LAWRENCEVILLE, Ga. — Vehicle valuation and data licensing solutions provider Black Book has released a new white paper designed to demonstrate the growing role of analytics in today’s automotive industry.

The white paper, “Data Analytics: Critical for Driving Today’s Automotive Decisions,” describes several types of analytics utilized by automotive industry professionals, including prescriptive and predictive analytics, data mining, text analytics, business intelligence and data visualization. The authors cite several examples of how analytics can benefit the decisionmaking process, including:

Predicting small-car retention values: Compact-car value retention should rise and fall with gas prices, “but not always by the same ratio,” as the paper points out. Gas prices spiked in 2011, but small-car values didn’t peak until a year later, when an improving economy bought more car buyers to market. By the time gas prices fell, supplies of compacts were limited, so their values held up.

Quantifying the Uber effect: By the end of 2014, the number of vehicles in Uber’s fleet had reached 160,000. With odometers spinning nationwide, average depreciation rates are rising, particularly in areas with high concentrations of Uber drivers. Black Book’s analysts determined a $30,000 new car would be worth $18,000 in two years under normal driving conditions and only $3,500 at five times the average daily mileage.

Understanding the impact of channel stuffing: When OEMs and dealers drive too much inventory into leasing, rental and other fleet sales or offer a “high level” of promotions and sales incentives, Black Book found, the resulting oversupply drives down vehicle values. The authors calculated a four-point drop in retention value for a midsize car two years after increasing its rental penetration rate from 8% to 20%.

“What’s impressive today about data analytics is that the technology behind data is allowing us to provide an immense amount of customization and proprietary interpretation around the data to meet the needs of specific organizational goals,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics. “Combined with our ability to capture data in real time, the analytics process is truly helping to fast-track intelligent decisionmaking environments in order to maximize profit potential and reduce losses.”

To download a copy of the white paper, click here.

Originally posted on F&I and Showroom