AI or Artificial Intelligence has been the most talked about tech subject in recent times, more so after the tests and trials of Autonomous Vehicles. It is collaborative intelligence where Humans and AI are joining hands by complementing and augmenting human capabilities. Even though Connected Cars have been on Indian roads for quite some time now, the concept has not really caught on. The slowdown in the automobile industry in India has been a concern for all, especially for those who are passionate about cars.


This is Passion——->

The slowdown has affected not just cars, but the industry as a whole, CVs, Two and three-wheelers. While several theories like demonetization, GST,  impending Euro VI or Bharat Stage VI, skyrocketing fuel price, disruption in the industry with EVs, have been put forth by several analysts, nobody has been able to pinpoint the real reason and also find a solution to come out of the crisis.News of stock  pileup, cutting down of production, VRS in OEMs, dealerships pulling the shutter down, loss of jobs are viewed seriously and is a matter of concern for everyone. The industry and related associations like SIAM and FADA are hopeful of a revival in H2 of the calendar year.

While the industry will take its own course to bounce back (it has to bounce back because the automobile sector of India is one of the largest in the world and accounts for over 7.1% India’s GDP and contributes nearly 22% of the country’s  manufacturing GDP) the dealerships should try and do their part for survival and revival during the slowdown.

Even during the slowdown the new models are doing well across India in terms of bookings and retails. So the question arrises; Is there a problem in dealership operations? Some of the dealerships I interacted with lamented that they are carrying year-back stock and also stock from 2018 which is serious and it means that the cashflow is affected.

It is with this scenario that I started thinking about deploying AI (Artificial Intelligence) for streamlining dealership operations. While the DMS provided by the OEMs supports in many ways, the dealerships need a more faster and agile Data Management System which can be provided by AI only. The term AI is very confusing and misleading and if you ask the new gen, what is AI, they will tell you: “AI – that is cool!”. Thinking about AI took me to my childhood days. As a young boy, I was fascinated by Pinocchio, after reading the comic and later the book. The wooden toy made by a carpenter at first starts moving around and later becomes a real human boy with real feelings. Isn’t the same thing happening today in the world of Robots. I was really impressed by a recent Malayalam movie, Android Kunjappan 5.25. A beautiful film about a robotics engineer struggling to take care of his grouchy ageing father while also building a career for himself. A stubborn father (due to his age) wants his son to be with him, but to make his living the son moves out to Russia. He brings a robot to take care of his dad and there starts the fun with full blown effect. Gradually, he gets accustomed to the robot as part of his life as a family member.

Movies and TV programmes have created a lot of confusion in the minds of people about the capabilities of AI. Though people experience personalised messages, contents, text messages from Amazon, Flipkart and other online and offline businesses to woo you to their sites and products but they have not given a second thought as to how they are getting these communications. Once the realisation sinks in they will understand the power of AI in streamlining the business operation.

Now, let us see what AI can do for small businesses and automobile dealerships (passenger car, Commercial vehicle, three wheeler,  two wheeler and tractor dealerships). It is not an exaggeration when I say AI can do all the daily complex tasks of an automotive dealership be it 1S, 2S or 3S. 

Unlike other MSMEs (Micro, Small and Medium Enterprises) or large enterprises the daily tasks of a dealership are complex and varied. Decisions have to be data driven for improved productivity and performance. Despite having the best DMS, realtime data are not available and in the absence of data, decisions are delayed or wrong decisions are made which is detrimental for the firm. This is one of the reasons why in most of the dealerships everything happens in the last 4-5 days of the month and it is a high pressure panic situation till 11:59 pm on the last day. AI can save you from all these calamities by gathering, processing, analysing and providing timely data and solutions. Data is the new oil, very true…

If daily KPI (Key Performance Indicator) based monitoring is done it can save huge amount of money for dealerships. I will touch upon some of the parameters which can help dealerships save money.

Inventory Management: 

This is where dealerships make or lose huge amounts. All the twelve months are not the same. Seasonalities, festivals, auspicious, inauspicious periods, weather conditions, full moon, no moon economic conditions, market conditions, sudden change in government policies, new entrants, new launches all play a vital role in the booking and retails of passenger cars in our country. AI can support by predicting most of these trends and factors and help plan accordingly. Stock ageing alerts, identifying potential customers from the pipeline for the vehicles in stock are all examples where AI can help.

Warranty Management:  

This is another area where the dealerships incur huge loses because timely action is not taken to submit proper claims to the OEM. Here again AI can support by giving timely alert and tracking claims submitted and pending submission with due date.

Service Parts: 

Many dealerships do not follow Fill rate percent, one of the most important KPIs and subsequently resort to  backordering and VOR (Vehicle Off Road) orders incurring additional cost delay in repairs and dissatisfaction of customers. Fill rate percent allows optimum stocking and helps avoid stock-outs. AI also helps calculating reordering levels taking into account the waiting period and the transit time from the parts distribution point of OEMs, basically takes care of supply chain management. AI also calculates continuously the average Transaction value. 

Let me now summarise the operational areas which can be transformed by AI for quick returns.

Retails:

  • End to end follow up of enquiries resulting in more wins
  • Pipeline Management
  • Customer Segmentation
  • Testdrive Management
  • Accessory Sales
  • Finance & Insurance
  • Selling VAS (Value Added Service)
  • KPI based review
  • Lost case Analysis
  • Improved SSI and Customer Experience
  • Accurate forecast
  • Supports stock planning with correct Model, Variant and Colour as per past performance, competition, seasonality, festivals and market trends…
  • Results in proper cashflow
  • Low Inventory

Finance & Insurance:

  • EMI Calculation
  • Insurance Premium Calculation
  • Reminder for Insurance Renewal

Tracking Earning Potential:

  • Dealer margin on the car, parts, accessories and service has several components
  • Primarily there is a fixed margin on retails and wholesales
  • The rest has many parameters and eligibility criteria with targets allotted in quadrants, monthly/quarterly
  • AI helps tracking these parameters to ensure that the dealership becomes eligible for the entire margin/incentives from the OEM 

Vehicle Inventory:

  • AI supports in vehicle ordering as per market trend, seasonalities, sales pipeline, festivals, past performance and various parameters
  • Monitors stock ageing and gives timely alerts.
  • It can even help identifying potential customers from the sales pipeline for stock liquidation
  • Maintains optimum stock
  • Improves cashflow

 HR:

  • All HR functions
  • On-boarding of new hires
  • Training
  • Performance Appraisal
  • Competency Mapping
  • Employee retention

Service:

  • Create a monthly calendar of vehicles reporting for service as per service due date
  • Plan parts order as per the calendar
  • Auto-messaging to customers for service due reminder
  • Thank you message after service
  • Analyse customer issues, repeat complaints etc
  • Service training
  • One of the most important KPI of service is SAR (Service Absorption Ratio), which indicates the HEALTH of a dealership
  • AI helps in continues monitoring of SAR so that corrective steps can be taken

Service Parts:

  • Parts ordering
  • Monitoring parts KPI, Fill Rate %
  • Reduces VOR orders saving additional cost
  • Avoids redundant and dead stock
  • Maintains optimum level of parts
  • Adds customer satisfaction  
  • Reminds customers about pending jobs not done
  • Pop-up for parts reordering level for optimum stock of critical parts

Bodyshop:

  • Collision repair is one the highest revenue earning departments in a dealerships
  • Timely estimation improves TAT which increases the number of jobs, earning more revenue and satisfied customers

Pre-owned Car Business:

  • A well managed used car division earns more margin than new car business
  • AI helps in proper evaluation calculating the RV and predicating the trend
  • Also helps in detecting fraud in case of stolen cars

Accounts & Finance:

  • A well managed used car division earns more margin than new car business
  • AI helps in proper evaluation calculating the RV and predicating the trend
  • Also helps in detecting fraud in case of stolen cars
  • Growth in Revenue
  • Net Profit Margin
  • Growth Profit Margin
  • Operational Cash Flow
  • Current Account ReceivableI
  • Inventory Turnover
  • EBITDA 
  • Helps in budgeting 
  • Highlights deviations

Lag Measure & Lead Measure:

While Lag Measure tells you if you’ve achieved the goal, a Lead Measure tells you if you are likely to achieve the goal. What ever you are trying to achieve, your success will be based on two kinds of measures, Lag and Lead. Let us see this example in the Service department of a car dealership. The service department has targets based on the UIOs in agiven territory (Units In Operation).

  • Number of vehicles reporting for service, other than free service
  • Revenue from regular service and running repairs
  • Revenue from Bodyshop

When a car leaves the dealership after the regular service, the next service due sticker is fixed in the car. Inspite of showing it to the car owner\driver, they seldom remember the due date. Dealerships have a process of reminding the customers the due date through their call centres by the CREs. The data is downloaded from the DMS as per the due date and the CREs call customers incessantly, most of the time unsuccessful in reaching the customer. This causes a lot frustration among the teams and the senior management of the dealerships and the OEMs. Now let us consider this function in a dealership which has deployed AI. You can make a calendar of service due customers by 25th of the previous month, automated message goes to customers’ registered mobile number at a prefixed date, reminding them of the service for their cars. The machine also calculates the work to be done on the car based on the service history of the car, approximate revenue from the service and the total cashflow expected for the month. It can also alert the parts department regarding the parts required for the month for service/repairs of the cars. While you don’t have direct control over collision repairs AI can help accelerate the process of estimation resulting in quick TAT (Turnaround Time) earning more revenue and customer satisfaction. Do I need to say more about lead measure and adaptability of AI, creating a win win situation?

Future of Mobility (FoM):

The future of mobility is at the cusp of a disruption. The way people travel from point A to point B is changing. In the new mobility ecosystem, the stakeholders will have to rethink and design new business models for value creation and build new strengths. Dealerships will have to relook at their existing capabilities to determine whether they are capable of delivering the value customers demand and if not build new strengths by deploying AI which will allow them to play in the new mobility ecosystem.

Summary:

A recent HBR article highlights five principles which can help in AI implementation: Reimagine business processes; embrace experimentation/employee involvement; actively direct AI strategy; responsibly collect data; and redesign work to incorporate AI and cultivate related employee skills. 

By adopting AI initiatives organisations can gain speed, cost savings, revenues, or other operational measures. Artificial intelligence can boost your analytic and decision-making abilities by providing the right information at the right time and heighten creativity. Smart machines helping humans expand their abilities in three ways. They can amplify your cognitive strengths (thinking, knowing, remembering, judging and problem-solving); interact with customers and employees to free you for higher-level tasks; and embody human skills to extend your physical capabilities. A tool to Reimagine your Business with a number of new AI and advanced analytic techniques which can help surface previously invisible problems that are amenable to AI solutions.

While there are a lot of challenges and pit falls in adopting AI through data integration, which is a combination of technical and business process,used to combine data from disparate sources into meaningful and valuable information for healthy decisions it will pave the way to come out of the slowdown.

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This is an article from our member Pro Ganesh. You can connect with him at ganeshkumartp@gmail.com


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