How dealers are revolutionizing auto remarketing with AI.

As artificial intelligence (AI) continues to evolve and gain traction in the automotive industry, it’s fundamentally changing the ways that dealers do business – and the auto remarketing sector is no exception. Todd Sanders, the Executive Director of Remarketing Services for Ally Financial, explains how AI can help dealers enhance inventory, improve pricing strategies, boost fraud-protection efforts and make condition inspections and reconditioning processes more efficient.

Q: How can AI-driven predictive analytics improve pricing and inventory-management strategies for auto dealers in the remarketing sector?

Todd Sanders: Used-car buyers have more information than ever at their disposal; by using more data-driven metrics on the wholesale values and predictive pricing, dealers can further refine their sourcing strategies. Rather than looking at stale comps or generic wholesale guidebook valuations, dealers can better predict valuations on what a specific vehicle will bring wholesale, in a specific condition and in a specific regional market. AI also can factor into inventory management by helping automotive dealers find and select vehicles that will sell faster within their markets and for higher grosses.

Q: What are the key benefits and challenges of implementing AI-powered tools for vehicle-condition assessments and reconditioning in auto remarketing?

Sanders: AI can help enhance the inspection process and inspection review by standardizing the inspection reports and process; enhancing accuracy with objective and consistent assessments that reduce some of the human error; and improving speed and efficiency by reducing the time and manpower needed to complete inspections.

On the flip side, the challenges for integrating AI into the vehicle-conditioning process include the need for significant amounts of comprehensive data to build those AI-enabled tools. Additionally, the variability of vehicles – from the types of vehicles to their age and condition – will also dramatically impact these data models. Moreover, the initial investments in these tools – including costs, time and training – are significant. In addition, they must be seamlessly integrating into current processes and procedures.

Automated condition reports benefit both buyers and sellers in a digital auction. Buyers receive more accurate and detailed inspection information, while sellers receive more detailed information about the condition of their inventory. One of the often-overlooked benefits of AI is enhanced transparency and trust. With more wholesale transactions moving to a digital space, accurate and detailed condition reports are the cornerstone of maintaining buyer trust because they leave less room for doubt or ambiguity. More trust fuels higher conversions, better customer retention and stronger relationships across the industry. Automated condition reports may lead to greater consistencies and help reduce potential arbitration disputes – both key metrics when gauging customer satisfaction.

Q: In what ways can data analytics enhance customer targeting and personalization in the auto remarketing industry?

Sanders: In the “part-art, part-science” used-vehicle marketplace, AI can help remarketers provide vehicle listings to customers that fit well in their marketplace. Dealers always appreciate vehicles that sell quickly and at higher margins and remarketers can help those dealers turn a retail profit. To maximize customer value in the digital-auction space, matching the right vehicle with the right buyer is crucial to meeting customer expectations on every transaction. By using data, auctions can analyze buyer behaviors, user preferences and purchase histories to recommend vehicles based on past purchasing decisions. This maximizes opportunities to match the right buyers with the right vehicle for the buyer.

Similarly, AI can help determine vehicles that may not be the best fit for a particular market and then provide solutions to remarket that vehicle in a market that is a better fit. Auctions with a national reach and broad support in all markets are essential for dealers to optimize the remarketing process.

Q: How can AI and machine-learning algorithms help detect and prevent fraud in the auto-remarketing process?

Sanders: Fraud certainly has crept into all aspects of the remarketing process and the used-vehicle marketplace and AI is not a replacement for vigilance and attentiveness in preventing fraud. But AI can be used to augment existing efforts to prevent fraud and limit the potential for losses. For example, AI can:

• Support document-verification processes to help evaluate authenticity of images, paperwork and titles.
• Efficiently search and review multiple large datasets and cross-verify multiple datasets.
• Assist in near real-time monitoring of potential fraud indicators, which can help enable swift intervention and prevents losses.

Q: How can auto dealers leverage AI and data analytics to better understand and adapt to market trends and consumer behaviors in the used-car market?

Sanders: AI has entered most of our personal lives in some form or fashion. The used-car marketplace should be no different. As mentioned earlier, AI is not a replacement for processes or procedures. Instead, it should be used to augment and enhance those processes, keeping the human factor at the center of decision-making.

AI has the capability to process millions of variables simultaneously, from historical transaction data and individual VIN-level data to national and regional auction trends and overall macro-economic conditions – all of which can influence remarketing decisions for buyers and sellers. The ability to analyze large and diverse datasets enables dealers to obtain timely market analysis that helps them determine what is selling, what is not selling and where consumers are going.

Similarly, with that near real-time analysis, dealers can make determinations for future demand. In turn, that will drive future inventory planning, pricing-optimization strategies and cashflow needs for business growth that operates within risk boundaries. Of course, some market trends are unpredictable, such as COVID and the subsequent new-vehicle supply shock. As such, dealers must be ready to adapt to those unpredictable markets. But AI helps dealers operate within risk boundaries, become more agile and stay a step ahead of the market.

Todd Sanders is the Executive Director of SmartAuction, overseeing the U.S. and Canadian sales staff since 2017. He earned his undergraduate degree from Olivet Nazarene University and a Master’s from Pepperdine University. Todd has been with Ally for 39 years, holding various positions across the U.S.

Visit www.allydealerbeyond.com/smartauction to learn more.

As we celebrate SmartAuction’s 25th Anniversary, we thank you for your business and look forward to continuing to help you achieve your inventory management goals.