How Toyota Finance Encashes Analytics For Improving Sales & Profitability

Auto loans is a challenging landscape. While a bank is just focused on money, an auto loans provider like Toyota Finance has to also focus on selling its vehicles. In addition, with more auto loans going bad and interest rates rising, financial institutions are becoming more selective in their lending for cars. According to National Automobile Dealers Association, a combination of these factors could mean 175,000 fewer sales this year

In such a challenging landscape Toyota finance is leveraging analytics with SAS tools for data analysis, in several useful ways in order to ensure improvement in sales and profitability. Here are some key areas which benefit from Analytics:
  • Re-marketing: The group had a big win in re-marketing, selling cars that have come off leases. Analytics initiatives were able to show that rather than sending cars to the closest auction, they could get better prices by moving cars to Florida for sale in the winter
  • Lease Pricing: To price its leases, the company uses residual risk modeling to predict the value of a vehicle over the life of a lease. That requires looking at the supply and demand across each vehicle level. Toyota sells everything from Corollas at $18,500 to Land Cruisers selling for over $85,000. So the analysts look at economic variables such as GDP and unemployment across each vehicle model.
  • Pricing incentives: With low gas prices, trucks are selling well, but the dealers also have to move sedans, so the company has to determine what incentives it should offer for different product lines using analytics.