Analysis
16 Dec 15

Don't drown in Big Data

Fuel prices and technology will continue to have a great impact on the remarketing industry in the next year. The former, because it is a determining factor for buyers to choose which motorisation they prefer; the latter, because it will continue to transform the industry itself.

The price of oil is at a historically low point, and will remain low for the foreseeable future. In the U.S., for example, the prognosis for 2016 is of an average gasoline price of $2.38 per gallon, just one cent above the price past September, which was $1.04 per gallon less than previous September.

This has a clear impact on vehicle preference, with segments like SUVs, pickups and passenger vans – none of which are the most fuel efficient – the most popular with first- and second-hand buyers, and thus also staying ahead of the depreciation curve. 

Although the situation across Europe is tempered by a host of fiscal measures and emissions standards favouring greener cars, experts admit that there currently is no impetus towards alternative motorisations, and residual values for pure electrics, hybrids and other green vehicles will remain at the current, low level.

Leveraging efficiency
Even 'Dieselgate' seems to have had little impact on sales figures and residual values for diesels; however, as the scandal is expected to accelerate the multi-pronged clampdown on diesels by government across the continent, most of the remarketing sector's buoyancy may be expected to reside in the petrol segment.

Meanwhile, technology continues to transform remarketing – in particular, by smoothing out inefficiencies in the remarketing process.

Speaking at the Fleet Europe Remarketing Forum last November in Rome, Christope Louvard (CEO, Autobiz) predicted that Big Data will, in the space of a few years, lead data providers to agree on the same B2C value for used cars. Right now, Christophe Louvard says, the spread above and below the ideal resale price across Europe still is as much as €1,500.

Another example of a potential quick win: dynamic stock pricing .This is common for airlines and hotels. Not so for cars. But a test by a dealer has shown that the system reduced time to sale by 10 days and increased the profit margin by 4.5%.

However, the increasing reach of Big Data brings problems as well as solutions: “Data collection and treatment is expensive; huge amounts of data generate the risk of false correlations and 'drowning in data'”.

One thing is for sure, though: the tide has definitely turned in favour of online remarketing. Of potential car buyers, 77% check classifieds online, 58% research social media sites, 37% look into customer review sites and 34% go to OEM or dealer sites.

Authored by: Frank Jacobs
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