to neutralize repair cost wherein vehicles are the "same" condition.

[0091] As shown at 320, to neutralize remaining repair costs, the pricing engine 150 simply adds the costs of vehicle repair to the transaction price and the result is an adjusted price of repairs.

[0092] As shown at 322, value is the price that an entity will pay for a product, thus, the greatest reflection of value is the last price paid by an entity in an efficient market, including price parts.

[0093] As shown at 324, in order to calculate the value of various vehicle options, miles, and conditions, a process that normalized trade prices is a requirement, this one step to that end.

[0094] As shown at 326, by normalizing the prices, the valuation system can group each factor impacting price and compare values to calculate an actual value per factor, thus, any vehicle.

[0095] As shown at 328, this valuation system will calculate the values of all new and used vehicles in the retail/wholesale markets and provide pre-trade transparency for decision making.

[0096] As shown at 330, the valuation system will improve vehicle wholesale, inventory controls, appraisals, vehicle design, and production schedules with precise valuation of all price factors.

[0097] Figure 15 is simplified table view showing, in greater detail, the general operation of one embodiment of factoring engine 152, which is also configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, factoring engine 152 is configured to, generally, determine the values for every vehicle characteristic, such as options, colors, and trim. In one embodiment, the factoring engine calculates the values of all options observed in the transaction prices (as adjusted) based on a first appreciation/depreciation curve (or function stated more broadly) from the NPC (i.e. the date of the NPC, and along with its values) to the actual transaction date and/or the result of an unbiased engine (below) per option.

[0098] As shown at 332, before mileage (Figure 9), history (Figure 10), options, colors (Figure 11), and condition can be grouped/valued, a non-linear ascent/descent of value for the base vehicle and options is calculated.

[0099] As shown at 334, the normalized value of the base vehicle and each option is recorded periodically (e.g., second, minute, hour, etc.) versus NPC to set a non-linear value ascent/descent.

[00100] As shown at 336, all values herein are based on previously normalized transactions that have been moved from the actual transaction (or trade) date (ATD) to a record date using the rate of ascent/descent, as shown in the lower table in Figure 15.

[00101] As shown at 338, if a date/factor lacks a transaction value, the last rate of ascent/descent is used, if an option lacks transactions, the average YMM rate of ascent/descent is utilized.

[00102] As shown at 340, by recording the normalized value of the YMM factors, the rate of appreciation or depreciation per factor is maintained on a percentage basis for each time period.

[00103] As shown at 342, the very first transaction represents the time period between the lowest NPC and the date wherein enough data exist from new/used retail/wholesale transactions.

[00104] As shown in 344, for example, the base vehicle has incurred a market loss of 4.71% ((14,922/15,659) - 100%) from NPC to (date 7) versus the entire YMM (vehicle + all options) of 7.5%.

[00105] As shown in 346, for example, Option (F) has incurred a loss of 54.65% (i.e., indicating a surplus in the marketplace driving its value down) while option (G) has realized a market value increase versus NPC of 2.02%, indicating (G) shortage (i.e., a shortage in the marketplace driving its value up).

[00106] Standard engine 154 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, standard engine 154 is configured to deduct the results from the factoring engine 152 from each transaction price to obtain a base vehicle configuration (BVC) value for each transaction observed. From this, one BVC value for a particular YMM will be generated.

[00107] Figure 16 is simplified table view showing, in greater detail, the general operation of one embodiment of current engine 156. Current engine 156 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, current engine 156 is configured to adjust a BVC value so as to bring it "current" (i.e., account for appreciation and/or depreciation effects between a dynamic date (more below) and a current calculation date (CCD) — a desired valuation date for the vehicle to be valued). The function performed relates to the following: automobile transactions take place at different points in time. A transaction taking place at the end of a month needs to be compared with an automobile of the same YMM that may have transacted at the beginning of the month. The BVC of both automobiles needs to be depreciated to the current point in time. Automobiles may depreciate daily, which means the longer you have one the less it's worth. The present invention accounts for the effect of automobiles transacting at different points in time by standardizing the values by making it as if they all transacted at the same moment.

[00108] With continued reference to Figure 16, an information record associated with a "Date 7" (see Figure 15) is designated 348. That record shows the respective appreciation/depreciation rate for each factor (i.e., base vehicle, trim, package, unit option, etc). Figure 16 further shows a dynamic database 350, having a time stamp 352 associated therewith corresponding to the last time the database 350 was updated and a current calculation date time stamp 354. Also shown is a time difference parameter 356.

[00109] As shown at 358, before mileage, history, options, colors and condition can be grouped/valued, a value ascent/descent from the dynamic date to the present date is calculated. [00110] As shown at 360, the time difference 356 represents the time period between the last calculated rate of ascent/descent and the present date as divided by time period weight, i.e., 24 hours.

[00111] As shown enclosed by dashed-line box 362, the current base value and the current constituent values (for the factors trim, package, unit options, etc.) corresponding to "Date 7" is the latest to have been process by block 350. A new transaction, identified as "Transaction 01" is also shown enclosed by dashed-line box 364.

[00112] As shown at 366, the factor appreciation/depreciation rate from the dynamic database 350 is divided by the time difference 356 and applied against factor value from the dynamic database (i.e., those factor values associated with "Date 7").

[00113] As shown at 368, as a result, the value of the base vehicle and each option is moved from the dynamic date to a present (current) calculation date in order to discern adjusted price for each factor.

[00114] As shown at 370, the amount of p-adjustment is a function of the factor (i.e., base vehicle/options) value, the rate of appreciation/depreciation, and time period/difference for a current value.

[00115] As shown at 372, each transaction that enter the current engine 156 has been adjusted for remaining reconditioning costs by the pricing engine 150, thus, all vehicles are considered to have the same condition.

[00116] As shown at 374, if the transaction includes an option, it is discerned herein and the current value of the option is calculated using the appreciation/depreciation rate; the time difference; and the factor (i.e., trim, package, unit option, etc.) value, while if the vehicle is lacking an option, that option value is $0. For example, Unit Option F and Unit Option H are not found on the vehicle in "Transaction 01". Accordingly, the value contributed by those options is $0, as shown in the column labeled "Adjusted Price" in Figure 16. [00117] As shown at 376, the values calculated herein are utilized to discern a current and normalized price of the base vehicle by subtracting the option values from the transaction price herein.

[00118] Repairs engine 158 is configured to determine how much additional loss in value should be attached to a vehicle by virtue of the fact that it was repaired or reconditioned. The repairs engine is included due to the observation that, in many instances, a car with $1,000 in repair may be worth 10% less (i.e., $1,100) because consumers of automobiles do not like damaged goods even if they've been repaired. The repairs engine 158 measures the additional loss of value per dollar of remaining repair.

[00119] Figure 8 is a simplified table showing the process implemented by the repairs engine 158. Repairs engine 158 utilizes the normalized and current YMM value, designated by reference numeral 174, as the basis and all other values are normalized except for the loss of value per vehicle repair dollar.

[00120] As shown at 176, all transactions are normalized, i.e., zero options, history and color with the same miles based on prior values that increase or decrease the transaction values as shown in the column labeled "Valuation". This means that the repairs engine 158 is normalizing all vehicle characteristics other than for reconditioning/repair cost. The reconditioning/repair costs correspond to repairs remaining to be made.

[00121] As shown at 178, the table in Figure 8 reflect that the values are brought current by moving the value from the actual transaction date to a current calculation date (CCD), e.g., using non-linear appreciation/depreciation of the YMM.

[00122] As shown at 180, the repairs engine 158 sorts the transactions, for example in an ascending repair amount and all of the transactions represent the last observed value for the increment amount within the repair array.

[00123] As shown at 182, the repairs engine 158 calculates the added loss of value for each dollar of remaining repairs through increments such as $50 and tracks the valuation for each YMM. [00124] As shown at 184, the value differences are based upon the valuation difference between an observed transaction and the YMM base value (i.e., in this example, $20,153 - $20,381 = $-228).

[00125] As shown at 186, valuation is the value difference divided by amount to calculate a per dollar value for each dollar increment, i.e., an amount of appreciation/depreciation per dollar.

[00126] As shown at 188, as an example, a vehicle with $1201 of repairs remaining has a value that is $467 less than the basis $20,381 plus (-0.38 * 8) equaling $470 or a net value of $19,911.

[00127] In sum, repairs engine 158 is configured to develop a repairs function reflecting the relationship between the amount of reconditioning cost and the normalized transaction price, on a per transaction basis across the group of YMM transaction. Further, the repairs engine 158, given a particular input for a target vehicle to be valued, is configured for evaluating the repair function using a reconditioning cost for the target vehicle to obtain a repair adjustment value.

[00128] Mileage engine 160 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. In this regard, mileage engine 160 is configured to normalize transaction prices for the group of YMM transaction records for all vehicle characteristics other than mileage, and, develop a mileage function reflecting the relationship between the number of miles and the normalized transaction price, and a per transaction basis across the group of YMM transaction records. Additionally, mileage engine 160, given a particular input for a target vehicle to be valued, is configured to evaluate the mileage function using a target mileage for the target vehicle to obtain a mileage adjustment value.

[00129] Figure 9 is a simplified table showing the process implemented by the mileage engine 160. As shown at 190, the mileage engine 160 starts with a zero (0) miles reference, with the last (i.e., the most recent in time) net product cost (NPC) for each year, make, model (YMM) combination, with all values being normalized excluding mileage. [00130] As shown at 192, all transactions are normalized, i.e., zero options, color, repairs, and history based on previous values increasing/decreasing the transaction values within column 194.

[00131] As shown at 196, values are brought current by moving the value from the actual transaction date to a current calculation date using, for example, non-linear appreciation/depreciation of the YMM.

[00132] As shown at 198, transactions are sorted in an ascending mileage order and each transaction is a new mileage break, i.e., market reflection of value change within a mileage array.

[00133] As shown at 200, the mile differences are based upon the mileage difference between the observed transaction (i.e., any present or subject transaction in the table) and the prior transaction, i.e., 8812 minus 8216 equals 596 miles.

[00134] As shown at 202, the value differences are based upon the valuation difference between an observed transaction (i.e., any present or subject transaction in the table) and the prior transaction, i.e., 19,977 minus 19,987 equals -10 dollars.

[00135] As shown at 204, mile value is the value differences divided by mile difference to calculate a per mile value for a mileage break, i.e., amount of appreciation/depreciation per break/mile.

[00136] As shown at 206, for example, a vehicle with 19,348 miles has a value of $17,917 + ($-0.21) * (the mile difference OR 19,348 - 19,176 -> 172) = $36.12. This mileage adjustment value provides a net value for such a target vehicle of $17,880.88.

[00137] In sum, the mileage engine 160 sorts CBV transactions based on mileage and divides the difference in miles by difference in price between the first transaction and second, the second and third, and so on to calculate a vehicle mileage break (VMB), the mileage brake value (MBV), and per mile value (PMV) between the transactions per YYM and updates the CBV value accordingly.

[00138] History engine 162 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. To measure the impact of any vehicle's history on its target price, the system and method of the present invention will isolate and compare the transaction prices for the various types of history information (e.g., registration, title, accident, flood damage, and theft information) to calculate the amount of value gain or loss for specific year, make, model (YMM). As an example, a car with a flood title would have a lower value than the equivalent car without a flood title. Basically, the history engine 162 will calculate the additional loss in value owing to title history issues.

[00139] In this regard, history engine 162 is configured to normalize transaction prices for the group of YMM transaction records for all vehicle characteristics other than for history condition, and, developing a history condition function reflecting the relationship between the value associated with the history condition and the normalized transaction price, on a per transaction basis across the group of YMM transaction records. For a given target vehicle with a specified history condition, the history engine 162 is configured to evaluate the history condition function using a history condition for the target vehicle to obtain a history condition adjustment value.

[00140] Figure 10 is a simplified table showing the process implemented by the history engine 162. As shown at 208, the history engine 162 uses the normalized and current YMM value as the basis and all other values are normalized except for accident history between $400 and $500 in the illustrative embodiment. That is, the accident history is the subject of the engine, and normalization is not sought beforehand. In the illustrated table, of the universe of history conditions, the illustrated grouping is accident history group wherein the cost of the accident repair (e.g., for the fender bender) is between $400 and $500 dollars. It should be understood that there are many other groups for purposes of the present invention and one of ordinary skill in the art would recognize the full range of variation in this regard.

[00141] As shown at 210, all transactions are normalized, i.e., zero options, repairs, and color with the same miles based on prior values that increase or decrease the transaction values in column 212 of Figure 10. [00142] As shown at 214, values are brought current by moving the value from the actual transaction date to a current calculation date using, for example, a non-linear appreciation/depreciation of the YMM.

[00143] As shown at 216, transactions are sorted in ascending mileage order and all of the transactions represent the last observed value for the specific history factor in the mile array.

[00144] As shown at 218, history engine 162 discerns the value of factors such as title, accident, odometer, registration, recall, lemon, flood, salvage, fire, theft, and inspection for each YMM.

[00145] As shown at 220, the value differences in column 222 are based upon the valuation difference between an observed transaction (i.e., any present or subject transaction in the table) and the YMM base value, i.e., ($19,941 - $20,381) equals $- 440 dollars.

[00146] As shown at 224, valuation is the value difference (column 222) divided by mileage (column 226) to calculate a per mile value for each mileage break, i.e., an amount of appreciation/depreciation per break/mile (column 228).

[00147] As shown at 230, for example, a target vehicle with a prior accident between $400 and $5000 and 19311 miles has a value $350 less than the basis (e.g., $20,381) plus -2 cents times 76 miles equals -$352.

[00148] In sum, the history engine 162 groups the CBV transactions based on vehicle history factors such as but not limited to ownership, lemon, dismantle, rebuilt, flood, hail, and accident codes and then divides the difference in price between the value of a normal CBV transaction and each group to calculate a vehicle history value (VHV) on a positive/negative scale for each group per YYM and updates the CBV value accordingly.

[00149] Colors engine 164 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. If the manufacturer builds too many red cars of a particular YMM or too few black then the color engine 164 will discern this and provide a negative value for red and positive value for black. In other words, this engine 164 identifies the popular and unpopular colors for a particular YMM combination.

[00150] Colors engine 164 is configured for normalizing transaction prices for the group of YMM transaction records for all vehicle characteristics other than interior and exterior color; identifying a transaction based on a median, normalized transaction price in the group of YMM transaction records; subgrouping transaction records within the group of YMM transaction records in accordance with at least exterior color, interior color, or a combination of exterior and interior colors; and developing, for each subgroup of transactions, a respective colors function reflecting the relationship between (i) color variations with the subgroup, and (ii) the amount of variance of the normalized transaction price from the median, normalized transaction price of the identified transaction for color.

[00151] Colors engine 164, given a target vehicle to be valued, is configured to select one of the plurality of color subgroups for the target vehicle, and evaluate the respective colors function associated with that subgroup using at least an exterior color and an interior color of the target vehicle to obtain a colors adjustment value.

[00152] Figure 11 is a simplified table showing the process implemented by the colors engine 164. As shown at 232, the colors engine 164 start by identifying the median transaction value that provides a market reflection of "no" color and all other values are normalized except for the colors.

[00153] As shown at 234, all transactions are normalized, i.e., zero options, repairs, and histories with the same miles based on prior values that increase or decrease the transaction valued in column 236.

[00154] As shown at 238, values are brought current by moving the value from the actual transaction date to a current calculation date (CCD) using non-linear appreciation/depreciation of the YMM.

[00155] As shown at 240, transactions are sorted in a descending value order and each of the transactions represents the last observed value for the specific color or group in the color array. [00156] As shown at 242, the median transaction of observable colors in a particular color/group for each YMM is the value basis for all other color transactions within the color/group array.

[00157] As shown at 244, the color engine 164 discerns the value of: (1) exterior color, (2) interior color, (3) exterior and interior group, (4) multi-color exterior, (5) leather, and (6) fabric for each YMM.

[00158] As shown at 246, value differences are based on the value difference between each transaction and the median transaction in a category, i.e., $19,571 minus $19,694 equals ($-123) dollars. This is shown in column 248.

[00159] As shown at 250, for example, a vehicle with exterior color (X) and interior color (A) within the particular YMM combination has a value of $292 less than the valuation of "zero" colors.

[00160] Isolation engine 166 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. hi this regard, isolation engine 166 is configured to takes each CBV transaction and adds back the values taken away from standard engine 154 and brings those values to the current calculation date (CCD) — a desired valuation date—based on the current engine 156 to standardize the transaction value of everything except for the options on each transaction. The term "isolation" refers to the fact that you are left with an automobile and its options and all other factors are removed {e.g. mileage, history, reconditioning, etc...).

[00161] Unbiased engine 168 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. hi this regard, unbiased engine 168 is configured to use a regression model {e.g., Ordinary Least Squares) to determine the value of the options on a YMM combination.

[00162] Normal engine 170 is configured to perform functions to contribute to the determination of the current base value and the current constituent values as described above in connection with the flowchart of Figure 5. hi this regard, normal engine 170 is configured to keep the current value of all components of a YMM combination. [00163] Vehicle valuation engine 172 is configured to combines the values of any given new and/or used vehicle based on selected theoretical and/or physical vehicle characteristics and the components herein to discern a near real time retail and wholesale value estimation of any vehicle and options. When a user wants the value of a target vehicle, the valuation engine 172 takes the relevant components of the target vehicle to be valued (e.g. mileage, history, reconditioning costs, options, etc) and calculates the value based on the processing of the other engines 146 - 170. It also includes a user interface to the various valuation engines.

[00164] Regression Model Embodiment. In an alternate embodiment, a regression model may be employed in a system or method consistent with the present invention to provide real-time or near real-time valuation of a target tangible good, such as a target automotive vehicle. In one embodiment, an ordinary least squares (OLS) regression model may be used. It should be understood, however, that other linear and non-linear regression models are known in the art that may be employed, and fall within the spirit and scope of the present invention.

[00165] Figure 12 is a simplified block and flowchart diagram illustrating a second embodiment of the present invention, valuation system 142', employing a regression model 252 for valuation of a tangible good, such an automotive vehicle. The method includes establishing a regression model 252 wherein the target value of the target vehicle to be valued is a dependent variable and wherein the characteristics of the target vehicle are the independent variables. In this regard, each independent variable has a respective coefficient associated therewith corresponding to current constituent values. The regression model 252 further includes an intercept corresponding to the current base value of the vehicle to be valued.

[00166] With continued reference to Figure 12, the next step in the method includes the step, designated 256, of conducting a regression analysis using time series data in the group of YMM transaction records (this block designated 254) to establish values for the intercept and coefficients. This step has the effect up bring all the prior transactions, which each have their own respective actual transaction date (ATD), up to the present time (i.e., desired valuation date), since that is the time the regression analysis is conducted. This analysis step 256 includes the substep of associating the plurality of transaction prices in the group of YMM transaction records {i.e., block 140 in Fig. 6) with the dependent variable of the regression model 252 and associating the one or more vehicle characteristics with the independent variables of the regression model 252.

[00167] For exemplary purposes only, regression model 252 may take the form of equation (1) set forth below:

[00168] Equation (1) Transaction_Price = Base_Value + a*Optl + b*Opt2 + c*Opt3 + . . . d*Optn + e*mileage + f*recon_cost + g*history

[00169] where Transaction_Price is the transaction price of the vehicles in the group of YMM transaction records;

[00170] Base_Value is the current base value (intercept) and is solved for by the regression;

[00171] Optl, Opt2, Opt3, . . . Optn correspond to certain of the characteristics of the vehicles in the group of YMM transaction records, and is a binary variable that assumes a logic one if the characteristic is present and a logic zero if the characteristic is absent;

[00172] mileage corresponds to the mileage characteristic of the vehicles in the group of YMM transaction records and is the number of miles on such vehicles;

[00173] recon_cost corresponds to the reconditioning cost characteristic of the vehicles in the group of YMM transaction records;

[00174] history corresponds to the history condition characteristic associated with the vehicles in the group of YMM transaction records; and

[00175] a, b, c, . . ., g are coefficients which have a numerical value solved for by the regression model.

[00176] With continued reference to Figure 12, once the intercept and coefficients of the model 252 have acquired values, the method proceeds to block 258, where the target tangible good {e.g., the target automotive vehicle) will be valued according to the present invention. In addition to the intercept and coefficients being valued, the regression analysis in block 258 requires certain information about the vehicle to be valued.

[00177] Block 260 is configured to provide information to regression block 258 corresponding to the year, make, model (YMM) and the presence or absence of a variety of options, as well, mileage, expected reconditioning cost, any history value adjustment, and any other information referred to herein that may bear on the valuation question, all as described in detail in regard to the first embodiment 142.

[00178] As shown in block 262, in one embodiment, certain of this information is obtained from a computer assisted inspection of the target vehicle, described elsewhere herein, as well in further detail in prior pending U.S. provisional application Serial No. 60/694,318 filed on June 27, 2005, the entire disclosure of which is incorporated herein by reference. In this computer-assisted embodiment, for example, a computer (e.g., wirelessly connected laptop 62 shown in Figure 1) to be used by an inspection agent may be configured for facilitating the inspection of the target vehicle, including configuration of the computer 62 to receive as an input a vehicle identification number (VIN) corresponding to the target vehicle and to automatically connect to a central database (e.g., databases 52 of central computer system 22) for retrieving available vehicle history information suitable for facilitating the inspection. Laptop 62 may also be configured to establish templates configured to correspond to digital pictures taken by the inspection agent of the target vehicle. Such templates may be for the exterior, interior, engine, drive-train and undercarriage of the target vehicle. In the end, such computer-assisted inspection process illustrated by block produces an inventory of remedial or repair/reconditioning work to be done to bring the vehicle up to predetermined standard. From this inventory, a repeatable and accurate appraisal of the reconditioning costs for the target vehicle can be obtained. It should be understood that the foregoing is exemplary only and not limiting in nature.

[00179] In a still further embodiment, however, such inspection may be conducted manually, as is well known in the art, to obtain the vehicle characteristics, including a inventory of repair/reconditioning work to be done, form which a manually-calculated reconditioning cost may be determined. [00180] With continued reference to Figure 12, regression block 258 is configured to use the above mentioned intercept, coefficients, and other vehicle characteristics information to determine a value for the target vehicle, which is shown as an output in block 264. The valuation regression in block 258 may take the form as in equation (2) below:

[00181] Equation (2) Target_Value = Base_Value_DEFiNED + a_DEFHMED*Optl + bϋEFiNED*Opt2 + c_DEFrNED*Opt3 + . . . d_DEFi_NED*Optn + e_DEFiNE_D*inileage + fϋEFi_NED*recon__cost + g_DEFi_NED*history

[00182] where Target_Value is the value of the target vehicle to be valued and is the output;

[00183] Base_ValueDEFiNED is the current base value as solved for by the regression;

[00184] Optl, Opt2, Opt3, . . . Optn are independent variables corresponding to the one or more characteristics of the target vehicle to be valued, and is a binary variable that assumes a logic one if the characteristic is present and a logic zero if the characteristic is absent;

[00185] mileage is the number of miles on the target vehicle to be valued; [00186] recon_cost is the reconditioning cost of the target vehicle to be valued;

[00187] history is the value reduction based on a history condition existent in the target vehicle to be valued; and

[00188] aoEFiNED, boEFiNED, CDEFINED, • • •, gDEFiNED are coefficients (corresponding to the constituent values) as solved for by the regression.

[00189] Example

[00190] Consider a target automotive vehicle to be valued and that for this model year, make, and model (YMM) there are three options: A first option (Optl), a second option (Opt2), and a third option (Opt3). Further assume that after suitable processing, a plurality of transactions records in the transaction database where identified as having the same YMM as the target vehicle and met all other criteria.

[00191] These transactions are summarized below in Table 1. Table 1

Trans Price Mileage Recon Opt1 Opt2 Opt3

$24,758 2418 $815 1 1 0 $25,659 3410 $1,462 1 1 1 $23,588 4123 $1,107 1 0 1 $21,512 4877 $1,202 0 1 0 $20,508 4920 $1,339 0 0 1 $23,421 5788 $561 1 0 1 $20,383 6172 $581 0 0 1 $25,322 6781 $729 1 1 1 $21,249 7515 $1,352 0 1 0 $20,208 7924 $1,374 0 0 1 $20,195 8052 $905 0 0 1 $24,178 8216 $945 1 1 0 $22,119 8812 $1,266 0 1 1 $22,062 9377 $1,363 0 1 1 $22,013 9872 $1,450 0 1 1 $21,995 10046 $1,385 0 1 1 $21,991 10092 $1,464 1 0 0 $20,893 11068 $744 0 1 0 $22,721 12793 $518 1 0 1 $19,515 14855 $1,140 0 0 1 $22,453 15473 $1,459 1 0 1 $22,327 16731 $1 ,052 1 0 1 $21,244 17559 $1,336 0 1 1 $19,082 19176 $1,296 0 0 1 $22,064 19358 $1,180 1 0 1 $19,018 19822 $666 0 0 1 $20,000 20001 $711 0 1 0 $20,846 21542 $794 0 1 1 $20,673 23275 $1,310 0 1 1 $20,577 24232 $1,269 0 1 1 $17,493 25070 $677 0 0 0 $23,414 25863 $1,469 1 1 1 $22,278 27221 $1,249 1 1 0 $23,159 28411 $1,051 1 1 1 $21,037 29632 $1,396 1 0 1 $21,995 30055 $1,017 1 1 0 $17,878 31224 $952 0 0 1 $16,740 32599 $1,351 0 0 0 $19,509 34912 $1,423 0 1 1 $16,452 35478 $1,419 0 0 0 $19,450 35501 $659 1 0 0 $20,238 37623 $1,275 1 0 1 $19,108 38919 $737 0 1 1 $22,093 39072 $567 1 1 1 $16,034 39662 $1,431 0 0 0 $19,861 41388 $1,332 1 0 1 $18,848 41523 $981 0 1 1 $15,543 44573 $1,146 0 0 0 Trans

Price Mileage Recon Opt1 Opt2 Opt3

$17,373 46270 $662 0 1 0

$15,222 47782 $1 ,485 0 0 0

[00193] The time series data in Table 1 is entered into the regression model represented by Equation (1) and will provide values for the Base_Value and the coefficients a, b, c, e and f (in the example, coefficient "d" is not needed since we are assuming only three options, and g=0 due to no history). The outputs would be as follows: BaseJValue = $20,000, a=$3,000, b=$2,000, c= $1,000, e= -0.10, and f= - 3.57E-14.

[00194] This result would mean that a target vehicle with NONE of the options, zero miles and NO reconditioning would be valued at $20,000 (i.e., base_value). The first option (Optl) would be worth $3,000, the second option (Opt2) would be worth $2,000, and the third option (Opt3) would be worth $1,000, the per-mile depreciation would be $0.10 per mile, and the per dollar reconditioning depreciation would be $3.57E-14.

[00195] It should be further appreciated that coefficients a, b and c in this example directly represent dollars, which operate to directly modify the base_value, also already in units of dollars. That is, the variable Optl, Opt2, and Opt3 are binary variables that are unitless. The coefficient associated with the mileage characteristic has the units of dollars/mile. Therefore, that term will result in dollars once multiplied by the miles on the target vehicle. Additionally, as described above, the economic impact of repair/reconditioning on a vehicle is not dollar for dollar. In many instances, a repaired/reconditioned vehicle is valued less by the market than the same vehicle in the "same" condition without the repairs. Accordingly, this example shows that even after repair/reconditioning, the value of this target vehicle will be less by approximately 20% of the reconditioning costs.

[00196] To complete the example, assume that the target vehicle has the first and third options, but not the second option. It has 1500 miles on it and needs $200 in reconditioning.

[00197] The equation (2) above that defines the model 252 (best shown in Figure 12) would be evaluated as follows: [00198] TargetJValue = $Base_Value_DEFiN_ED + a_DEFiN_ED*Optl + b_DEFiNED*Opt2 + C_DEFi_NED*Opt3 + . . . do_EFi_NED*Optn + e_DEFi_NED*mileage + f_DEFi_NED*recon_cost + g_DEFi_NED*history.

[00199] Target_Value = $20,000 + $3,000*Optl + $2,000*Oρt2 + $l,000*Opt3 - 0.10*mileage - 3.57E-14*recon_cost

[00200] Target_Value == $20,000 + $3,000*(l) + $2,000*(0) + $l,000*(l) - 0.10*(1500) - 3.57E-14*(200).

[00201] Target_Value = $23,850.

[00202] The Figures 17-28 show various aspects of the present invention.

[00203] Additional features, aspects, and embodiments of the present invention are set forth immediately below.

[00204] Element Valuation Processes

[00205] To provide real time vehicle valuations, NAMX will define the values of every vehicle element such as options, colors, and trims for any vehicle in question by isolating and comparing the transaction prices. For the same year, make, and model as the vehicle in question, the isolation process will:

[00206] Define the last transaction and price for the most basic model available [00207] Define the last transaction and price for every trim available [00208] Define the last transaction and price for each option available [00209] Define the last transaction and price for each interior color available [00210] Define the last transaction and price for every exterior color available [00211] Define the last transaction and price for every second exterior color available [00212] Juxtapose each defined transaction price with all other defined prices [00213] Define the initial valuations of each color, option, and trim defined [00214] Define the rate of depreciation between each transaction and the newest [00215] Adjust initial values based on the depreciation rate from their date to the newest

[00216] Establish the secondary valuation for year, make, model, options, colors, and trim

[00217] Intangible Valuation Processes

[00218] Based on the NAMX inspection, buyers will logically deduct reconditioning costs when establishing prices in NAMX. To discern retail readiness of the wholesale valuations, NAMX processes will add reconditioning costs back to the prices for every transaction defined above. To calculate additional loss of valuation resulting from reconditioning cost, the NAMX processes will likewise measure the difference in prices compared to each incremental increase of reconditioning cost and time. For example: $1.00 of reconditioning cost on any specific model may reduce prices by $1.28. To the extent that reconditioning costs reduces prices further than the actual costs, NAMX will add those amounts back to the transactions defined above as well. To measure the impact, of any vehicle's history on price, NAMX will isolate and compare the prices for the various types of registration, title, accident, and theft information to calculate the amount of price gain or loss for specific models.

[00219] Mileage Valuation Processes

[00220] To measure the precise depreciation per mile for each specific model, NAMX processes will create vehicle mileage breaks for each base model combination by calculating the primary (greater-than-normal decline) price reductions to set the start and end of vehicle mileage breaks. Within each of the mileage breaks, NAMX will calculate the differences between the prior and break transaction prices as well as mileages and then divide the difference in price by the difference in mileage to calculate the per mile value within the break. To calculate the total mileage value, NAMX finds the average mileage (A) and price (B) for the overall model in question and multiplies the difference in miles (X) for the specific vehicle by the per mile value (Y) of each vehicle mileage break between (A) and (X) to calculate the precise gain or loss (Z) of value from (B) for any specific vehicle. As a result, NAMX will normalize each of the secondary and intangible transaction prices defined above. [00221] Element Valuation Combination

[00222] The isolation processes will discern the valuation of specific vehicle elements in real time, thereby enabling physical (vehicles that do exist) and hypothetical (vehicles that do not exist) new as well as used vehicle valuations. Rather than average the transaction prices or utilize any methodology that fails to calculate the factors constituting the prices such as condition, options, colors, mileage, and history, NAMX will define, isolate, calculate, and combine those factors and their correlating prices to discern real time and accurate valuations. For specific new and used vehicles, NAMX will calculate the base model combination price and then add or deduct the price of each option and color. For used vehicles specifically, NAMX will add or deduct the value of vehicle history and each mile individually. Before combining those values to calculate a physical or hypothetical valuation, NAMX will adjust each price to the most recent transaction date by calculating a depreciation rate. For vehicle options that lack transaction prices, NAMX will apply the depreciation rate to the initial price of the option. In short, NAMX will calculate precise and real time valuations for any vehicle.

[00223] Still further features, aspects, and embodiments of the present invention are set forth below.

[00224] An improved Vehicle and Specific Attribute Valuation System:

[00225] I have discovered an automobile and specific attribute valuation system and method comprising: (a) an industry operating system (IOS) that provides integration, administration, and use of industry systems such as: 1) vehicle identification, 2) vehicle inspection, 3) vehicle valuation, 4) inventory management, 5) inventory automation, 6) vehicle transportation, 7) vehicle marshalling, 8) vehicle reconditioning, 9) physical auctions, 10) electronic wholesale, 11) dealership operations, 12) vehicle retail, 13) dealership ecommerce, 14) vehicle appraisal, 15) consumer finance, 16) product surveys, 17) industry advertising, 18) auto ecommerce, 19) vehicle production, 20) industry support, and 21) industry payments to enable efficient industry interactions; (b) a category engine that groups observed retail and wholesale (RAW) transaction attributes and prices based on the year, make, model (YMM) combination; (c) an incentive engine periodically measuring the value of vehicle incentives to set a net product cost (NPC) and retail product cost (RPC) for every vehicle and option per YMM from a net dealer cost (NDC) and suggested retail price (SRP) respectively; (d) a pricing engine that adds the cost of remaining repair back to retail and wholesale (RAW) transaction prices; (e) a factoring engine that calculates the values of all options observed in RAW transaction prices based on the appreciation/depreciation curve from the NPC to the actual transaction date (ATD) and/or the result of (m) per option; (f) a standard engine that deducts the results of (e) from each RAW transaction price to establish a base vehicle configuration (BVC) value per transaction observed; (g) a current engine that utilizes the appreciation/depreciation curve from the net product cost (NPC) to appreciate/depreciate the BVC value from the actual transaction date (ATD) to the current calculation date (CCD) to establish the current base value (CBV); (h) a repair engine that sorts CBV transactions based on the amount of repair dollars remaining at the ATD and compares the values to calculate the increase/decrease of price per dollar of repair remaining per YMM combination and updates the a repair dollar factor (RDF) as well as the CBV value accordingly; (i) a mileage engine that sorts CBV transactions based on mileage and divides the difference in miles by difference in price between the first transaction and second, the second and third, and so on to calculate a vehicle mileage break (VMB), the mileage brake value (MBV), and per mile value (PMV) between the transactions per YYM and updates the CBV value accordingly; Q) a historical engine that groups the CBV transactions based on vehicle history factors such as ownership, lemon, dismantle, rebuilt, flood, hail, and accident codes and then divides the difference in price between the value of a normal CBV transaction and each group to calculate a vehicle history value (VHV) on a positive/negative scale for each group per YYM and updates the CBV value accordingly; (k) a color engine that groups the CBV transactions based on interior color, exterior color, dual color, and color combination and then calculates the price difference between the value of a CBV transaction and each group to calculate a relative color value (RCV) on a positive/negative scale for each group per YYM and updates CBV values accordingly; (1) an isolation engine that groups all CBV transactions based on manufacturer and aftermarket options and then adds back the per option value from (f) to all CBV transactions and then uses (g) in each group per (YMM) combination; (m) an unbiased engine that calculates the difference in price between a CBV transaction and each group in (1) and/or utilizes an ordinary least squares regression and/or multivariate regression and/or other regression models to calculate a specific option value (SOV) for each group per YYM and updates the CBV and (e) values accordingly; (n) a normal engine that applies (b) through (m) for each year, make, model, color, option, mile, history, and condition on an individual and collective basis to establish an ongoing normalized base value (NBV) per factor to be utilized by any engine herein when sufficient data does not exist; (o) a valuation engine that combines the values of any given new and/or used vehicle based on selected theoretical and/or physical vehicle characteristics and the components herein to discern a near real time retail and wholesale value estimation of any vehicle and options. The prior art does not factor critical variables such as repairs, history, and color while tending to rely upon moving averages to produce an invalid guide of obsolete vehicle, mileage and option valuations.

[00226] While the invention has been shown and described with reference to one or more particular embodiments thereof, it will be understood by those of skill in the art that various changes and modifications can be made without departing from the spirit and scope of the invention.

Claims

1. A method for valuation of a target tangible good, comprising the steps of:

establishing a transaction database containing a plurality of transaction records, each record reflecting a transaction involving a tangible good and respectively including (i) a transaction price and (ii) one or more characteristics of the tangible good;

electronically updating the database as transactions involving the tangible goods occur in an electronic marketplace;

defining, using information in the database, (i) a current base value and (ii) one or more current constituent values that respectively correspond to the one or more characteristics of the goods;

determining the characteristics of the target good to be valued; and

calculating a target value by adjusting the current base value as a function of the characteristics of the target good and the current constituent values.

2. The method of claim 1 wherein the tangible goods comprise automotive vehicles and the target good to be valued is an automotive vehicle, and wherein each record further includes at least the year, make and model (YMM) of the vehicle, and wherein the characteristics in each record further include at least one selected from the group comprising a body type, a trim level, a mileage level, an exterior color, an interior color, an individual option, an option package, a reconditioning cost, a history condition, and an incentive value.

3. The method of claim 2 wherein the transaction price is one selected from the group comprising (i) a wholesale transaction price; (ii) a retail transaction price; and (iii) a grouping containing one of the wholesale price, the retail price or a manufacturer- to-dealer price.

4. The method of claim 3 wherein said step of determining the current base value and the current constituent values includes the substep of:

grouping records reflecting transactions involving vehicles having the same year, make and model (YMM) as the target vehicle to be valued to define a group of YMM transaction records.

5. The method of claim 4 wherein said step of determining a current base value and current constituent values further includes the substep of:

evaluating only information contained in the group of YMM transaction records that reflects a preselected number of the most recent transactions.

6. The method of claim 4 wherein said step of determining a current base value and current constituent values further includes the substep of:

evaluating only information contained in the group of YMM transaction records that reflects transactions that have occurred in a preselected time interval.

7. The method of claim 4 wherein said step of determining the current base value and the current constituent values includes the substeps of:

providing each transaction record with a net dealer cost (NDC) price element;

measuring an incentive value of manufacturer incentives for vehicles having the same year, make and model (YMM) as the target vehicle to be valued; and

adjusting, for the group of YMM transaction records, the respective net dealer cost price elements in accordance with the measured incentives so as to establish a net product cost (NPC) price element.

8. The method of claim 4 wherein said step of determining a current base value and current constituent values includes the substep of:

adjusting, for the group of YMM transaction records, the respective transaction price as a function of the corresponding reconditioning cost.

9. The method of claim 8 wherein transaction records each include an actual transaction date (ATD) and wherein said step of determining the current base value and the current constituent values includes the substeps of:

identifying the unique combinations of characteristics available for a vehicle having the same year, make and model (YMM) of the target vehicle to be valued;

selecting, from the group of YMM transaction records, and for each unique combination, the respective record reflecting the most recent transaction;

juxtaposing the transaction prices of the selected transaction records so as to define, for each selected YMM transaction record, a respective set of first constituent values;

defining, for each selected YMM transaction record, a respective first appreciation/depreciation function based on the respective net product cost (NPC) and actual transaction date (ATD);

adjusting each set of first constituent values in accordance with the respective first appreciation/depreciation function to produce a respective set of second constituent values.

10. The method of claim 9 wherein said step of determining the current base value and the current constituent values includes the substep of:

deducting the second constituent values from the respective transaction prices in the selected YMM transaction records to obtain a base vehicle configuration (BVC) value.

11. The method of claim 10 wherein said step of determining the current base value and the current constituent values includes the substeps of:

defining a second appreciation/depreciation function based on the net product cost (NPC) and a time interval between the actual transaction date (ATD) and a current calculation date (CCD) wherein the CCD corresponds to a desired valuation date;

adjusting the BVC value in accordance with the second appreciation/depreciation function to establish the current base value.

12. The method of claim 11 wherein said step of determining the current base value and the current constituent values includes the substeps of:

normalizing transaction prices for the group of YMM transaction records for all vehicle characteristics other than for reconditioning cost, wherein reconditioning cost corresponds to repairs remaining to be made;

developing a repair function reflecting the relationship between the amount of reconditioning cost and the normalized transaction price, on a per transaction basis across the group of YMM transaction records.

13. The method of claim 12 wherein said step of calculating a target value for the target vehicle to be valued includes the substep of:

evaluating the repair function using a reconditioning cost for the target vehicle to obtain a repair adjustment value.

14. The method of claim 13 wherein said step of determining the current base value and the current constituent values includes the substeps of:

normalizing transaction prices for the group of YMM transaction records for all vehicle characteristics other than for mileage

developing a mileage function reflecting the relationship between the number of miles and the normalized transaction price, on a per transaction basis across the group of YMM transaction records.

15. The method of claim 14 wherein said step of calculating a target value for the target vehicle to be valued includes the substep of:

evaluating the mileage function using a target mileage for the target vehicle to obtain a mileage adjustment value.

16. The method of claim 15 wherein said step of determining the current base value and the current constituent values includes the substeps of:

normalizing transaction prices for the group of YMM transaction records for all vehicle characteristics other than for history condition and mileage;

developing a history condition function reflecting the relationship between the value associated with the history condition and the normalized transaction price, on a per transaction basis across the group of YMM transaction records.

17. The method of claim 16 wherein the step of calculating a target value for the target vehicle to be valued includes the substep of:

evaluating the history condition function using a history condition and a mileage for the target vehicle to obtain a history condition adjustment value.

18. The method of claim 17 wherein said step of determining the current base value and the current constituent values includes the substeps of:

normalizing adjusted transaction prices for the transaction records in the group of YMM transaction records for all vehicle characteristics other than interior and exterior color;

identifying a transaction based on a median, normalized transaction price in the group of YMM transaction records;

subgrouping transaction records within the group of YMM transaction records in accordance with at least exterior color, interior color, exterior and interior color combination;

developing, for each subgroup of transactions, a respective colors function reflecting the relationship between (i) color variations with the subgroup, and (ii) the amount of variance of the normalized transaction price from the median, normalized transaction price of the identified transaction for color.

19. The method of claim 18 wherein the step of calculating a target value for the target vehicle to be valued includes the substep of:

selecting one of the plurality of color subgroups for the target vehicle to be valued;

evaluating the respective colors function for the selected subgroup using at least an exterior color and an interior color of the target vehicle to obtain a colors adjustment value.

20. The method of claim 19 wherein said step of determining the base value and the current constituent values includes the substep of:

engaging an isolation engine.

21. The method of claim 20 wherein said step of determining the base value and the current constituent values includes the substep of:

engaging an unbiased engine.

22. The method of claim 21 wherein said step of determining the base value and the current constituent values includes the substep of:

engaging a normal engine.

23. The method of claim 22 wherein said step of determining the base value and the current constituent values includes the substep of:

engaging a valuation engine.

24. The method of claim 4 where said step of determining the current base value and the current constituent values includes the substeps of:

establishing a regression model wherein the target value of the target vehicle to be valued is a dependent variable, and wherein the characteristics of the target vehicle are the independent variables, each independent variable having a respective coefficient associated therewith corresponding to current constituent values, and wherein the model further includes an intercept representing the current base value; and

conducting a regression analysis using time series data in the group of YMM transaction records to establish values for the intercept and coefficients thereby establishing the current base value and the current constituent values, wherein said analysis step includes associating the plurality of transaction prices in the group of YMM transaction records with the dependent variable of the model and associating the one or more vehicle characteristics with the independent variables of the model.

25. The method of claim 24 wherein the intercept and the one or more coefficients in the regression model are determined in accordance with the following:

Transaction_Price = Base_Value + a*Optl + b*Oρt2 + c*Opt3 + . . . d*Optn + e*mileage + f*recon_cost + g*history

Where Transaction_Price is the transaction price of the vehicles in the group of YMM transaction records;

Base_Value is the current base value (intercept) and is solved for by the regression;

Optl, Opt2, Opt3, . . . Optn correspond to certain of the characteristics of the vehicles in the group of YMM transaction records, and is a binary variable that assumes a logic one if the characteristic is present and a logic zero if the characteristic is absent;

mileage corresponds to the mileage characteristic of the vehicles in the group of YMM transaction records and is the number of miles on such vehicles;

recon_cost corresponds to the reconditioning cost characteristic of the vehicles in the group of YMM transaction records;

history corresponds to the history condition characteristic associated with the vehicles in the group of YMM transaction records; and

a, b, c, . . ., g are coefficients which have a numerical value solved for by the regression model.

26. The method of claim 25 wherein said step of calculating a target value for the target vehicle to be valued further includes the step of evaluating the following:

TargetJValue = Base_Value_DEFiNED + a_DEFiNED*Optl + b_DEFiNED*Oρt2 + C_DEFi_NED*Opt3 + . . . d_ϋEFi_NED*Optn + e_DEFrNED*mileage + f_DEFINED*recon_cost + gDE_FiNED*history

where Target_Value is the value of the target vehicle to be valued and is the output;

Base_ValueDEFiNED is the current base value as solved for by the regression;

Optl, Opt2, Opt3, . . . Optn are independent variables corresponding to the one or more characteristics of the target vehicle to be valued, and is a binary variable that assumes a logic one if the characteristic is present and a logic zero if the characteristic is absent;

mileage is the number of miles on the target vehicle to be valued;

recon_cost is the reconditioning cost of the target vehicle to be valued;

history is the value reduction based on a history condition existent in the target vehicle to be valued; and

aDEFiNED, bϋEFiNED, QDEFINED, • • •, gDEFiNED are coefficients (corresponding to the constituent values) as solved for by the regression.

27. The method of claim 4 wherein said step of determining the characteristics of the target good to be valued include the substep of:

conducting an inspection of the target vehicle.

28. The method of claim 27 wherein said conducting an inspection substep is performed manually.

29. The method of claim 27 wherein said conducting an inspection substep includes the further substeps:

configuring a computer for facilitating inspection including configuring the computer to receive as an input a vehicle identification number (VTN) corresponding to the target vehicle to be valued and automatically connect to a central database for retrieving available vehicle history information suitable for facilitating the inspection.

30. The method of claim 29 further including the step of:

configuring the computer to establish templates for at least one selected from the group comprising exterior, interior, engine, drive-train and undercarriage, configured for correspondence with digital pictures taken of the target vehicle during the inspection.

31. A system for valuation of a target tangible good, comprising:

a computer system configured to:

establish a transaction database containing a plurality of transaction records, each record reflecting a transaction involving a tangible good and respectively including (i) a transaction price and (ii) one or more characteristics of the tangible good;

electronically update said database as transactions involving the tangible goods occur in an electronic marketplace;

define, using information in said database, (i) a current base value and (ii) one or more current constituent values that respectively correspond to the one or more characteristics of the goods; and

calculate a target value by adjusting said current base value as a function of determined characteristics of said target tangible good and said current constituent values.

32. The system of claim 31 wherein the tangible goods comprise automotive vehicles and said target good to be valued is an automotive vehicle, and wherein each record further includes at least the year, make and model (YMM) of the vehicle, and wherein the characteristics in each record further include at least one selected from the group comprising a body type, a trim level, a mileage level, an exterior color, an interior color, an individual option, an option package, a reconditioning cost, a history condition, and an incentive value.

33. The system method of claim 32 wherein said transaction price is one selected from the group comprising (i) a wholesale transaction price; (ii) a retail transaction price; and (iii) a grouping containing both the wholesale price and the retail price.