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Driving through digital changes – How the automotive industry from sales to service is changing

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23 December 2020

When the car was invented at the end of the 19th century, it was essentially meant to serve as a substitute for horses and carriages. With the help of a combustion engine, a variety of buttons, and a steering wheel, drivers could drive their vehicles around, carrying other passengers and goods. Now, imagine if a time machine could bring Karl Benz, Gottlieb Daimler, and Henry Ford to 2020, what would they see?. 

Electric cars are becoming more popular, and instead of complex combustion engines, these cars only need batteries. Cars are connected to the internet, enabling them to receive automated updates allowing both drivers and passengers to enjoy all kinds of in-journey experiences and benefits.

In recent years digitalisation has changed the automotive industry, particularly with the continued growth in automation and the emergence of new business models. This has led automakers to adapt to the new environment. Drivers, in today's digital age, expect the same level of connectivity from their vehicles as they get from their digital devices such as smartphones and tablets. This level of connectivity involves everything from high-quality infotainment systems for passengers to assisted driving and parking with dashboard payments. This level of digitisation has the potential to rethink how people use transport and how businesses generate value for industry and society.

Changes in customer behaviour and new technologies have led to the digitisation of the car industry. It started with the integration of navigation assistance and infotainment voice-command applications like Alexa and Siri. Now, the automakers' focus on providing direct mobility services and unified experiences throughout the customer journey, even from the moment of pre-purchase has shifted.

 

The way we purchase cars has changed, in some cases, almost beyond recognition

Ever since the development of IT-based technologies back in the 1970s, we have been promised the dream of technology that will transform the way we live and work, and yet almost 50 years later we are still selling cars using the same paradigms and sales models. In essence, the automotive industry is one of the only sectors of society that has not undergone a 21st-century transformation. If you reflect on the way you shop, communicate with family and friends, bank, and interact with the government - now do the same with the way customers are sold cars and you’ll see what I mean.

Of all the digital transformations that have occurred in sales in the first two decades of the 21st century, the one purchasing experience with roots still deep in the 20th century is the car-buying process. Then COVID hit. Operations went from finance, sales, and service transactions handled in person, to more streamlined processes. While some in the industry had already laid digital foundations, many have not prepared to adopt technology platforms as part of their daily operations.

While the COVID-19 pandemic certainly helped nudge this shift along, long before the virus arrived, it was already well underway. For the past several years, buying anything online has been a creeping trend.

This trend has exploded with the onset of quarantine orders and national lockdowns, with an increased rise in online shopping throughout 2020. Car purchases are no exception to this. And now, driven by COVID-19, there is also an increase in overall demand for car purchases, driven by a desire to feel safe and rely less on public transport.

The pandemic solidified the desire that was already there. People are used to digitally purchasing everything now, from groceries to office supplies. Why are cars supposed to be any different?

This is a major challenge for car dealerships as most dealerships are heavily rooted in doing things offline. Until very recently, websites mainly existed as an initial research platform, with the primary objective of getting visitors to come to the showroom and not much more - something which one brand famous for its electric cars had the foresight to overcome with their business model.

Today, as customers are equipped with digital technologies with all the information at their fingertips, before going out to the dealer, they are exploring online for new cars. More and more car manufacturers are starting to join forces with digital transformation companies to find solutions such as creating mobile-based augmented reality systems to allow customers to get to know car models without even having to set foot in the showroom. Auto companies can enable customers to see inside and outside their potential new model using VR capabilities, as well as hear genuine sound effects at 360 degrees. Even better, virtual showrooms allow dealers to save money by reducing the amount of space they need to hold all the models of available cars. It’s a win-win overall.

As well as AR, investing in VR technology is also something to consider for dealers. With a VR demo station, dealers can offer customers immersive test drives that can enhance customer experience but also help sell more cars to existing customers.

 

Moving with the times

Current cars are well known for being able to alert their owners about basic maintenance issues such as low oil or the need to fill up. Imagine if you did not need to stop into your local garage every time a dashboard warning light in your car flickered. Now, you don’t need to, thanks to always-on connectivity. Today, vehicles can retrieve a variety of information and send it to the cloud to process, alert drivers to potential future problems, from engine problems to defective brakes, or rear lights. Predictive maintenance has proved so valuable that with remote access, manufacturers can deliver technology updates, security updates, information retrieval, etc, instantly, without the driver ever having to set foot in a repair shop, unless you’re told to of course.

It has been tough to make the transition to a digital model, and it's not something that can happen overnight. But the prospective rewards are huge. Auto dealers who can take a digital approach could win a big deal and gain an important advantage.

With digital now more of a necessity than a choice, auto brands and dealers must commit themselves to introduce and integrating digital technologies and strategies into their business.

The key to starting or progressing digital transformation is to have a workforce that understands the fundamentals of digital technology so that they can break from tradition, carry out effective marketing campaigns, and influence customers through successful social selling techniques as well as understand the long-term benefits.

At the end of the day, the aim of these concepts from digital showrooms, to online booking tools, from digital maintenance to integrated back-office tools should be to ensure that the journey of purchasers is engaging, enjoyable, and beneficial.

One of Henry Ford's famous quotes about the Model T was, "Any customer can have a car painted any colour that he wants, so long as it is black." The Model T only came in black because the production line required compromise so that efficiency and improved quality could be achieved. By shaking up the automotive industry with a wave of digital change for the 21st century, improvements from sales to service would be beneficially immeasurable, something Ford himself would be proud to see.

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