Brenton Barnes

MANHEIM Australia and New Zealand, a Cox Automotive company, has launched a used-car market tool which combines a variety of previously untapped industry data sets designed to take used vehicle intelligence beyond the guesswork and hunches that have marked used- car operations until today.

The company has opened a new Market Intelligence portal that applies sophisticated definitive analysis to a newly developed Residual Valuation software tool and a Used Vehicle Value Index.

Brenton Barnes, Manheim’s data & market intelligence product manager, told GoAutoNews Premium that the portal would be able to prove, and disprove, a great many of the long-standing theories and assumptions that exist in used-vehicle retailing.

“It will provide our customers with much needed information, insights and forecasting abilities,” he said.

“By providing access to our new software, we can empower our customers to better understand the used-vehicle market in order to set more competitive residual values and better manage risk.”

The portal is run by a market intelligence team assembled by Manheim to study trends in prices for vehicles sold in the secondary market and to develop wholesale-price forecasts for high-volume models.

The Manheim team is drawing on rich data flowing from its role as a remarketing partner for automotive OEMs, state and local governments and fleet managers and dealerships. The data provides Manheim with a unique insight into local and international trends affecting supply and demand for vehicles.

Manheim’s Market Intelligence platform leverages the power of Cox Automotive’s retail and wholesale data sets, data science teams, valuations and used-vehicle listings to help customers improve the accuracy of their residual values.

The company believes it is the first time in Australia that a valuation tool has been able to combine auction wholesale data with pricing data from online car classified sites.

The online platform overlays wholesale auction results and data with retail listing data from Cox Automotive’s CarsGuide and Autotrader classified websites which provide information like initial listing price, final listing price and time-on-market.

Mr Barnes said: “Our valuation engine formulates a depreciation curve of a given model by plotting both auction results and retail listing prices to form a single view. When wholesale data is scarce, we can also use the online listing data to better determine the most appropriate residual valuation and depreciation curve.

“We have been in front of OEMs and leasing customers and so far we have received really high praise.”

Mr Barnes said that the Manheim team were able to get better data by not trying to perform predictions for every car on the market to avoid spreading themselves too thinly.

“We are focusing on the 20 per cent of models that make up 80 per cent of the market, which are all the fleet models, and in doing that we can expend a lot more of our focus on analysing the data,” he said.

“The fully transparent prediction methodology takes into account new- and used-model vehicle lifestyle stages and can generate valuation predictions for 12-, 24-, 36-, 48- and 60-month lease terms across a wide range of kilometres.”

Mr Barnes said the data could be used to explore many scenarios and questions that OEMs, governments and fleet and leasing companies wanted answered.

These could potentially include:

• The ability to set more accurate guaranteed future-value leases
• Using Cox’s global database of over ten million annual vehicle transactions to identify trends in, for example, electric-vehicle retained values and remarketing opportunities and challenges
• Analysing the retained value of factory-fitted options and establish rules of thumb to be used when setting residual values on vehicles fitted with factory options.
• Analysing how long the price honeymoon of a new model lasts in the used-car market
• The relationship between the number of private buyers of a vehicle and a perceived higher level of retained value. For example, the relationship between the low number of vehicles sold into rental, fleet and government by Honda, Mazda and Subaru and their potential to hold very high resale values
• The relationship between vehicle quality and resale values
• The Uber effect where cars are classed as good Uber vehicles. Do they tend to have a high resale value?

Mr Barnes said: “When you log into the portal, you essentially have the micro view of the market where you can look at specific models, their current selling prices and our opinion of their future value.

“But you then have the macro view of the market view with the Used Vehicle Value Index and all of the drivers of used-vehicle prices and forecasts for those drivers where they are available.”

Mr Barnes said Manheim has been working with the NAB economy analysis team which is providing economic forecasts like the unemployment rate and consumer confidence which are driver of used- car prices.

“The index is providing a view of trends that people already thought existed in the market but there was no data to back it up,” he said. “So the Index gives us a credible view and data-driven view of when the used car market sits at any given time.

“Trying to read the used car market over the years has been incredibly frustrating with people making off-the-cuff quesses.  

“Up until now speculation has been the extent of the conversation when people are trying to take a reading of the market. But now we can say the market is up two per cent and large cars are up 10 per cent because there is a sudden shortage of supply.”

The index is available for the overall market but can analyse market segments as well.

“Our aim is to better inform our customers so they can make intelligent choices; helping them to address their most pressing valuation needs and adding new layers of insight and information than they have previously been able to access,” Mr Barnes said.

“Working right across the automotive industry, and with such a diverse customer group, we understand their challenges and we have designed the new tool to help them solve them.”

By John Mellor