Data-driven dealerships are performing better overall
- October 10, 2019
- Posted by: John Swift
- Category: Automotive Industry
Dealerships which invest in data analytics to track market changes, help in pricing part-exchanges and stock for sale and flag up vehicles which are overage do better, sell cars faster and make more profit per unit than those relying just on the management team’s experience and judgement.
The clear message from an Auto Trader webinar broadcast this week on how to avoid or deal with vehicles which have stuck around for too long is that using accurate, up to date market breakdowns helps dealerships navigate these problems and make it stronger, faster responding and able to weather downturns in consumer demand.
The scale of the problem of overage stock is enormous. Auto Trader says that 35% of dealers have cars sticking around for more than the 60-day trade ideal and 49% of stock is overpriced. Nine out of ten retailers lose an average of £24,000 per year because of vehicles not shifting. The cumulative cost to the industry last year was £300 million.
Used car and van dealerships today face pressures that simply weren’t there only just a few years ago. Buyers now spend far more time online researching a possible purchase, an average of 13 hours, so forecourt visits have dropped making it more important than ever that the sales staff convert a walk-on or enquiry into a firm order. Franchised dealers struggling with the new market have put more emphasis on used, adding to the competitive pressures in this sector and there is a further problem that the sheer size of the UK vehicle parc – up to 32 million last year from 29m in 2013 and cramming 170 vehicles onto each mile of road – is persuading many drivers to seek alternatives such as uber and perhaps suggesting that we may have passed peak demand for car ownership.
These decisions are not just made by experience
Those are macro factors beyond the control of anyone business but there are ways dealers can fight back and move with the shifting market and become more data-driven. AT says dealers need to be much sharper and respond faster, to be more in tune with what sells in their area and that software is now available that can track prices on a daily basis, nationally or within a defined area around the dealership, by brand or type of vehicle and that retailers embracing this technology have a more modern, efficient business.
Market analytics and good DMS software automate a lot of the management information a business owner needs so they can base their critical judgements on fact rather than just informed guesswork.
An AT spokesman said: “This is a data-driven market and these decisions are not just made by experience.”
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