Is remarketing becoming a science?
Is remarketing becoming an exact science? That was the central question of Fleet Europe’s Remarketing Expert Track last Tuesday. The short answer: yes – but it will also remain a people-centred business. More than 350 attendees of the virtual event got the long answer, which will help them stay ahead of the competition.
Benefiting from event moderator Johan Verbois’ panoramic industry overview, amiable guidance and expert questioning, the Remarketing Expert track provided a detailed look at a crucial topic – the ‘data-isation’ of remarketing.
Nuggets of gold
Some people are old enough to remember the days when you looked up used-car prices in a book, which was issued a couple of times a year. Now, thanks to the quantity and quality of live data available, it’s the market itself that determines those prices.
Increasingly, Artificial Intelligence (AI) is brought to bear to sift the nuggets of informational gold from the millions of data points spewed out by the market on a daily basis.
So, how is this done in practice? Jan Peter Oving, CEO of the Pala Group BV, a medium-sized Dutch automotive company that includes nine BMW dealerships, presented a case study of how to implement data usage. In recognition of the topic’s importance, Pala has appointed Data Intelligence employees – and has seen the effort more than repaid in rising earnings.
“We’re a family-run business, but we realise that change is necessary,” said Mr Oving. And change must apply not just to corporate strategy, but first and foremost to corporate culture, “because culture eats strategy for breakfast.”
He then explained how Indicata’s dynamic pricing approach had helped the company: “Based on using market data, we have been able to increase our margins and capital efficiency.”
“It’s a good thing this is a virtual meeting, or I would have owed you a drink in the bar,” joked Morten Holmsten, Global Director at Autorola Marketplace, in the panel discussion afterwards (pictured).
The participants agreed that AI was a crucial tool for the future or remarketing. “It helps us understand customer behaviour and customer preferences, and build better business propositions,” said Alexander Prinssen, Director Motors at eBay Classifieds Group.
For Dr. Christof Engelskirchen, Chief Economist at Autovista Group, AI dovetails with the trend towards ‘omnichannel’ marketing and the seamless integration of online and offline channels. It’s going to get busy in all those channels, because “the volume of used-car transactions is going to increase from 8 million annually now, to 12 million in 5 to 10 years – due to more and shorter leases, among others. To even out market imbalances, we will need even more cross-border remarketing.”
And, interestingly: “In the future, there will be less haggling. People are not necessarily looking for the cheapest price. They want a combination of the best price, optimal quality, and most convenience.”
Following the panel discussion, Mr Holmsten presented a Thought Leadership session on Remarketing as a Science – although he was quick to qualify his expertise: “I’ve spent 17 years in the auction business, hammering away at auctions. So perhaps I’m more of a carpenter than a scientist.”
He delved into the deceptively simple triangle constituted by seller, buyer and the price they can agree on, revealing the complex layers of considerations and decisions which make life so hard for remarketeers. “A couple of years ago, it was said we soon would no longer need auctioneers because we would have enough data to find the right buyer for every used car. However, in reality, it seems that it’s not always so easy to ‘find Wally’.”
“In fact, the 2020 Nobel Prize in Economics was awarded for work on 'the optimisation of auctions’, stating that auctions are actually a pretty good way to set the right price – if the process is clear and efficient.”
Concluding the first part of the event were two breakout sessions. In one, Brian Madsen (Director, Cars2click International) explained how to use AI and data to improve B2B car sales remarketing and OEM used car sales to their dealer network.
In the other, Dirk-Marco Adams (CSO, Autovista Group) focused on the important levers for professional remarketing under the influence of two key trends – digitalisation and electrification.
But innovation is not the only potential source of revenue. There’s still plenty of money to be plucked from low-hanging branches, Mr Adams remarked: “Each year, 1.1 million risk fleet vehicles are being disposed of in Europe. Of those, 10% have missing or wrong elements in their description. This affects value. In fact, the average value lost upon disposal is around €250 per vehicle.”
The virtual event was the first of four major remarketing-focused highlights on Fleet Europe’s 2021 calendar. On 22 June, a second Expert Track will delve into Buying used cars online, today and tomorrow. In October, Fleet Europe will publish an e-book on Vehicle electrification: the remarketing challenge & opportunity. And on 17 November, the annual Remarketing Forum will return.
See also (2/2): AI is how remarketers will add value
Image: Fleet Europe