Innovation often grabs headlines, but the automotive industry depends on data to guide its design and manufacturing decisions. How many units need to reach the market? What’s the appropriate mix of entry-level, mid-tier, and high-end trim packages? When dealerships look to acquire inventory, they ask themselves similar questions to determine what’s likely to sell and who’s likely to buy it.

The data that drives these decisions comes from the customers. Manufacturers and dealerships must understand what their customer base is likely to purchase based on which features draw them in and what they can afford. What’s the secret behind this process? Data and equity mining. Here’s how the automotive industry uses these practices to understand and reach customers.

What Is Data Mining?

Data mining is the process of collecting, sorting through, and processing large amounts of data in order to draw useful conclusions or make predictions¹. The types of data can be widespread and can include:

• Personal information, such as their location
• Online presence, like posts and search history
• Financial information, including yearly salary or credit reports

Within the automotive industry, other types of information may include vehicle purchase history and driving patterns.

What’s the Benefit of Having This Data?

These learnings help manufacturers and sales teams better identify their target markets. Manufacturers can focus on producing vehicles with the features that are most desired by customers, alongside innovations that help push the industry forward. Sales teams can benefit by knowing which customers are likely in the market and what they may be in the market for.

For example, if a data system understands that a consumer typically upgrades their vehicles every five years, that their income has increased, and that they always purchase a specific make, then a salesperson could make educated assumptions about when that consumer will need their next vehicle and what they’ll be looking for.

Of course, this data isn’t easy to parse. Distilling thousands of individual pieces of information into something useful is challenging, if not impossible, to do manually at large scales. To overcome this challenge, special computer programs analyze the data and output meaningful conclusions. These outputs can then be used to influence the way sales professionals reach out to and interact with their customers. Similarly, manufacturers can use it to make production run decisions¹.

What Is Equity Mining?

Equity mining is data mining with a focus on evaluating customers with positive vehicle equity that are in a good position to purchase a new vehicle. Types of data used to identify candidates would include:

• Variations in interest rates
• Current resale and trade-in value of a consumer's current vehicle
• Current payments
• Purchasing incentives

This means being able to identify customers likely to make an upgrade and being able to make offers that match their financial ability and preferences. With payments kept the same, it can be beneficial to the consumer and the dealer².

Additional Benefits of Equity Mining

The benefits of equity mining go beyond being able to make a sale. By having the knowledge to make offers that make sense to a consumer, dealerships can build positive reputations with clients. Being involved in additional vehicle purchases past an initial one means a longer lasting relationship with a consumer that’s more likely to keep returning for vehicle upgrades over time.

It can also save time in deciding what customers to reach out to, and when, rather than casting a wide net and hoping one of them responds. There’s little gain in selling to someone who isn’t ready to make a purchase. 

Data can help identify and pull in other areas of revenue. This could include:

• Scheduling preventative maintenance for customers
• Providing customer-specific discounts to get them to return
• Purchasing habits used to push vehicle accessories

Regardless of the application, data is a valuable resource for increasing ROI when used intentionally.

Fill Your Lot With the Vehicles Customers Want

When you know what your customers want to drive, you have a clearer sense of what inventory to acquire. ACV Auctions makes stocking your dealership simple, with a comprehensive auction platform that tells you everything you need to know about each vehicle’s condition. Let our data drive your acquisition decisions—register today.

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Sources: 

1. How to Increase Revenues with Automotive Data Mining and Equity Mining. DataArt. Retrieved on January 9, 2024, from https://www.dataart.com/blog/how-to-increase-revenues-with-automotive-data-mining-and-equity-mining
2. Automotive Equity Mining vs. Data Mining: Drive Auto Sales and Profit. AutomotiveMastermind. Retrieved on January 9, 2024, from https://www.automotivemastermind.com/blog/dealerships/data-vs-equity-mining/