By Andy Whitehair, CEO, Autofinity
Accurately pricing a used vehicle to market has always been fraught with ambiguities but in a dynamic and fast-paced market, retailers are increasingly reliant on digital pricing tools.
However, that in itself can be problematic. There is no one method to value used vehicles and most retailers rely on an array of retail and trade pricing tools, local knowledge and specialist experience.
Traditional ‘trade plus’ or even ‘pricing back’ are now far too simplistic especially with stock under pressure as a result of both new car production compromised due to ongoing supply issues and the cost of living crisis resulting in customers keeping their cars longer. Factor in highly informed customers now having a good grasp of both the value of their part-exchange and price expectations of their next used car and devising and implementing pricing strategies are even more challenging.
With trends in trade prices often taking weeks to be reflected in retail prices and large variations in pricing in the market, little wonder that accurate and timely used car pricing has become something of a holy grail.
Speaking at the National Franchised Dealer’s Association Driving Digital event, which preceded the AM awards evening in May, I listened to Robert Forrester, Vertu Motors Plc, CEO, discussing automation for increased efficiency to free up employees’ time thereby reducing the cost per sale of each vehicle. He went on to talk about automating pricing strategies and how eventually it would be managed by AI.
Whilst adopting an AI powered pricing strategy may feel too futuristic to contemplate currently for many, the increasing reliance on pricing tools is apparent but brings with it a new set of challenges, namely system integration.
As a platform specialising in integration and pooling vehicle data from multiple sources, vehicle pricing and how to aggregate that data to enable retailers to make the most informed decisions in real time is an area of focus for us.
If, as a sector, we are to achieve genuine digital transformation, we need to overcome the issue of multiple systems operating in their own silos. Each collecting valuable data and often fulfilling specific and necessary functions, bringing all this information together to create a rich data source is Autofinity’s raison d’etre.
When thinking about pricing strategy specifically, retailers will use a number of pricing methods such as Cap HPI and Auto Trader, but by creating a joined up process whereby these separate data sources are pooled, must be the way forward. Once the data has been assembled in one place, the information can be used holistically to better inform vehicle pricing. A vehicle’s price can be realigned accordingly using this one rich data source and fed back into online channels, then an even more accurate pricing strategy develops.
If it were then possible to overlay the pooled information with a retailer’s own criteria, price 1% below the Auto Trader average, for example, before the aggregated pricing information is fed back to online channels in the form of a used vehicle’s price tag, a highly sophisticated but easily manageable pricing strategy emerges.
By applying aggregated pricing information and overlaying with the retailer’s own pricing ‘rules’, the vehicle is more likely to be placed higher in searches and sold faster.
Combine those elements with an automated red flag when vehicles do not meet any part of the criteria whether it’s a pricing issue, lack of images or incomplete vehicle description, enabling retailers to both avoid compliance issues when inaccurate pricing generates incorrect finance quotes or conflicting price tags appear for the same vehicle on different channels, and retailers reduce the need for ongoing labour intensive cross checking.
Now imagine having full visibility of all of the above for a dealership’s or even a group’s inventory in one place which takes just seconds to access.
The creation of such a blended data source to better inform a dealer’s pricing strategy will improve the business’ ability to wield control and direction in a dynamic used car market. By utilising automation with the injection of human expertise would give retailers a valuable edge.
The implementation of such a joined up, coherent, easy-to-use and automated pricing strategy can then be further developed to create an instantaneous, reliable and accurate valuation tool whereby multiple data sources are pooled to deliver similar data rich content for fast and accurate assessments of auction vehicles under consideration and part-exchange vehicles.
The aggregation of such data through integration and clever knowledge pooling to deliver ‘a Single View of the Truth’, is our vision.
ViHUB already does this for vehicle data including identifying pricing anomalies and automating updates to multiple channels. We want to take our application to a new level and replicate vehicle data pooling to deliver similar functionality in pricing.