As we experience the most dramatic shift in used car market in recent memory, Paul Keatley, Client Development Director at AutoTrader and John Hogan, Co-founder & CEO at Real World Analytics (RWA) talk about what has driven this shift, the power of collaboration and how RWA’s new tool, PriceSmart, is producing even greater returns for customers.
Q: We’ve seen a huge amount of change in process and technology within the auto market in the last eighteen months. Can you outline for us what that journey has looked like with regard to car pricing and marketing?
Paul Keatley: It’s clear that the market conditions are dynamic, and with regards to pricing the trends are unprecedented. According to our Retail Price Index data, prices are increasing at a rate of more than 20% year-on-year. To put that into context, this time last year, average prices were growing at around 5%, which was then an all-time record. This massive acceleration in price growth has been fuelled by the increasing imbalance of supply and demand levels.
There are many data points that need to be factored into decision making whether it be for pricing, stock management or consumer purchasing. For us the journey has meant our data products have evolved into real time API solutions that allow accurate vehicle data for consumer comparison and trust, supply &demand data tools as well as accurate to market vehicle valuations.
Q: The benefits of AutoTrader and the AutoTrader Accelerator tool are dramatic. So how does RWA PriceSmart help groups take things a step further?
Paul Keatley: Utilising our API technology, RWA enables retail groups to customise their reporting and enhance decision making even further due to the flexibility of an API interface over software.
Q: Can you explain how the RWA’s relationship with Autotrader came about and where the idea for our PriceSmart integration tool came from?
John Hogan: One of our customers had a spreadsheet with their Recommended Retail prices based on a dynamic pricing policy overlaid on AutoTrader valuations but we could see that they were still exiting AutoTrader at less than 100% valuation because of inconsistencies on the implementation. We agreed to make this more actionable by pulling the AutoTrader data from their API and applying the appropriate algorithms and presenting a daily action report to each sales manager every morning in each branch. In addition, Head Office can see how well the policy is implemented in each branch with the help of League tables.
Q: In layman’s terms what does this new solution offer groups?
John Hogan: The new solution allows dealer groups to sell at an average of 102-103% of the Autotrader valuation which is typically £300 extra margin per vehicle. It does this by applying a dynamic pricing policy algorithm based on the local Retail Rating of the car to give a recommended retail, any prices that are out of sync are automatically emailed to the Sales Manager in the branch each morning for action.
In addition, changes to Retail Ratings & Valuations are tracked on a daily basis to alert the Senior Management team of any significant shifts in the market. By looking at exceptions only, a considerable amount of time is saved on the AutoTrader portal too.
Q: Pricing cars has always been a key skillset for auto sales managers and some of them will feel they have developed an expertise that can only be built up over years of work. What would you say to those people, and why should they consider bringing an external data tool into their business?
Paul Keatley: Data can’t replace experience. But at a time when the market is moving so quickly, we consistently see that the most successful retailers on our platform utilise data to complement their experience to inform their pricing and forecourt strategies. The scale and accuracy of our data means that retailers are able to monitor the market in near real-time and can adapt accordingly.
John Hogan: Completely agree with Paul that data can’t replace experience, but computer algorithms are much more consistent than people. With this solution, customers are getting the best of both worlds where Sales managers can do their thing with the best information at their fingertips but also be prompted on those under-priced cars that leave a lot of money behind & overpriced cars that are damaging stockturn & ultimately margin.
This article is an advertising feature in the AM Dealer Technology Guide which provides very useful information on the latest technologies and tools that help dealers future proof their business. Click here to check out the Dealer Technology Guide.
If you would like to find out more about how RWA PriceSmart is providing dealer groups with the ability to increase their margins by an average of an extra £300 per vehicle, please contact us here or call 0808 1890 617.
About Real World Analytics
Real World Analytics provides a cloud-based Business Intelligence (BI) solution that helps you become a complete data-driven dealer group. By bringing all your data into one place and delivering actionable insights to different levels in the business, everyone has the right information at the right time to do their job efficiently. The management will be presented with executive dashboards where they can drill down to the details for further investigation. Your managers in the outlets get reports such as DOCs delivered to them automatically so that they can action issues on the spot. The solution is designed to help you stay on top of your business with all the information you need at your fingertips.