Ans: AutoNation is having a problem with inventory because of the culture of ordering a customized vehicle for a customer, but such an order usually adds six to eight weeks to the transaction. The customer who wants to buy on the spot must choose from cars on the lot that the manufacturer has already configured, priced, and shipped. Despite manufacturer incentives and rebates to entice customers to purchase, dealers often have a glut of new cars sitting in their lots for months at a time that no one wants to buy it. The swollen inventory and slow turnaround hurt dealers because they must borrow money to pay for the cars the manufacturers ship.
This has also become a problem for auto manufacturers such as GM, Ford and Chrysler due to their manufacturing processes which are not set up to quickly change production models and have been geared toward optimizing the efficiency of the production plant. Again because of the frequent change in consumer tastes which can shift almost overnight as gasoline prices rise or fall, or as one automotive fashion fad gives way to another.
This problem is impacting the business performance of AutoNation and of the auto manufacturers because of following reasons. 1. It has become imperative for the manufacturers to keep their plants running regardless of demand to pay for the rising costs of employee healthcare and pensions. What’s more, auto workers must be paid most of their salaries regardless of whether they are working, so manufacturers want them working all the time. 2. Losing market share to the Japanese and Koreans
3. Auto manufacturers are scrambling to revamp their product line up 4. The enlarged inventory and slow turnaround hurt dealers because they must borrow money to pay for the cars the manufacturers ship.
2. What pieces of data do AutoNation need to determine what cars to stock in each of its dealerships?
How can it obtain these data?
Ans: The following pieces of data AutoNation need to determine… Preferences of car buyers
Most popular configurations
They put forth a major effort to consolidate the customer lists from its hundreds of dealerships. They uses proprietary analytic software as well as assistance from DME, a marketing firm with expertise in creating customized direct mail campaigns.
3. What is AutoNation’s solution to its problem?
What obstacles must AutoNation overcome to implement its solution?
Ans: They categorized their customers into groups with the help of DME and propriety analytical software and follow unique strategies for each category. They create sales pitches, service specials etc. for each group. In the past they tried to search for customers who want to buy the cars that they produced but now they are producing what customers looking for. And also AutoNation is trying to apply these principles of market intelligence to auto manufacturing. They use data mining techniques to determine the demand for each model and very accurate configurations of each model among thousands of possible variations that are most popular with buyers. With this they can focus on producing these vehicles in the numbers that the data dictate. Therefore they don’t have to keep unnecessary inventory.
To auto manufacturing, the auto nation must overcome this problem such as the rising of gasoline price and the demand to the pay for the rising of cost employee healthcare and pensions. It will be effective enough to bring production in line with the customers demand. It can lower the rising cost of gasoline and makes the company revenue up to 90% total earn for selling branded cars. And also it will help them to compete with Japan and Korean car producers. They can determine the demand for each model and very accurate configurations of each model among thousands of possible variations that are most popular with buyers.
MIS In Action
Explore autonation.com, examining all of its features and capabilities. Then answer the following questions.
1. How does this Web site help AutoNation forge closer ties with customers and potential customers?
Ans: The AutoNation web site offers vast experience in new and used car sales and service. They have a large selection of cars, trucks and SUVs on the web. That means that customers can easily find the vehicle that they want. It doesn’t only help the customers to find the right price. Using their web site, customers can explore car pricing options with a quick quote or by payment, then research reviews and compare new and used cars that fit their budget and needs, check available auto financing and leasing plans, and search AutoNation’s huge auto inventory to locate the car, truck or sports utility vehicle that customers like.
Their dealers carry popular brands including Acura, Audi, Bentley, BMW, Buick, Cadillac, Chevy, Chrysler, Dodge, Ford, GMC, Honda, Hyundai, Infiniti, Isuzu, Jaguar, Jeep, Land Rover, Lexus, Lincoln, Mazda, Mercedes-Benz, Mercury, MINI, Mitsubishi, Nissan, Pontiac, Porsche, Saturn, Scion, Subaru, Toyota, Volkswagen and Volvo. Therefore customers have a vast collection to pick their choices. AutoNation’s dedicated sales force is available by email or telephone if customer has questions, need information or wish to complete their transaction online. Or, if customers prefer to visit one of AutoNation’s local auto dealerships, he/she can search for the closest dealership through this site. That is how they have ties with customers and potential customers.
2. What information could AutoNation collect from its Web site that would help it determine in which makes and models of cars are of most interest to potential buyers?
Ans: • What type of cars customers looking for (used/brand new) • What is the brand that customers looking for
• Which model
• When the vehicle is designed
• If it is a used vehicle then mileage
• In what period of the year people buy more vehicles
• Usually how much a person spend on a vehicle
• What is the customer total income
• What type of customers buy which brand