By Richard Yarrow
Need to know
-Franchised dealers slow to use the data that helps other retail sectors
-Planning tools now available to support expansion strategies
-Customer data analysis will improve sales and profit margins
It was Albert Einstein who famously said that information is not knowledge. What he didn’t say, but what he meant, was that it’s about how that information is interpreted and subsequently used.
Consulting market intelligence data to support decisions is a key element of today’s retailing landscape. Top companies all invest time and money in making sure they know what their customers want, when they want it and how much they’re willing to pay.
Tim Peake, group strategy director for Trader Media Group, said using dynamic data was an essential and well-proven ingredient in any successful retail business. “High Street supermarkets, Amazon and the travel industry all do it, but car dealers don’t seem to want to,” he said.
“The automotive industry is awash with data yet it’s surprising how little of it is used. We know that dealers who use market intelligence products to support their decisions are more profitable.”
The SMMT is perhaps the most obvious source of industry data. Most dealers will look at its free monthly bulletin on car registrations broken down by manufacturer/brand. “Additional information on model, sales type and regional data can bring this into the context of the local market,” said a spokesman. “For this reason, a number of dealer groups purchase monthly reports with this detail.”
He used the example of a high-profile dealer group selling prestige cars which recently bought such a report to see how each dealer was performing in their local market. That was used to set and review objectives for each dealer principal and regional sales manager.
Franchised dealers analyse data for day-to-day business planning and sales reporting in all three key areas – new, used and aftersales. But market intelligence is particularly important when a business is looking to quantify the opportunity for an acquisition or to fill an open point.
The SMMT spokesman said: “An existing single-brand regional dealer group was looking to purchase a number of franchises for a different brand. It wanted to know the brand’s history of new car sales in the relevant regions, plus the total opportunity for aftersales. It also wanted to see the number of cars currently being serviced by those franchises. A combination of our MVRIS and Motorparc data allowed the group to quantify the total business opportunity and how the franchises had been performing, compared to existing dealers in the group.”
A number of dealer groups and carmakers also now use AMi, the data intelligence service from AM. It has 10 years of accounts for the largest 250 franchised dealers plus benchmarking capabilities for carmaker networks.
Early warning system
HR Owen is one of several AM100 groups which uses SMMT data for business planning and market analysis. Finance director Mike Warren said there was no way of quantifying the benefits it brought, but that it was an early warning system to highlight whether the business was on track. “It’s not expensive to buy so it’s useful to have. To not have it would be like driving at night without headlights; you can still do it but you don’t have the confidence to know what you’re heading towards.”
Tony Gannon, communications director for auction firm BCA, said that in tough economic conditions – where every sale is hard-won – market intelligence was essential. But he argued it assumes an even greater importance in the used car market. “Market intelligence is critical. There is the ‘where can I source it and what can I buy it for?’ issue, while the part-exchange function poses similar questions, such as ‘what should I pay and what can I trade it for?’”
Gannon believes that sourcing quality used stock is the real battleground for dealers, and knowing where to access consistent supplies is important. “The remarketing industry has led the way here with information such as online stock locators, plus physical and online buying channels with detailed, condition-graded catalogues and pricing data.”
Information can also help retailers know if the cars they are sourcing are actually the right ones for their customers. Peake said a recent Trader Media Group survey found that 54% of total stock had low regional demand. In addition, only 40% of vehicles were priced to deliver strong internet response and a good margin. The remainder either cost too much or too little.
He added: “Intelligence on market trends, pricing, and local demand when buying, selling and retailing stock, is invaluable and readily available. Understanding which are the most sought-after makes and models, and what price should be paid for them, will help a dealer stock the correct product and buy it at the right price.” He believes an effective intelligence-led pricing strategy will help maximise turnover and have a significant effect on overall profitability.
There are also plenty of tactical and strategic reports. Dealer groups who remarket vehicles in the wholesale sector can track their performance against budget and their rivals in terms of conversion and price. At the highest level, there is data which deals with the more esoteric economic and social issues that impact on the automotive sector.
Data analysis shouldn’t be an annual or even seasonal activity. Peake said it must underpin the business on a daily basis. “Those dealers which start to act like other retailers in their attitude towards data will be the winners of the future. Those that don’t will continue to struggle.”