Average per-vehicle profitability varies from country to country in Europe (Image: Oliver Wyman)
A new study says the use of artificial intelligence can improve car-sales planning and boost per-vehicle profitability by between 15 and 20 pc.
In the report, titled “Supercharging car sales planning with AI,” management consultants Oliver Wyman cite widespread inefficiencies in sales volume planning across all European markets.
AI can help make sure dealers have the right cars to meet customer demand. “Instead of relying on experience and gut feel to plan and allocate volumes, automakers now can leverage smart, data-driven tools based on artificial intelligence,” Oliver Wyman says in a summary of its report.
Sales planning and allocation of vehicles may become even more difficult as tougher emission rules take effect in Europe. Also, a changing product mix is likely to negatively affect profit levels.
“With several carmakers targeting 50 percent EV market shares by 2025 – and with sales of their more profitable diesel cars likely to plunge – the challenge to sustain healthy margins will be enormous,” Oliver Wyman says.
The consultants say that, if a smarter planning approach isn’t adopted, automakers may not be able to respond in time to changes in customer demand. And they may overlook profitable niches in the market.
“An array of AI and advanced data analytics applications…can help overcome these challenges, attract new customers, and foster excellence in sales planning and volume allocation,” the report says
Per-vehicle profitability, defined as gross profit minus cost of sales and incentives, varies widely across Europe. According to the Oliver Wyman analysis, profitability in the major European markets is highest in Germany and lowest in Italy, Portugal, Poland and Sweden.
-By Arjen Bongard