Data-Driven Inventory-Management System Debuts

The topic turned to data – a treasure trove of it – when I interviewed AutoTrader.com Chief Marketing Officer Clark Wood earlier this year.

I marveled at not only the high-profile companies AutoTrader had acquired of late, but also the data bases that came with them.

There’s Kelley Blue Book, with its vast information on used-car pricing. Then there’s vAuto, an inventory-management provider using advanced analystics derived from its impressive supply-and-demand statistics.

Dale Pollak of vAuto.

Not to mention AutoTrader itself, an online automotive selling site, with a deep pool of information on millions of cars, and its companion firm, Manheim, an auto-auction network with all sorts of data from the action in its bidding lanes.

“Each of those firms has major data bases of their own,” I told Wood. “Will you put them together in a way where the whole is greater than the sum of the parts?”

His answer was a qualified, “yes,” at that early point. It made me wonder how those companion companies might flex their combined data.

Now we know, in part, with vAuto’s introduction today of Provision, a super-charged used-vehicle inventory-management software system for dealers. It shows what can happen when information-rich companies pool their resources.

“This is a business-intelligence breakthrough for the automotive industry, made possible through our alliance with AutoTrader.com and Manheim,” says Dale Pollak, vAuto founder.

He adds, “Provision brings game-changing insights and tools to help dealers efficiently and effectively know what vehicles to stock, what to pay and where to find them, all with a real-time, precision approach.”

The Provision engine runs on the three “Ws” of smart used-vehicle management, vAuto says.

The first is “what” to stock. It starts with a dealership’s pre-set targets for inventory value, vehicle age, turn rates and gross profits. Provision applies a 7-point, market supply/demand-based diagnostic test to all available used vehicles.

The diagnostic measures indexes like “Demand” and “Interest,” distilling real-time click-stream data from AutoTrader.com, an industry first.

“Dealers haven’t seen this data before,” Pollak says.

Provision systematically sorts through this market intelligence to find and recommend the “right” vehicles for a dealership, down to equipment and trim. It assigns an A through F grade to individual vehicles to help dealers decide whether to pursue or pass.

The second “W” is “what” wholesale prices dealers should pay for a vehicle. The Provision system recommends that, based on three factors.

One is where the vehicle needs to be priced for the best and fastest Internet response. Two involves reconditioning and other expenses. Three focuses on a dealer’s gross profit goal. Dealers can create “what if” scenarios such as, “If I pay X for a car, what retail price should I ask to make Y in gross and sell in Z days.”

The last “W” is “where” to get the car. The new system taps into top wholesale vehicle sources, linking with the major auction outlets and letting dealers drill down to run lists and lanes for the vehicles they want. It is touted as another industry first.

“We’ve built a bridge between the top retail (AutoTrader.com) and wholesale marketplaces,” Pollak says.

The release of Provision is the first vAuto major-product launch since AutoTrader acquired the company. “When we acquired vAuto just over a year ago, it was with the promise that we’d leverage the strengths of AutoTrader.com and its family of companies to benefit dealers,” says AutoTrader CEO Chip Perry.

“Provision brings AutoTrader.com, Manheim and vAuto to the same table,” he says. “It’s a partial fulfillment of our initial promise. I say ‘partial’ because there are more innovation and dealer benefits to come.”

Manheim President Sandy Schwartz adds: “It’s a perfect blend of our people and respective market intelligence, technologies and resources to create a win-win for everyone. Provision will be a transformative force for the industry.”

For Pollak, it's a profound moment.

“I put my company, people and reputation on the line with the decision to sell to AutoTrader.com,” he says. “I’m excited about the synergies we’ve created and delighted that 11/11/11 will forever mark a new beginning for the automotive industry.”

Wood and Perry have been with AutoTrader from the very beginning, when it started as AutoConnect in 1998 and assumed its current name the next year.

“It’s hard to believe all that’s happened since then,” Wood tells me.