James Talbot, our Head of Product, talks about the science behind producing market-leading vehicle valuations
In a world where it seems things are becoming more digitised every day, assessing the value of a vehicle still requires a human touch. Every vehicle is unique and even the most common car on UK roads—the Ford Fiesta—will very rarely have two the same in terms of derivative, mileage, condition, age etc. Producing an accurate valuation for any particular vehicle is, therefore, a challenge that requires a blend of data-driven automation and human finesse.
In today’s market, more than half of all vehicle transactions involve a part-ex so it’s clear the valuation is important to get right if a dealer wants to secure a deal. This only becomes harder in the digital realm where a dealer won’t often see the part-ex until the deal is nearly complete. In order for digital retail in automotive to be successful, consumers and dealers need to trust the valuation of the part-ex is accurate.
How eVA produces market-leading vehicle valuations
For eVA to produce instant valuations with greater than 99% accuracy it all starts with one of the largest vehicle data-sets in the UK to drive the algorithm. In excess of one million price observations are made daily using wholesale and retail data from Manheim, Dealer Auction and Auto Trader to give a robust view of the market and ensure all valuations compare to what’s being seen on the ground.
But where eVA really shines is with condition-based valuations. As with all used cars, wear and tear affects a vehicle’s value so this information needs to be taken into account.
At its most simple, eVA allows the user to select from five pre-set conditions on the appraisal, but if required, more detailed information can be inputted to arrive at an even more accurate number. The appraisal is then supplemented with additional information such as MOT, service history and number of keys, then fed into the algorithm to arrive at a value.
Data and algorithms are vital and help us to get to a figure that’s extremely accurate, but checks and balances are still needed by a team of people behind the scenes to ensure utmost accuracy.
It’s not all about the data, a human touch is still required
Last September on Cox Automotive’s Fuel/talk podcast, Paul Humphreys, Managing Director of eVA—while discussing digital retail and how part-ex fits into the customer journey—compared the vehicle valuation process to the artistry of a club DJ. Now if that seems a little odd to you, you wouldn’t be the only one to first think that, but dig a little a deeper and you begin to understand his meaning.
Just as live music requires the mix to be constantly adjusted to suit the room, so too do vehicle valuations to reflect the current market. While a DJ behind a mixing desk changes the mix by adjusting sliders and knobs, eVA’s team of dedicated valuation specialists monitor the valuations produced by our algorithm and compare them to real auction and retail prices daily. Adjustments to certain models or sub-sets can be made on the fly to ensure prices are always relevant to the current market.
Our valuation specialists might not physically be moving knobs and sliders about to refine the valuations, but the process is fundamentally the same. It’s all about having eyes on the ground and reading the room to ensure the valuations produced reflect real life.
Ultimately all of this is needed to build trust between the retailer and consumer when completing a deal. From the consumer’s perspective, a self-appraisal takes a few minutes and a valuation is generated immediately, but behind the scenes, an immense amount of work has happened to ensure we arrive at a fair figure—and one that avoids that awkward re-negotiation at the point of inspection. In what has historically been a contentious part of the transaction, part-ex is now easier than ever and should no longer be a roadblock towards a deal.
To return to our previous analogy; just as a DJ seeks to create an atmosphere that’s rewarding to their listeners, for us it’s all about improving the part-ex experience for everyone involved and helping our customers keep their customers happy.