How Digital Buying Experiences Transform Automotive Retail

The modern vehicle has been compared to a smartphone on wheels – becoming more intelligent with each passing year. To keep up with these tech-savvy cars of the future, OEMs must put legacy models behind them and transform their retail models to be digital-first.

Andy Howard

February 9, 2024

4 Min Read
online car shopping image (Getty)
Traditional dealership-based retailing giving way to digital model.Getty Images

In today’s digital-first world, consumers expect experiences that are characterized by convenience and personalization. In the automotive industry, the push to integrate digital capabilities across the retail landscape is becoming increasingly pressing for automakers that want to maintain their competitive edge.

Digitally native electric-vehicle entrants have this digital model refined, though they are faced with unique challenges regarding aftermarket, incentives and pricing. Legacy OEMs have begun to take steps toward digitization – a process that requires leaders to migrate their outdated systems and fundamentally transform every element of the car-buying journey.

To inch closer to adopting more digital buying experiences in automotive, leaders first must understand what is driving this transition, as well as how they can succeed in their efforts to meet customer expectations.

Drivers of Digital Transformation

Similar to any retail interaction, the customer is key. Automakers have come to realize that the modern consumer wants easier, quicker, more personalized service from their chosen brands – and are willing to pay for it.

Utilizing digitally native models is incredibly intuitive and offers customization that is not available with the traditional dealership model. With a dealership model, potential customers are required to go to the dealership, check the inventory for availability, choose from the existing selection and engage in price haggling.

Today, consumers have the option to digitally search through dozens of brands, saving time and money while seeing a larger selection. With digital retail, vehicles are made to order to the customer’s uniquely desired specifications.

Moving the Needle

Once the why has been solved, organizations must plan for how they can meet these new digital demands. Traditional OEMs should develop a roadmap for implementing the direct-to-consumer sales model currently being offered by the innovative EV startups coming to market. This simple, fully digital buying experience extends from online configurations and pricing to captive finance integration and home delivery options.

Many legacy OEMs already have begun improving their online sales experience for new and pre-owned vehicles by investing in best-in-class online retail tools that enable mobile retail experiences. The key to future success for these OEMs is modernizing their configuration process, which is the cornerstone of customer experience. By integrating capabilities such as 3D visuals and VR, consumers can truly build their dream vehicle from anywhere in the world.

What’s more, automakers must provide a unified shopping experience that is seamlessly integrated and multi-channel, incorporating features such as home delivery and aftermarket servicing. OEMs should reward loyal customers by tailoring offers to individual preferences through the use of customer opt-in, which offers a single view of the driver and their purchase history.

Benefits of Digital Experiences

Several key benefits are associated with digitizing automotive retail, including:

  • Modernizing CX: Leveraging a single view of the customer and integration across purchasing, financing, delivery, logistics, warranty and services will improve brand satisfaction and loyalty.

  • Increasing consumer engagement: Educating customers on product offerings and providing immersive experiences will enable buyers to personalize their vehicles, which can increase the purchase amount and positively impact retention.

  • Focusing on sustainability: Shifting to a made-to-order system will have significant ecological benefits across several key vectors. With this model, vehicles go directly from manufacturing to consumer, drastically decreasing the negative impact associated with logistics. Beyond shipping, emissions from physically traveling to and from the dealership are eliminated, as well as paper waste from in-person deals.

  • Boosting revenue: Initiating a seamless digital experience yields strong financial results by driving customer retention and upselling.

Challenges Associated with Digitization

As with many new technologies, there are hurdles to overcome. For example, OEMs relying solely upon the build-to-order approach are limited to offering new vehicles, which restricts their customer base and alienates customers who are interested in pre-owned options. 

There are also challenges associated with the digital buying ecosystem. While there is no doubt that the technology required for the transition to digital exists, integration is a big challenge. For example, many OEMs now have an online configurator, which allows potential customers to visualize the vehicle specifications, color, interior, etc., but don’t have the skills to turn that design into an order. Traditional OEMs continue to struggle with establishing a functional capability that is both seamless and integrated to bridge the gap between ideation and purchase.

For the OEMs that do have the ability to facilitate this process, it usually takes several months for a personalized vehicle to be manufactured. While this is a small price to pay for full customization for many consumers, others may be deterred by these long wait times and opt for something more readily available.

These challenges, though not insurmountable, prove there is a long road ahead until vehicle purchasing is digitally native across the entire automotive industry.

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The modern vehicle has been compared to a smartphone on wheels – becoming more intelligent with each passing year.

To keep up with these tech-savvy cars of the future, OEMs must put legacy models behind them and transform their retail models to be digital-first. Leaders should begin mapping out their strategies to best capitalize on the benefits while brainstorming innovative ways to overcome the hurdles.

Andy Howard (pictured, above left) is Automotive and Industrial Equipment Lead for Capgemini Americas.

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