We’re in an age of unprecedented disruption. Whether it’s the way we watch TV, get around town, find accommodation or even prepare dinner, every year a new technology seems to come out and change the way we live and operate.
While the world of automotive sales has yet to experience its own seismic shift, make no mistake—change is coming. And that change is being driven by consumers. In addition to creating completely new business models, new technologies such as Netflix, Uber, Airbnb and Blue Apron have raised the bar for how all retail transactions are occurring. People now expect quick, transparent and convenient transactions in every facet of their lives, and the automotive industry needs to step on the gas if it’s going to meet the elevated expectations of consumers.
Today, there is incredible potential for digital innovation in the automotive sector; no shortage of directions that manufacturers and dealers can go in to build customer confidence, uncover new efficiencies and create new sales opportunities.
With an eye towards the horizon, here are four predictions for the future of automotive sales:
Mobile technology for deeper customer connections
Dealers are already using mobile apps to showcase vehicle inventory and schedule maintenance appointments, but how many people actually keep automotive apps on their smartphone home screens? When the average consumer finishes their research and buys a vehicle, they have little other use for the app and promptly delete it. Therefore, the key for automotive brands will be making their apps “stickier.”
Much like credit card companies already do today, automotive brands must transform into fully fledged lifestyle brands that continually offer their customers new, rewarding experiences. And they must make their mobile apps the centerpieces of their brand-building strategies.
Rather than simply providing a product catalog or appointment-booking tool, dealers and manufacturers should aim to build their technology to become a part of their customer’s daily routine. For example, they could offer surprise and delight moments such as tickets to sporting events, concerts, or even exclusive access to celebrities. For instance, some dealerships offer a chance to enjoy an intimate concert or win tickets to marquee sporting events.
It is these types of value-added, brand-building opportunities that will create “stickiness” with consumers and ensure they’ll never delete a dealer’s app.
Digitization will shorten the product life cycle
Repeat business will soon become even more valuable in the automotive sales sector. Years ago, when there was no such thing as a lease, our parents would buy a car and own it for a decade. But today’s consumers like their toys— when a new iPhone comes out, people line up to get one. So why can’t the same be true for cars? If a customer buys a 2018 Porsche Cayenne, why wouldn’t that same customer be interested in the 2019 model?
To shorten the product lifecycle of vehicles and make this fun scenario a reality for consumers, both manufacturers and dealers need to incorporate new technology on the back-end that enables them to meet customer demand in real-time with real-time supply. It’s about knowing the math. You can only offer a top-end customer a reduced price on a new car every year if you know for a fact another customer will buy their used car.
These types of tiered markets already exist today, of course, but with access to more data, dealers will be able to quickly determine what models/years specific customers are looking for. This will, in turn, speed up turnover rates to a point where vehicles will essentially become long-term rentals where consumers are just flipping every year.
In addition to sticky mobile apps, connected in-car dashboards will be key in this new consumer environment, helping dealers and manufacturers upsell their loyal consumers year round by providing them with customized offers to fit their unique wants, needs and desires.
AR & VR showrooms can improve profitability
While mobile apps will help dealers better connect to their customers, they will by no means replace the brick and mortar dealership. After all, a car is the second most important/expensive purchase of most consumers’ lives, and people are always going to want to see, touch, feel and test drive their new car before completing a purchase.
That said, there is vast potential in a virtual showroom. At this year’s SXSW conference in Texas, attendees used virtual reality and augmented reality technologies to flip through closets and try on clothes. Now, imagine bringing those same technologies to the automotive industry.
Aside from being a super cool way to draw customers in the door, AR/VR will allow dealerships to carry less inventory. No longer will they have to pay interest on vehicles just sitting on their lots taking up space. With a virtual showroom, customers can not only build a vehicle in the perfect color with their ideal add-ons and features, but actually experience how the car accelerates on the open road or takes turns on icy highways.
Open standards will drive new efficiencies
In 2017, car buyers have almost unlimited visibility and transparency into buying a vehicle. Before even stepping foot on a dealership, consumers know the make, model, all the variant and options year they’re looking for, and they know the price they want to pay for it. This competitive marketplace of slim, ever-shrinking margins has made it not just essential, but almost life or death for dealers to uncover new efficiencies. However, to do so, they need manufacturers to pave the way.
Today, almost all manufacturers are integrating on outdated dealer management systems on the back-end, and this is leading to mishmash of old, disparate systems on the retail level— all trying to integrate with each other, and all incredibly inefficient. However, if manufacturers created an open API for their systems it would create a lower barrier of entry for automotive software sector startups and entrepreneurs.
With a standardized open interface for dealer operations to order cars, parts, manage warranty and all other dealership operations, suddenly there would be a rush of innovation throughout the industry. The best product would win. And, in the long run, customers would win as well, as all savings would eventually be passed on to them.
The time is now for manufacturers and dealers to work together. Let’s use open standards and cutting-edge new technologies to create one unified shopping experience where, regardless of car brand or dealership, consumers get to enjoy a fast, trustworthy and, yes, fun buying experience— we are still talking about cars, after all.
Considering the stigma of distrust that has always existed in the automotive sales sector, digitization represents an incredible opportunity to bring transparency and trust to the car buying process. But for true disruption to occur, we need the industry’s major players to take the wheel and start driving towards a digital transformation.
Mark Endras is the CEO and co-founder of TradeRev.