While auto dealers have begun tapping into technologies that can help them intelligently uncover new prospects, not all of them have caught up with the times. In the old days of marketing, we would blast out commercials. In the online age, we have trained advanced profiling and targeting technologies to pick out the audiences deemed most receptive.
AI is progressing very quickly in the automotive space, not only with autonomous vehicles, but also with how cars are bought and sold. In fact many of the world’s most cutting-edge machine learning technologies are being developed in Canada.
Cloud computing power offered by some of the biggest tech vendors supports processing of huge quantities of data. And that data is now more available than ever before – not just from the databases of dealers and manufacturers themselves, but also from countless third-party data warehouses and even consumers’ non-auto spending habits.
These tactics have served the industry well, particularly in US, where auto demand isn’t as robust as it once was. In Canada sales have remained somewhat strong, but Canadian dealers still seek new digital marketing innovations that can help move cars off the lot faster. Some are in a difficult position, however, at least those which continue selling using the old methods. They need to stop matching people to vehicles, and start matching vehicles to people.
Matching vehicles to people is what successful car dealerships do in order to take complete control of their inventory and, ultimately their profitability. Because while smartly targeting a diminishing customer base may now become challenging, there is another asset pool that dealers can better target, to make up the difference – their stock of vehicles themselves.
For years, many dealers have worked from the “churn and earn” playbook, buying in stock without much regard for its margin, then working hard to drum up consumer interest. Selling smart can leave stock on the lot for weeks if you are still sourcing dumb. What if they could start, instead, by taking on only the inventory they were sure was likely to sell quickly and at the most attractive margin?
Such a prospect sounds like a difficult challenge, taking many data inputs from several years and relevant up to the minute, but artificial intelligence is emerging to be the technology which can now meet that challenge.
Through automotive AI technology, dealers are able to crunch historical data to know whether a Ford F-150 or a Honda Accord typically commands the highest margin, how long each takes to leave the lot, and whether blue or gray is the most in-demand color. Canada’s automotive marketplace, taking a page from the US playbook, is benefiting from having this type of intelligent data that better informs inventory strategy and helps them optimize their lot turnover.
If “data is the new oil,” as the saying goes, then it is also the gas fueling auto marketing. It can show dealer’s possible buyers who are willing to spend more, those with more or less disposable income, which features they may be most interested in.
The real transformation in the Canadian auto sector will come from aligning these traditional methods with new intelligence about inventory performance. The nexus of both is the sweet spot in which the highest margin can be wrung in the quickest time at the lowest cost. I like to think of it as fishing, but with the foresight to know where the biggest creatures swim, and a rod that is turbo-charged like a salmon magnet.
And I like to think that the “AI” of “artificial intelligence” is really amounting to “auto intelligence.” AI can also travel farther up the supply chain, to ensure that manufacturers are only making the kinds of cars that current shopper dynamics suggest will sell. If the data suggests people want to buy white sedans within the next 14 days, that is what manufacturers should be doing. We could soon be emerging into an era of just-in-time vehicle production, not just sales.
The model is changing – from the churn-and-earn approach to measuring results by simple sales volume, to getting smarter about the most profitable motors to pick. But new technologies are emerging, and Canada’s car industry is starting to see real gains in the marketplace.
Author: Eric Brown
Eric Brown, President of LotLinx, is a noted industry speaker and expert with appearances at the SAE Automotive Global Leadership Conference, NADA Leadership Summits and JD Power and Automotive News Marketing conferences among others. He has also been a guest automotive expert on Fox News and quoted in numerous publications such as Wall Street Journal, USA Today, and Forbes. In 2012, he was named Nashville, T.N. “Innovator of the Year.” Eric Brown is a graduate of Missouri Southern State University with additional studies in executive leadership from Harvard University and e-commerce strategies from Columbia University.