Commentary & Voices
Part II: Manheim M LOGIC Helps Consignors Achieve Millions in Profit Lift by Optimizing Wholesale Vehicle Distribution
Wednesday January 15, 2020
- Location Optimization is an agnostic, data-driven solution that recommends transportation to the best auction – whether it's a Manheim or non-Manheim location – based on a rich set of vehicle and market considerations.
- M LOGIC Location Optimization increases client profits net of transportation- and deprecation-related costs.
- M LOGIC Location Optimization is the remarketing industry’s go-to solution for wholesale inventory distribution.
As I wrote in Part I of this two-part series, M LOGIC is a suite of decisioning products that brings the power of Cox Automotive data and insights to wholesale clients in a very tangible way. In that article, I described how M LOGIC™ Pricing Optimization increases consignor profits via AI-driven auction floor prices. Another way that clients can address the challenges of a dynamic wholesale marketplace is by using M LOGIC Location Optimization to distribute vehicles from grounding dealers, marshaling yards, rental locations, and even physical auctions to the best physical auction destination.
Location Optimization is an agnostic, data-driven solution that recommends transportation to the best auction – whether it’s a Manheim or non-Manheim location – based on a rich set of vehicle and market considerations. These include local supply-demand, geographic-specific price retention, destination auction capacity and sale schedule, as well as transportation time and costs.
By accounting for these factors, M LOGIC Location Optimization increases client profits net of transportation- and deprecation-related costs. At the same time, it balances wholesale inventory with local supply-demand, directing client cars to where the right buyers are.
For example, a current OEM client is using M LOGIC Location Optimization to assign transportation from grounding dealer locations to physical auctions for its upstream no-sells. Compared to this client’s previous vehicle distribution strategy, M LOGIC has not only increased the client’s price retention by 1.9%, but it has also decreased the client’s transportation costs at the same time. Overall, on the portion of this client’s cars whose transportation decision M LOGIC is changing,Location Optimization is adding an impressive $300 in profit lift per vehicle, resulting in millions of dollars of profit lift per year.
In another instance, a luxury brand asked M LOGIC to optimize the distribution of its inventory from marshalling yards to auction locations. In this case, the client’s goal was to maximize vehicle sale price while maintaining a desired per-VIN profit margin range. To minimize transportation costs, M LOGIC constrained all shipments to full truckloads of 8 vehicles. After optimizing distribution decisions for more than 2,000 vehicles over the course of this 5-week pilot, M LOGIC demonstrated the potential to lift the client’s sale prices by more than $250 per shipped vehicle.
Because of these successes, along with our ability to design solutions that meet each client’s unique strategic objectives, M LOGIC Location Optimization is the remarketing industry’s go-to solution for wholesale inventory distribution. In 2019, M LOGIC optimized the distribution of approximately 250,000 client vehicles, and we expect to grow that number to around 600,000 in 2020 as we onboard additional clients.
To learn more about M LOGIC and how using technology and data helps consignors succeed, visit https://www.mymanheim.com/decisioning/.
In Case You Missed It
Last month, I wrote an article highlighting some client successes with M LOGIC Pricing Optimization, an AI-enabled solution that uses VIN-specific vehicle and market attributes to set accurate auction floor prices, both online and in-lane. Read more about how Pricing Optimization can make consignors more competitive and efficient.
Ben Flusberg is associate vice president of M LOGIC, a suite of decisioning tools from Manheim that brings the power of Manheim and Cox Automotive data, tools and insights to help clients make smarter, real-time decisions and take action for faster inventory turns at every step of the wholesale life cycle.