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Manheim announces sophisticated ‘Market Intelligence’ capability – introducing new Residual Valuation software tool and a Used Vehicle Value Index

March 7, 2019 Motoring No Comments Email Email

Manheim has recently unveiled a sophisticated new Market Intelligence software platform, which incorporates a Residual Valuation tool as well as a Used Vehicle Value Index.

Brenton Barnes, Manheim’s Data & Market Intelligence Product Manager explained that, “Our new Market Intelligence software is a sophisticated tool which will provide our customers with much needed information, insights and forecasting abilities. By providing access to our new software we can empower them to better understand the used vehicle market, in order to set more competitive residual values and better manage risk.”

Manheim established a Market Intelligence team dedicated to analysing trends in prices for vehicles sold in the secondary market and developing wholesale price forecasts for highvolume models. As a member of the Cox Automotive Australia group of companies and a remarketing partner for automotive OEMs, state and local governments, FMOs and dealerships, Manheim has a unique insight into local and international trends affecting supply and demand for vehicles.

New Residual Valuation Tool

Manheim’s Market Intelligence platform leverages the power of Cox Automotive’s rich retail and wholesale data sets, data science teams, valuations and used vehicle listings to help customers improve the accuracy of their residual values. The new tool allows data driven valuations for most popular fleet models which are constantly checked and refined by the company’s most experienced valuations professionals.

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 kms.

Brenton continued, “With our first customers already on board and more set to sign up soon, our new tool continues to generate a lot of interest from the fleet and leasing industry, who depend heavily on accurate residual forecasting to underpin their business decisions. They especially appreciate access to vast amounts of wholesale auction data from the Manheim auctions lanes and digital sales channels.”

One key point of difference compared to other forecasting tools comes as a result of combining Cox Automotive’s industry wide view of vehicle transactional and sales data. The company believes it is the first time in Australia that a valuation tool has been able to combine auction wholesale data as well as listing data from online-classified sites. The online Market Intelligence platform not only surfaces wholesale auction results and data, but also overlays retail listing data from Cox Automotive’s CarsGuide and Autotrader classified websites.

Brenton explains, “By providing both sales and listing data, we can help our customers form a view of both the wholesale and retail markets for the vehicles they are setting residual values for. 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 listing data to better determine the most appropriate residual valuation and depreciation curve.”

Manheim expects the new tool to be a very useful source of information for those in the automotive industry who need to accurately predict residual values. The product is available to both existing Manheim customers and organisations operating within the automotive segment.

“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. 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.”

Announcing the Manheim Used Vehicle Value Index

As part of the Manheim Market Intelligence project, to underpin the valuation platform the team also worked to create a Manheim Used Vehicle Value Index for the Australian market which shows trends in wholesale prices going back to 2006.

Working with Manheim’s global Chief Economist’s team they have established an Australian equivalent of the well-known US Index – a long trusted gauge of upswings and downturns in used vehicle prices which is commonly referenced in the Wall Street Journal among other mainstream publications.

The Manheim Used Vehicle Value Index (MUVVI) is updated monthly using sales data from Manheim, which captures data from their extensive wholesale used-vehicle marketplace and auction network. By applying statistical analysis to its database of millions of used vehicle transactions, Manheim has developed a reliable measurement of used-vehicle prices that is independent of underlying shifts in the characteristics of vehicles being sold.

The MUVVI will help Manheim to have richer discussions with customers and prospects about the state of the used car market and where prices might be headed in the future. For instance, if a customer wanted to understand the impact of an economic shock on used car prices, Manheim can analyse what happened to prices during similar events in the past. The index also gives them the ability to manage buyer and seller expectations by highlighting the apparent seasonality in used vehicle values, historical past performance and trend lines. It is also helpful when it comes to assisting customers with setting residual values.

Brenton commented, “Our new Index has a number of useful applications for automotive industry. It has been useful for validating the opinions buyers and sellers have about the used car market and in some cases addressing misconceptions. For example, from time to time we hear comments like “used car prices increase during a recession”. The theory goes that in a recession, would-be new car buyers settle for a used car or demonstrator – pushing up prices. The reality is, during the global financial crisis all asset prices suffered. We found used vehicle prices fell 17% below their long run average.”

“The index has also been useful in highlighting trends in major vehicle segments. For instance, the index was useful in measuring spikes in sales prices for large vehicles at around the time of the Ford and Holden plant closures. As evident in Figure 1, when Ford ceased domestic manufacturing in October 2016 large car prices spiked to 19% above their long run average and when the Holden closed their South Australian plant in October 2017 prices rose to 20% above the long run average before normalising again.”

Manheim will commence publishing results of the Index each quarter.

The team has also been able to expose seasonality in used car prices. The team identified that vehicles sold in the first half of the year were more likely to achieve above-average prices. In particular, vehicles sold in April achieve above-annual average prices 92% of the time (12 out of 13 years) with the only exception being the period effected by the global financial crisis – as illustrated in the index heat map in Figure 2 below.

Figure 2. Manheim Used Vehicle Value Index – Heat Map

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