After a 2-year rollercoaster ride, it might be time to begin to think about business as usual. As strange as that might seem, when it comes to used-vehicle sales some experts seem to think so.
Manheim, for example, have recently pointed to trends returning toward “normalcy in the used market.” Even with inflation and the potential for a recession, there’s a sense that the used-car market is showing signs of momentum and stabilization.
Time will tell if that’s true or if consumer demand drops. Either way, as the industry moves further from the pandemic, there’s a need to assess your used-vehicle acquisition/sales approach and apply data-driven strategies to adjust – and to be ready to take advantage.
At hand is an opportunity to leverage findings through technology that build a “vehicle-first” marketing strategy focused on pinpointing the vehicles that provide the best overall resale gross-and-turn scenario to attract customers.
Virginia’s First Team Automotive is a perfect example. Over the past year, the group and dealership leaders focused on bringing together data from all sources in an effort to help identify which used vehicles would be the best fit for their inventory and customer base.
The First Team staff wanted to optimize the number of vehicles purchased and which models/trims produced the best results in inventory turns and gross profits. Their strategy was to increase trade-ins from customers, eliminate auction fees and further control costs by improving the reconditioning process.
Did it work? Yep. First Team Automotive saw used-vehicle profits increase 54%, franchise trade-in profits improve nearly 70% and average gross profit on non-franchise-purchased used vehicles went up 105%. It’s an indication of the power of data insights to establish purchase and pricing strategies, especially in a market environment that might be starting to normalize but is still working through persistent low inventory issues and margin pressure – all of which contribute to higher used-vehicle acquisition costs.
In other words, it’s all about finding the right mix for your market. First Team Automotive dealerships were able to do so by making precise decisions about vehicle acquisition, based on sales history and model sales and by ensuring that inventory matched customer requirements.
It sounds great, but we all know data has a downside. It can be confusing, difficult to understand and impossible to standardize and use consistently. To make data-driven decisions, everyone turns to designing their own spreadsheets, which by itself is an overwhelming exercise. Consider, for example, that for every First Automotive success story, thousands of dealership hours per day are wasted creating incomprehensible reports based on confusing data.
The key is to be able to automatically generate useful reports from data sources across the dealership – including DMS, CRM, Google Analytics, social media and inventory-management platforms, and also use the data to drive decisions using advanced analytics. Good data is only as good as the analytics platform in use to simplify complex decision-making so the average user can benefit from it.
A good reporting and analytics platform can solve three important challenges:
- Data Integration: Aggregate all the data across your enterprise and create a normalized data hub. Integrate with all data sources with seamless and regular updates.
- Data Visualization and Dashboards: Make data easy to understand with a visualization-driven user interface and dashboards to easily interpret complex reports.
- Data Analytics and Decision Support: Solve business problems by using advanced statistical analysis and algorithms to provide insights and make decisions using them.
Ultimately, data is only as good as your ability to implement better decisions from the utilization of that data. When the presentation of sound data makes sense to your sales team, it can help protect dealerships from used-vehicle market volatility and set the stage for that long-awaited day when “normal” actually does arrive.
To read the full case study and results click here: https://www.frogdata.com/data-driven-dealership-case-study1-en-us.htm
Chris Dulla (pictured, above left) is vice president of FrogData, an advanced reporting and data analytics tool that helps dealers improve operational performance by providing a data-centric view of their entire operation.