There’s a lot of buzz these days about artificial intelligence (AI) and machine learning, usually coming from Silicon Valley high-tech giants. Thanks to RMS Automotive these revolutionary data science technologies are now being used within the vehicle remarketing industry to improve client performance.
Combining powerful analytics with Cox Automotive’s industry-leading data assets, RMS Automotive has created an AI-powered Optimization product suite that provides clients with vehicle-specific insights that drive data-driven decisions and improve overall portfolio performance. The AI approach enables these solutions to leverage large amounts of data to make scientific, prescriptive recommendations that are fast, automated, integrated with client systems, and dynamically updated as market conditions change. Specifically, these products can:
- Accelerate sales,
- Increase portfolio returns and residual values,
- Match inventory with the right buyer,
- Enable faster, more confident decisions, and
- Enable clients to focus on exceptions and reduce administrative burden.
“We are doing exciting work that is pushing the boundaries of the vehicle remarketing industry,” said Dr. Ben Flusberg, associate vice president, Decision Support, RMS Automotive. “Clients are experiencing increased pressure on performance. To help them succeed, we blend artificial intelligence, technology and unmatched industry perspective and take their portfolio performance to the next level. While some players are talking about AI and machine learning, we are actually using it today and clients are raving about their significant portfolio improvements.”
Leveraging VIN-level Decision Making with Optimization Product Suite
The RMS Optimization product suite – Pricing, Location and Reconditioning – provides clients with VIN-specific recommendations, including how to price vehicles most accurately, where to best distribute inventory across physical wholesale auctions, and how to optimally recondition vehicles prior to sale. Pricing and Location Optimization are available today and are live with several clients. Reconditioning Optimization is set to launch soon, taking advantage of Cox Automotive’s proprietary knowledge of AutoGrade®, the industry standard condition scoring system.
RMS products can be tailored to meet clients’ business goals and priorities and are applicable to both digital and physical auction inventory. The Optimization suite uses data science algorithms to drive actions and then displays controls and reporting in a web-based user interface.
- Pricing Optimization – Increases retention and conversion by using VIN-specific vehicle attributes to set accurate auction floor prices.
- Location Optimization – Increases retention across the portfolio, after subtracting transportation-related costs, by optimizing the distribution of vehicles at physical auctions.
- Reconditioning Optimization – Improves price retention or return on reconditioning spend by recommending VIN-specific vehicle repairs for approval
Through a series of champion-challenger pilots, where multiple strategies are compared in order to promote the one that performs best, RMS has demonstrated that Pricing Optimization lifts client profit by $100-200 per vehicle. So if a given client remarkets 100,000 vehicles annually, that’s $10m-$20m in incremental profit. In addition to increasing client profit, Pricing Optimization also provides more consistent, stable prices across regions and markets.
Using Machine Learning for Personalized Recommendations
To complement the Optimization product suite, RMS is also partnering with Manheim to develop a vehicle recommendation engine for wholesale buyers. This new capability uses machine learning to analyze individual buyers’ purchase and bidding patterns and then presents similar vehicles that are available for sale within the Manheim marketplace. The goal is to help dealers find the right inventory faster and also show them relevant vehicles which they might not otherwise have found. Personalized recommendations will benefit sellers, too, by increasing dealer exposure to their inventory and driving marketplace velocity.
Recognizing People Make AI Work
Building data-driven solutions that propel client businesses forward requires expertise across different areas and lots of teamwork. The AI algorithms that power RMS solutions are developed by Cox Automotive’s team of several dozen data scientists and are brought to life by technologists, software developers, product managers and client consultants. Using data from across the Cox Automotive ecosystem, these experts create solutions that equip RMS clients with an unmatched set of decision-making tools.