Don’t forget used car buyers
Used car sales underpin dealer profits, and substantive contradictions with the new vehicle customer experience require reconciliation. OEMs should help. Used vehicles are entry level products that build brand loyalty. Technology for browsing features on new vehicles and remote viewings can be applied to used models, as can tools for trade-in and finance approval. Manufacturers, dealers and software providers must collaborate because customers expect the back end to work without issue. Are management systems ready to integrate all the features needed for synchronised digital and physical purchases across brands, covering new and used vehicles, without holding up the transaction at any point?
Opportunities to improve the customer experience
OEMs are extending personalisation beyond alloy wheels and decals to parts such as customised floodlighting and sills, leveraging rapid prototyping techniques and challenging the third parties that traditionally dominate aftermarket upgrades. Providing new capabilities after the vehicle leaves the factory is another growth area – cheap modems that plug into diagnostic ports give older vehicles basic connectivity and create scope for extra services. Connected cars interacting seamlessly with dealers might convince more owners to stay with franchises, rather than opt for independent garages. Customers routinely experience mobile windscreen and paint repairs. Now they can order car washes, fuel top-ups and tyre changes. Why not offer similar products from mobile servicing vans?
There are opportunities to improve marketing effectiveness and refine product strategy. Big data promises much, assuming customers consent and are not presented with any unsettlingly accurate insights. Alongside vehicle data, which could lead to per-mile servicing plans, interactions with dealers and manufacturers provide clues about consumer tastes. They should be shared, rather than duplicated. Some firms are bolstering their knowledge of cross-shopping and brand reputation by acquiring third party comparison sites. Selling online enables customers to pre-order new models. Using cheap and refundable deposits, some brands have built excitement about product releases and received free publicity for their impressive pre-order figures.
Collaboration redux
Dealers and manufacturers must develop a shared perspective about which new competencies and assets will be required, how to acquire them and who should be responsible. There are tough choices – more investment in mobile servicing will mean less spent on showrooms, but also opportunities for collaboration in servicing networks and backend software, providing dealers can agree on how to apportion costs and benefits. Brands might find collaboration with competitors attractive, just as video streaming providers buy server capacity from rivals, parts warehouses and digital assets could be shared.
Five questions for dealers and manufacturers:
- What should our future UK footprint look like?
- How can we have a seamless handover between OEM-led and dealer-led activities?
- Where should new and used sales experiences be the same, and where should they differ?
- What new revenue streams will result from changing technologies?
- What are the opportunities for pooling assets and back-end processes with others?
Summary
Digitalisation and alternatives to ownership are challenging traditional vehicle sales methods and business models, but manufacturers and dealers have the advantage of incumbency. Brands rather than dealers are likely to lead online sales in the future, although both will play a role. There is significant opportunity for continued success, but OEMs and dealers need to establish new operating models, processes, systems and data that serve the needs of the end consumer.