The vehicle remarketing (i.e. auction) industry is beginning to recognize the value of OEM build data, as greater access to this information enables multiple valuable uses to both sellers and buyers of used vehicles.
OEM Build Data can be defined as window-sticker-level information on any particular individual vehicle (VIN-number specific), providing a comprehensive view of all vehicle descriptors, including Year, Make, Model, Trim, Color, Interior, Standard Equipment, Packages and Options. Build Data also includes the vehicle’s base MSRP price, as well as the individual MSRP prices of each package and option.
In terms of realizing value from this data, think of Manheim alone. According to a recent article from AutoRemarketing, Manheim conducts 3.5 million vehicle inspections last year, and the company expects that figure to top 4.2 million in 2016. If we assume that a vehicle inspector is paid an average of $15/hour and spends 30 minutes inspecting each vehicle, that equates to $31.5 million in inspection costs per year for Manheim alone.
If we further assume that 75% of that labor time is spent trying to identify the individual options on a vehicle, the auction industry is positioned to realize tremendous labor savings by enabling a vehicle inspector to definitively decode a VIN down to factory paint, package and option codes/descriptions, freeing up inspectors to focus their efforts on the higher-value job of diagnosing the physical and mechanical condition of the vehicle.
The potential cost savings to the auction industry of accurately described vehicles goes even further. Inspection results cut down on arbitration; Manheim’s and AiM’s arbitration rate for cars with condition reports is less than 1 percent. The National Auto Auction Association estimates that 9.3 million used vehicles sold through auto auctions last year. If we assume that 1% of those vehicles were arbitrated at a cost to the auctions of $500 per vehicle, total arbitration cost to the industry is approximately $46.5 million per year. Describing a vehicle incorrectly can be a costly mistake.
Multiple industry studies show that increased information for the wholesale buyer increases their confidence in purchasing. Manheim reports that used vehicles with condition reports are about four times more likely to sell than cars without them. Online and in-lane buyers tend to look first at listings with condition reports to identify vehicles they want to target.
While commercial sellers have long been users of vehicle condition reports, vehicles accompanied by condition reports draw more bidders, especially online, and therefore more bids. Manheim reports that typically results in higher selling prices and increases the likelihood of sale.
OEM build data will enable improved ease and accuracy of data collection and power new innovation in the remarketing industry. Manheim recently released a new tool, dubbed Capture, which offers more detailed vehicle data to create condition reports, helping to reduce subjectivity in the inspection process. It is also testing a program that offers more real-time information about a vehicle’s condition. The goal for Capture and the condition report program that is being tested is to reduce subjectivity and human error in the condition report process.
Manheim’s new Capture’s technology uses vehicle identification numbers (VINs) to provide more detailed information about vehicle year, make model and even color, making the tool more useful for dealers, says Shane O’Dell, senior vice president of Manheim Vehicle Solutions.
O’Dell adds: “Anytime we get more objective, we’re going to have less error and less variation.”
vAuto’s new Stockwave tool works to tie vehicle recommendations to automated buying in the auction lane. Getting the right configuration of color, packages and options correct means the difference between acquiring a high-demand vehicle (at the right price) and acquiring the wrong vehicle that won’t meet with high local market demand. Getting packages and options right is paramount to success for such software products.
Recently, AutoIMS and Chrome announced a partnership to offer OEM Build Data to the remarketing industry through AutoIMS.
The aim is to offer wholesale vehicle sellers more accurate, standardized vehicle content data.
This partnership also supports requests for a centralized vehicle data repository by the International Automotive Remarketers Alliance (IARA) Standards Committee.
The solution addresses remarketer concerns related to increasing vehicle volumes in physical and online auction venues and the ongoing challenge to fully account for the equipment, options, and other information needed to maximize the value of a vehicle through better descriptions and pricing.
The data connection itself will allow participating AutoIMS consignors to access accurate, VIN-level, as-built vehicle descriptions, recall notices, MSRP, invoice prices, and warranty information. The data is available to AutoIMS consignor clients, and will be discounted for IARA members.
“The IARA is very excited to see this initiative take flight. This data will give our remarketers increased confidence throughout the remarketing process, resulting in lower days to sell and maximized residual value retention,” said Tim Meta, head of remarketing for Fifth Third Bank and IARA Standards Committee Chair.
Craig Jennings, Chrome Data’s Managing Partner said, “It became very clear that AutoIMS was the most efficient channel to enable broad access to our accurate, as-built vehicle descriptions for remarketers. We look forward to expanding the partnership and adding even more value to the industry.”
AutoIMS CEO Mike Broe added, “We are very excited to partner with Chrome Data to provide this critical information to our consignors; we also look forward to working with Craig and his team on other valuable product offerings for the remarketing industry.”
It’s an exciting time in the vehicle remarketing industry, as access to “big data” on used vehicles is going to save millions of dollars of labor and arbitration costs for the auctions, make sellers’ lives easier, maximize vehicle values, enable new innovative software applications, and help buyers better understand what they’re bidding on (and maybe even prompt an additional bid or two per vehicle).
About the Author
Steve Greenfield is CEO/Founder of Automotive Ventures, LLC, an Atlanta-based company seeking out ideas and companies with business models that offer a unique and compelling value proposition and are solving big problems in novel ways.
One of their portfolio companies, OEMBuildData.com, provides automotive manufacturer “build data”: VIN-specific vehicle details down to the level of exterior color, interior, packages and installed options. This allows industry players to get detailed information on the configuration of each vehicle OEMs are building on their production lines.