The digital transformation: Used car retail performance management 2.0 Jörg Höhner, Global Managing Director INDICATA E.N.G. Automotive Retail & Distribution Summit Berlin - April 5, 2016

1. The digital transformation:
Used car retail performance
management 2.0
E.N.G. Automotive Retail & Distribution
Berlin - April 5, 2016
Jörg Höhner, Global Managing Director INDICATA

2. Papal Inauguration
Pope Benedict XVI
Papal Inauguration
Pope Francis

3. NO TRIVIAL CHANGE
Major trends changing consumer car buying patterns
The internet empowers
consumers
Smartphones and tablets
are game changers
Consumers take their
homework seriously
Targeted research
results influence buying
decisions
WWW

4. NO TRIVIAL CHANGE
And also the used car business sees already disruptions…

6. In a time where
supply and demand
changes faster than
ever, data-driven
insights are vital to
drive your used
vehicle business to
growth.

7. Actionable
Metrics &
Insights
DATA-DRIVEN INSIGHTS
Monitor real-time data to improve used car performance

8. MARKET DAYS
SUPPLY
PRICE TO
MARKET
INVENTORY
AGE
PRICING
STRATEGY
STOCK
TURN
SHARE OVER
FIRST PRICE
TO MARKET
NUMBER OF
PHOTOS
DATA-DRIVEN INSIGHTS
KPIs to guide used vehicle suceess

9. STOCK TURN
Careful stock management to improve operational performance
5,6
7,4
0,0
2,0
4,0
6,0
8,0
10,0
Nov. 2014 Nov. 2015
Profit Impact:
€ 38.400
Small Dealer
6,6
8,3
0,0
2,0
4,0
6,0
8,0
10,0
Nov. 2014 Nov. 2015
Profit Impact:
€ 180.300
Mid-size Dealer
7,3
9,2
0,0
2,0
4,0
6,0
8,0
10,0
Nov. 2014 Nov. 2015
Profit Impact:
€ 1.140.700
Large Dealer Group

10. MARKET DAYS SUPPLY
Measures the relationship between supply and demand today
120
Supply
Total number of vehicles currently available
Demand
Average number of vehicles sold per day
60

11. MARKET DAYS SUPPLY
How can Market Days Supply help protect residual values?
Volume
Distribution
Pricing
Strategy

12. GERMAN PREMIUM
MANUFACTURER
JAPANESE VOLUME
MANUFACTURER
EUROPEAN VOLUME
MANUFACTURER
1 - 3 0 d a ys
3 1 - 6 0 d a ys
6 1 - 9 0 d a ys
9 1 + d a ys
INVENTORY AGE
Minimize the profit harming effects of increased market volatility
24%
13%
13%
50%
28%
15%
12%
45%
29%
18%
13%
40%

13. 105 % 5% above Price to Market
100 % Average Price to Market
95 % 5 % below Price to Market
Nøgletal
PRICE TO MARKET
Assess the price position of your inventory

14. Price/
Market
MDS
97 50
100 74
101 150
99 217
Price/
Market
MDS
101 60
98 60
95 60
- -
Days in
stock
1-30
31-60
61-90
91+
Typical Ideal
PRICING STRATEGY
Know when Market Days Supply is in your favour

15. Attractive cars
priced too low
Identify network dealers who
consistently price below the
market
Identify network dealers
without “rational” pricing
strategy
Know when Market Days
Supply is in your favour
„Discount“ dealers
Fresh inventory
priced lower than old
Attractive cars priced
too low
PRICING STRATEGY
Top 3 dealer pricing strategies undermining profitabilty

16. SHARE OVER FIRST PRICE TO MARKET
Identify and manage deprecation risk of your inventory
Avrg.
Price/Market
102%
Total Inventory
Value
€ 8.426.359
Share Over First
Price/Market
37%
Value @ Retail Asking Price € 3.754.629
Depreciation Risk Next Month € 56.319

17. TOO FEW PICTURES
Manage the ideal photo count

18. CASE STUDY
Premium Brand Dealer in the Netherlands
Average stock
days reduced
by
15%
95%
Gross Margin
per unit up by
Used car sales
grew
113%
YOY
2,1 to
3,7
Stock turn
increased from

19. CASE STUDY
Asian OEM
Apr. 2015 Nov. 2015 Change %
Over aged (>90 days in inventory) 2.348 1.747 -26%
Slow market (MDS >120 days) 1.982 1.564 -21%
Over first price to market 2.218 1.723 -22%
Price not changed recently (>60
days)
2.869 2.135 -29%
Too few pictures (<3 pictures) 846 474 -44%

20. www.indicata.com