The document discusses trends in the used car market in 2020. It notes that consumer demand for used cars increased due to the pandemic as safer alternatives to public transportation. Used car prices decreased across most of the US, with the largest drops in Miami and Orlando. Luxury car models experienced greater price reductions compared to other types. The top used car dealers by sales in 2020 were CarMax, Penske Automotive Group, and AutoNation. The document proposes next steps to improve machine learning models for predicting used car prices.
IAC 2024 - IA Fast Track to Search Focused AI Solutions
Buying Used Cars in the New Normal
1. The New Normal
Buying Used Cars
Sanjay Bhakta
Global Technology Leader
sbhakta21@gmail.com
2. U.S. Geography & Used Car Models
Overview Buying Used Cars
The Used Car Marketplace of 2020
Used Car Prices Drop Across the U.S.
Large Price Reduction of Luxury Used Autos
U.S. Top 10 Used Car Dealers
Cycle diagram
3. The Used Car Marketplace of 2020
01 Consumer demand increased for used cars, safer than public transportation,
cost effective, and they’re expecting discounts around 20% or less
02 Online purchases & maintenance preferred; >80% consumers research
purchases online
03 Home test drives, touchless delivery, disinfectant smell , low inventory (new car
inventory is more scarce), used car values record average is over $20k
04 Used car prices decreased geographically across the U.S., luxury models
dropped greater
References: https://www.copilotsearch.com/posts/cities-with-biggest-drops-in-used-car-prices/;
https://www.orlandosentinel.com/business/os-bz-car-buying-coronavirus-20200827-uuvsqacvenekdcenemb3hszlje-story.html
4. Used Car Prices Drop Across the U.S.
Reference: https://www.copilotsearch.com/posts/cities-with-biggest-drops-in-used-car-prices/
Consumers bought less cars across the U.S. from Jan to May 2020, crossovers dropped the
most, trucks the least
5. Large Price Reduction of Luxury Used Autos
Reference: https://www.copilotsearch.com/posts/cities-with-biggest-drops-in-used-car-prices/
Jan to May 2020 U.S. Used Car Market
● Luxury autos experienced
significant reduction in prices in
comparison to other models
● Fiat had the largest price drop
● Audi the smallest price drop
6. U.S. Geography & Used Car Models
U.S. Geographical Region Average Change Used Car Price Models w/largest price drops Population
Miami-Fort Lauderdale-West Palm Beach, FL 6.59% Kia Forte (-15%) 6,161,804
Orlando-Kissimmee-Sanford, FL 5.85% Dodge Charger (-16%) 2,531,168
Salt Lake City, UT 5.20% Hyundai Sonata (-15%) 1,277,259
Dallas-Fort Worth-Arlington, TX 5.19% Jeep Patriot (-14%) 7,401,559
Minneapolis-St. Paul-Bloomington, MN-WI 5.12% Infiniti Q50 (-12%) 3,675,965
Reference: https://www.copilotsearch.com/posts/cities-with-biggest-drops-in-used-car-prices/
Jan to May 2020 U.S. Used Car Market
● Southeast Coast of Florida experienced greatest reduction in prices, with Kia Forte
loosing 15%
● The new normal has impacted used car purchases coast to coast, north to south
7. U.S. Top “10” Used Car Dealers
Rank Dealership
1 CarMax
2 Penske Automotive Group
3 AutoNation
4 Lithia Motors
5 Group 1 Automotive
6 Sonic Automotive
7 Hendrick Automotive Group
8 Carvana
9 Asbury Automotive Group
10 Larry H. Miller Dealerships
References: https://www.autodealertodaymagazine.com/356603/carvana-crashes-used-vehicle-dealer-rankings;
https://finance.yahoo.com/quote
CarMax
03/20/20 - $44.27
09/01/20 - $108.58
Carvana
03/20/20 - $29.35
09/01/20 - $227.19
CarMax & Carvana significantly rebounded in the 2nd
Quarter of 2020 with stronger sales
and earnings, reflected in their respective prices
8. Customer Journey Map of Car Purchase
Customer Journey Map
● 2020’s New Normal - more customers
prefer e-commerce
● Variations by Persona
● Sentiment varies from excited to angry
● Touchpoints across omnichannel & social
● Frictionless, intuitive, includes
recommendations aligned to profile and
goals
● Machine learning improves visibility to
pricing
Reference: https://online.visual-paradigm.com/diagrams/templates/customer-journey-mapping/car-purchase/
9. Conceptual Architecture
Data Capture Data Cleansing
Evaluation
EDA Data Prep
Modeling
Open source
datasets
ML Model Performance
Polynomial
Regression
Low
Ridge Regression Med
Random Forest Best
XGBoost Low
A prototype was built within Jupyter notebook predicting used car prices
https://github.com/sanjbhakta/MLUsedCarPricePrediction
10. Where Next?
● Curate additional datasets
● Make available on Git with Random Forest and XGBoost
● Recommendation engine, integrated with ML model, make available on Git
● Comparison with AutoML
● Forecasting used car sales & estimating outlook for share prices of top 10 dealers