Customers’ expectations and behaviours are evolving
Nowadays, car buyers navigate through online and offline channels and experience different journeys involving a multitude of different touchpoints, with more parts of the customer journey and decision-making moving towards the online world.
From Capgemini's Cars Online Report 2016, we have seen that integrating the physical and online sales experience is key, given the fact that 72% of customers are willing to buy a new car online. Digital channels cannot fully replace some of the experiences that offline channels provide such as test drive, and to see and feel a car in real life. However, customers expect more technology to be available from Original Equipment Manufacturers (OEMs) to support their online purchase, including help from online customer support and experiences based on augmented or virtual reality.
OEMs have the potential to make marketing and sales channels more efficient
57% of customers indicate a preference for buying their cars directly from the OEMs (Capgemini Cars Online report, 2016). The consumer demand for online sales creates an opportunity for OEMs to have closer relationship with the customers, greater influence on customer journey, and more direct-to-consumer business model. There is great potential for OEMs to increase efficiency in the marketing and sales channels, which will not only reduce unnecessary expenses, but also through closer relationships with customers which, in turn, generates longer and multiple customer lifecycles and increased profitability.
Adoption of hybrid models to meet new opportunities and customer demands
Some OEMs have already embraced the opportunity and shifted from being product-focused to more customer-focused businesses. They have started this digital transformation by adopting hybrid models that require them to keep up with changing customer behaviour and the advent of new technologies. This includes initiatives that improve the OEMs’ digital presence and visibility, optimise and linking customer interactions, and provide efficient customer support both online and offline.
These initiatives are focused on improving customer experience, with increased investments in interactive sessions directly with the customers such as pop-up stores, online platforms, digital showrooms and other interactive engagements. Some examples can be seen below.
Audi Digital Showrooms
Physical cyber stores present Audi’s model range using virtual technology throughout by the use of multi-touch tables for model configuration, powerwall screens to present specific models, and lounges for consultations in a private setting. The showroom concept is offered in Berlin, London, Paris, Istanbul, Beijing and Moscow.
Mercedes Me is a range of online services designed to enhance the online customer experience, for example by enabling the car to share information in real time with a Mercedes-Benz retailer and by giving customers access to after-sales help and support through the online platform.
Volkswagen Seemore App offers the chance to interact with the Volkswagen model range in augmented and virtual reality. Customers can bring images from catalogues, billboards and advertisements to life as well as change colours, scan the interiors and learn more about the models.
Volvo Mobile Showrooms
Volvo showcases their brand in mobile showrooms at recreational, cultural and athletic events around the world. The pop-up stores are also supplemented with a modern Scandinavian living room, to anchor the Nordic elements of the brand.
Balance is the key
Capgemini's Cars Online Report 2016 highlights the future role of dealers within an online purchasing model as one of the largest challenges in the digital transformation of the automotive industry. There is a need for OEMs to find the right level of involvement and balance.
In previous blog posts, we have suggested other ways for dealer networks to continue to exist including providing real life test drives, home deliveries for new cars as well as taking more control of the after sales market by deploying the latest digital technology and harness new data streams to drive sales. Extensive data points can be collected through their digital channels, which offer unique opportunities for analysing, profiling and directly approaching potential customers. This approach offer them new ways to protect their competitive advantage.
Future opportunities in automotive retail also include after sales, connectivity and shared mobility service
However, the opportunity to embrace the after sales market is not just for the dealers but also for the OEMs. In a previous Capgemini study, Tesla’s use of analytics to enrich after-sales service is put in the spotlight. This service is also linked to car connectivity as Tesla’s cars are connected wirelessly to a remotely managed central corporate office. Each car generates huge amounts of data which is analysed and followed by upgrades of the car’s systems (e.g. safety parameters or adding new features or hardware changes). Other OEMs are expected to follow a similar model and increase the market volume of connectivity services; experts expect a fivefold increase until 2020.
Another opportunity is the shared mobility service. Over the last five years the number of car sharing members in North America and Germany has grown by more than 30 percent annually. One can predict that the future car usage will be more demand driven, and customers want to be flexible and use their smartphones or other devices to choose the best solution for a particular purpose, rather than just using their cars as “all-purpose” vehicles.
Shaping the future retail model
To catch the opportunities in automotive retail, Capgemini Consulting can assist from strategic and conceptual development to digital implementation of the entire transformation. We support OEMs in creating the future retail models, including how to balance between online and offline retail formats as well as deciding upon owning retail formats versus partnering with/delegating to the dealers.
Ensuring connected and seamless customer journeys is key, and with extensive multistage methods, Capgemini enables OEMs to achieve retail excellence with minimal risks and disruptions. You can read about our full set of offerings here.