Arguably, no industry has been more disrupted in the past decade than automotive – be it with the arrival of electric vehicles, the emissions drama, the emerging sharing economy or the rapid expansion of digital-only auto sellers.
Add the prediction that by 2030, all cars will be even more connected, autonomous, shared and electric, and you understand why Volkswagen Group CEO Herbert Diess wants the brand to pivot to become the “leading software-driven car company.” His bold ambition reflects what is happening across the industry, from OEMs to the disruptors.
All this means every moment of the buying journey is being questioned and in a state of flux. Just look at Tesla changing its retail strategy three times in the past five years or the used-car disruptors, such as TrueCar in the U.S. and Cazoo in the UK, influencing the experience for new- and used-car buyers alike.
In the long term, this looks set to fundamentally change not only what is being sold – expanding from cars and service plans to software upgrades and subscription services – but also the places where these are sold and how customers pay.
While, for now, the traditional model of buying a car remains the most popular, growing levels of customer dissatisfaction, especially among younger buyers, are driving the immediate and impactful car buying changes.
Over the next 12 months, a few unescapable changes will include:
E-commerce fast becoming a hygiene factor in automotive
The entry of younger car buyers into the market is a key factor in current estimates that by 2025 over 25% of global auto sales will be conducted online. Recent studies, such as The Future of Automotive Sales, show that satisfaction among younger customers is driven by convenience and control – two of the key propositions of e-commerce.
Recent announcements, such as Volvo’s move to 100% electric and 100% online, albeit with full network support, are a good indicator of existing customer experience strategies that are being prioritized because of increased customer familiarity, appetite and expectation for online sales. It also suggests the recent surge in e-commerce-related activity across manufacturers will continue to see significant investment and accelerated efforts.
Blended digital customer service innovations showing they are here to stay
Many retailers have instigated appointment booking for in-store visits, ensuring that customers feel safer when shopping in-person; others offered video chats with sales staff to serve customers who still might prefer to shop online. Some even added technologies that let store staff talk and support online shoppers through messages, photos and videos.
During the pandemic, automotive brands innovated here too, offering virtual showrooms and virtual appointments helping meet customers where they are most comfortable. Near-future expansions could see video-based virtual consultations selling anything from accessories, extended warranties and gap insurance to in-vehicle subscription services such as extended range for EVs or XM Satellite radio stations.
Standout experiences drawing customers back to the showroom
As we begin to commit strict lockdowns to history, consumers will be more likely to see shopping as an event or destination, something to entertain and not just fulfill a direct purchase need.
Offline is still critical to the car-buying journey – test drives are the No.1 factor influencing customer purchases – so expect to see more auto brands drawing customers back into their retail network with richer, standout experiential in-showroom or test-drive experiences. Extended (e.g., 48-hour) test drives are a given, but those brands that cut through will be the ones that go further. They will enable the customer to immerse themselves in the product and services in ways that make the human benefits clear and relatable, as opposed to a lengthy list of functional features.
The relentless rate of change in the nature of car buying shows no signs of slowing; these three areas are just the most recent phase.
To successfully navigate beyond that, automotive stakeholders will need to delicately balance traditional and emerging car buying behaviors and strategically plan for the now, near and next time horizons that are at play across the automotive industry.
Mark Geden (pictured above, left) is head of planning for Tribal Worldwide, a specialist in interactive marketing.