The Future Of Automotive "Digital"?

After years of resisting digital change, both automotive manufacturers and dealerships are finally embracing the new digital retail landscape. All it took was the pandemic to change how the automotive retail business was conducted online. 

Customers now have new tools to search for inventory, book online test drives online, trade in, and sell or buy cars online. This new technology is liberating dealerships and helping them sell more cars with fewer salespeople. 

The new modern process at dealerships is creating massive value for today’s digital consumers–buying a new car has never been easier.

Is digital really worth it?

Looking forward, the automotive retail transformation is accelerating. The driving forces are:

Urbanization. 

As 60% of the global workforce are now living in urban areas, this is impacting the cost of retail space. Dealerships have to re-think the possibility of changing the size of dealerships in order to generate higher returns on investment. 

Flagship dealerships may opt for smaller square feet locations, as seen in parts of Asia and Europe, along with new ways of using digital tools for revealing vehicles for visually engaged digital customers. The emergence of new, tactile displays can showcase unlimited amounts of vehicles and let customers work with a sales associate to narrow their selection.

Dealerships and OEMs are also experimenting with will smaller pop-up stores that drive traffic and customer interaction by moving the pop-up location to target customers where they are today. Customer feedback combined with an enhanced customer experience is critical as dealerships and OEM’s embrace the changing retail landscape in 2021. 

Connectivity.

Approximately 80% of new car purchases now start online. Used cars purchase in 2021 can be 100% online. Most buyers are only going to the physical showrooms twice: once to view the vehicle and second to complete the financing.

In the future, the connectivity will only increase, as online experiences will serve to guide the customer from the early stages of the car purchase to the final sale. The process has already changed, buyers are coming to the dealerships later in the sales process than ever before.

Once the deal is made, dealerships are now able to engage customers and help shape the car ownership experience in new ways. The digital customer journey now includes connected car experiences and goes beyond yesterday’s one stop car buying process to include higher levels of service connectivity, along with aftermarket personalization–are collectively improving digital car shopping experience every single day. 

Convergence.

Even with the advances in technology, digital retail in automotive has to become more interactive. Dealerships must now provide consumers a seamless transition from the online to offline world, from digital shopping to the physical dealership experience. 

According to Ian Nethercott the number of visits to a dealership prior to purchase of a new vehicle have gone down from an average of 5 pre-pandemic to an average of 2 visits today.

In 2020, 4 million new cars were sold online. In 2021, the number of cars sold online will only increase. Dealerships must embrace and implement an omni-channel strategy in order to attract, grow, and adapt to the changing needs of today’s consumers.

As online sales grow–car pricing must also become completely transparent. Customers will eventually demand transparency on all automotive transactions. The days of dealers providing confusing or misleading pricing on vehicles will become a thing of the past or dealers will quite simply no longer be in tune with today’s consumer. 

Modern digital consumers want all the information to make the best decision possible today. Dealerships mush provide accurate, transparent information during the purchase process or risk losing the sale. 

Social trends.

The way new generation of buyers (GenZ and Millennial’s) are purchasing vehicles is driving the change in retail. These new consumers are influenced by online communities, social, local, values, mobile, and the aggregation of communal norms. 

Manufacturers and dealers will have to personalize the process in order to sell to this demographic and create memorable buying experiences for them. 

By providing superior content–retailers and automotive brands–can enhance the quality of engagement to drive increases in sales and brand awareness. 

Digital retail has accelerated during the pandemic

Prior to the COVID-19 shutdowns, dealers have begrudgingly embraced changes in the retail landscape brought on by the Internet. However, with ever increasing consumers online, due to the pandemic, they are embracing digital technology and putting online consumers first.

“People’s expectations changed overnight,” said Larry Dominique, chairman and CEO of Alfa Romeo North America, who is in the process of relaunching the Alfa Romeo brand in North America after a 30 years absence. 

During the pandemic, insights about where the consumer begins their journey is all digital. By meeting customer expectations online, dealers can increase conversions to 45% versus 33% for the best sales associates. 

“People have realized they can use these tools,” Dominique stated, “they know exist, they know they work, and they know they are convenient.”

“You just don’t see those kind of sales conversion rates without digital,” said Ian Nethercott of Nabthat, a California based mobile first technology company in the Automotive Space. “By addressing the consumer in a different way, dealers are selling more cars in less time.”

The new digital normal

Consumers now have the ability to start the conversation at any time of day or night, even when the dealership is closed. Companies like Tesla, Carvana, Shift, and Vroom and pushing forward with a new digital normal. 

Dealerships have to invest in technology and also understand what they can do with it.

Three components of the digital retail:

One: Digital gives you higher customer engagement 

Two: Digital makes you more efficient in new or used car sales and trades

Three: Digital increases customer satisfaction on any device

Digital is powering remote selling in multiple ways. People can sell remotely, buy remotely, and be in multiple places at the same time.

How to elevate expectations with digital retail?

As things return to normal and with digital retail in place–all your sales associates can sell more cars. 

What was true 35 years ago: 1 person can sell 10 cars per month is now hyper accelerated with digital retail. Today, the sales associate is expected to sell 16 to 30 cars per month.

As the Internet has become a large part of daily life, the customer wants to learn about the car by virtually experiencing it, nearly touching it, driving it–all before they buy. For most people, buying a car is still a high-ticket item which they either lease for 36 months or finance for 60-72 months. 

The purchase is also influenced by the way the customer feels at the time of purchase. Buying is an emotional decision for most customers and is influenced by emotions of the moment. The challenge for dealerships is to get the digital retail right and then attract the customers into the physical dealership to finalize the purchase. This is where a lot of dealerships make mistakes.

According to Michael Bilson from Pulsar.ai, “20% of new cars sales activity happens when the dealership is not open. It happens on the weekends and after hours.” Nearly all of the new car buyers and all of used car buyers are doing research online.

Digital customers want:

One: 24/7 access to showroom and questions pertaining to inventory

Two: Instant access to updated inventory

Three: Access to third party review sites to review rides

Four: A digital concierge to do walk around and show them the car

A Jetson’s new reality

In the near future, people will still want to in-person test drive before they purchase. The vehicle is not going to drive or fly for them at least not yet. However, the amount of research the customer wants to do online is only increasing and this will change the dealer-customer relationship. 

By digitizing the sales process, the dealership can operate a lot more efficiently. In going digital, you are giving great options to your customers. These include:

One: Vehicle recommendations

Two: Ability to customize options including: accessories, warranties, etc.

Three: Pricing and payments. All the details customers want with 100% transparency

If your dealership can provide all the information and then share with every customer in a transparent and easy way based on their shopping criteria–it will be a win-win for the dealership and the customers will say, “that was easy.” 

What’s the biggest mistake a dealer can make?

Digital retail is the use of technology to help alleviate the time a consumer has to spend in a dealership. If you can get the customer to complete the finance, trade-in, credit applications online, it makes for a much smoother online purchase and saves the customer time. 

If you are not going digital, that is the number 1 mistake.

Digital advertising for dealerships

As everything is going digital, you may have to change your budget from print and TV ads to digital. Internet is now the source of information for consumers. 

Although most dealers had to decrease ad spend during the pandemic, they can still promote their dealership, brand, and customer experience: 

One: Use segment specialist Equua to reach a new digital, cash-in-hand consumer

Two: Respond intelligently to new leads

Three: Invest in website and online tools Nabthat for example

The future is here to stay

 Digital retail helps dealers integrate the different areas of the automotive business into a seamless process that changes how dealerships operate every single day. It doesn’t have to be an overnight change, but the faster you go digital, the quicker the consumer online sales improves, and consumer wins–which increases your sales goals along with customer satisfaction. 

It is vital for dealerships and OEMs to create new opportunities for buyers and sellers today because:

One: 29% of traditional car buyers are completing deals online

Two: 40% of GenZ and Millennials are buying their vehicle purchases online

Dealerships should use the latest technology including automation to:

One: Automate all areas of the business

Two: Reduce unnecessary labor cost, marketing cost, and maximize ROI

Three: Advertise to reach a tech savvy, affluent buyer

Four: Focus on improving online customer experience along with in-dealership experience

Additionally, dealerships should make it easier to buy, trade, and sell online. Ensure that online presence is undiluted, because 70% of leads are from potential customers that are on your website. Dealers and OEMs should partner with Equua to reach an affluent car buyer.

Thanks for taking the time to read this article on "The Future" of automotive retail. You may also want to take a look at how Brands like Tesla, Porsche, Genesis, Lucid, Rivian, Damon Motorcycles, Carvana, Vroom, Clutch, Cazoo and others are already making the shift to "Digital" and creating a superior experience for their customers right now.

Lastly take a look at the Digital Retail and Customer Experience Shows on Auto Hub Show where we ask a range of companies in this exciting space how the industry is changing for the better in 2021.

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Is Digital Retail Really Worth it?

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