Using data and analytics to buy, sell and price more efficiently
KAR Auction Services Inc., Cox Automotive, Black Book and CarGurus are among the companies making heavy investments in data and analytics to help their customers buy, sell and price vehicles more efficiently, said those companies’ executives who attended Used Car Week in November.
The idea, the executives said, is to help manufacturers, financial institutions, dealers and others use their own data coupled with market data to create immediate and future remarketing strategies to maximize their return on investment.
“We have two pilots going on with OEM customers to help them with their pricing models, helping them assess what individual vehicles are worth,” said Kelly. “We weren’t doing that two years ago, but we’re doing it now. Our customers are more comfortable with digital tools.”
John Manganaro, vice president, product and analytics at DRIVIN, also a KAR Auction Services property, said he and his team are researching dealers’ used-vehicle purchase habits and whether data and analytics can help them broaden the make and model vehicles they typically sell.
He cited a case study involving a Honda dealer who avoided used Chevys because his dealership was located on the same block as a Chevy dealership.
Based on an analysis of the Honda dealer’s sales and his market, Manganaro’s team convinced the Honda dealer to stock two “5- or 6-” year old Chevy Suburbans. They also advised the Honda dealer to “be realistic” when pricing the vehicles.
The Honda dealer was pleasantly surprised to sell the vehicles in 22 days. Manganaro said research revealed that the Chevy dealer was committed to selling low-mileage and certified used Chevys that were no more than 4 years old.
“Just because the Chevy dealer isn’t selling Chevys over 4 years old doesn’t mean that no one wants to buy them,” Manganaro said.
Making data usable
Nick Peluso, president of Cox Automotive’s Manheim Digital Marketplace and president of RMS Automotive, also a Cox Automotive property, said every company has useful data, but many don’t use it because it has to be “cleansed” and “normalized” first.
For example, take the color blue, he said. One manufacturer may call it cobalt blue, another calls it sky blue, and yet another company calls it blue.
He said Cox Automotive devoted a lot of time in 2017 to making data usable and will make more advancements in the coming years.
“We all have data, but we have to put it in a fashion that makes it usable,” he said. “You have to run it through a filter and normalize it, then it’s much easier to use. We, the industry, haven’t been good at that.”
Peluso said RMS Automotive builds various data tools for institutional customers. Its price optimization tool takes Manheim Market Report values and redefines those values to fit specific vehicles, he said.
The company also offers reconditioning optimization, which suggests specific reconditioning services for specific vehicles and location optimization, which then pin points where a specific vehicle should be sold to get its best return on investment.
“In 2018 and beyond, one of the big things we’re going to see in our space is the use of data and analytics, artificial intelligence, fill in the blank — whatever you want to call it — more and more driving decision making, helping people get to a better outcome,” Peluso said.
Black Book has offered analytical services to remarketers, dealer groups, lenders and other customers for many years, but that effort has gathered momentum over the last three years, said Anil Goyal, the company’s senior vice president, automotive valuation and analytics.
Putting a price on history
“Several months” ago, Black Book began offering vehicle history analysis, which include the impact an individual vehicle’s history has on its value, Goyal said.
Taken into consideration is a vehicle’s prior usage, such as rental or lease, and its number of owners versus its age. Another consideration is whether the vehicle has been in an accident and if so, the severity of the damage and if its title reflects that it has been salvaged or damaged.
Black Book is putting a dollar value on a vehicle’s history, Goyal said.
“We have data scientists working, and we provide very custom analytics depending on the needs of our customers,” he added.
“It’s not ‘just give me a range for where the evaluation is going to be. I need more precision on my values because of my situation — what is the history and how do I recondition, whether it’s a rental, what does my trade-in looks like. I want to be able to account for things that are not readily apparent’.”
Marty Blue, senior vice president, business development at CarGurus, said the company provides dealers that sell vehicles on its site information about how their vehicles are performing in terms of things such as vehicle details page views and leads via email, phone and text.
“We’re a technology company that specializes in the auto industry so we’ve always used data to drive all our decisions and make sure we are able to provide the best experience for our consumers and the best traffic for our dealers,” she said.
Source: Auto Remarketing