An “inventory efficiency index” created by software company Cloud Theory can tell manufacturers exactly how well their vehicles are selling in real time.
The index allows automakers to view supply and demand across all makes and models instantaneously to better see what is and isn’t selling — and allocate their resources accordingly.
“Cloud Theory is collecting information via the indexing of dealer websites,” Cloud Theory Vice President Rick Wainschel told Automotive News. “We have about … 99.7 percent of franchise dealers in America. We know what inventory is on their lots or on its way to their lots.”
A score for manufacturers is created based on a relationship between a make or model’s market share and “competitive supply situation.” A score of at least 100 means a manufacturer is selling vehicles at above-average efficiency, while a score below 100 shows that supply is stronger than demand.
While manufacturers typically know their inventory positions, they don’t know their competitors’ situations, Wainschel said. As the supply chain stabilizes and inventory levels return to normal, it’s helpful for manufacturers to understand their inventory in a “competitively contextual way,” to understand “who has what and where,” he said.
“Manufacturers are spending an enormous amount of money on advertising, incentivizing people to buy vehicles,” Wainschel said.
With this data, manufacturers can easily decide where to allocate funds, incentivize or move vehicles, he said.
Data from this index shows that Kia and Lexus have gotten off to the best start in 2023, with scores of 155.6 and 154.4, respectively.
The index also can showcase how well vehicles are doing at a segment level. The Kia Telluride, for example, is selling particularly well at a score of around 185, which benefits Kia’s score, Wainschel said.
The index also reveals some truck segments are struggling.
“A lot of the manufacturers took their supply chain issues that were affecting them universally and they focused their attention on the truck segment,” Wainschel said. “So that’s GMC, that was Chevy, Ford, Ram … There’s more supply to be had.”
As the supply goes up the inventory goes up, making it harder for these vehicles to sell through as fast as other segments that are in low inventory situations. The result is that brands such as GMC and Ram aren’t performing as well, Wainschel said.
All inventory efficiency information gathered by Cloud Theory is available to manufacturers, but the company will soon create a version of the tool that is “more visual in nature” to showcase trends and findings, Wainschel said.