Imagine if you had to enter a series of long and complex negotiations every time you wanted to purchase your groceries. You might have an idea of what you want and what you can afford, but there is no certainty on what you’ll end up paying.
Now imagine this process repeating itself across everything you buy. Sounds pretty terrible, right? But this is exactly what happens every time somebody wants to purchase a vehicle.
Rather than straightforward online platforms like Amazon, where you can check reviews, make an informed decision, and complete a transaction in about 30 seconds, the customer journey for purchasing a car is so much more circuitous and stressful.
However, thanks to the rise of new technologies, platforms, and industry-wide disruption brought by OEMs and startups alike, this is all changing quickly. For the first time in history, consumers have never been more empowered with knowledge, various buying platforms, and immersive technologies that immensely improve their overall car-buying journey.
But how far will digital take over? Will it fully replace the car dealership model? Not yet. But the ecosystem is changing rapidly. Here’s everything OEMs, dealers, marketplaces, startups, and consumers need to know about to leverage digital in automotive retail.
Digital delivers what consumers want
The car buying journey has always been complex. In the past, people visited several dealerships, picked up brochures and printed materials, and discussed the pros of particular vehicles with sales staff before deciding to buy.
According to the researchers at Star Global, the demand for a seamless, digital approach is one of the biggest challenges in automotive retail. For retailers, it is a do or die moment, especially in the aftermath of COVID-19, where this demand for contactless delivery has only further grown during the last few months.
Although most purchases still happen at dealerships, research and decision-making happen before arriving at a dealership online. 95% of car buyers use digital resources as a research source.
But the internet is far from just a source of research. While most customers still prefer for there to be an offline component to the process, 60% of US consumers are at least “interested” in buying their next vehicle completely online.
The Time For Change is Now
Digital interactions and personalized offerings now dominate people’s lifestyles. Buying a car shouldn’t be any different.
It likely surprises no one that people are fed up with the traditional car sales model. 87% of Americans dislike something about the car buying experience. 24% of those people would rather get a root canal than shop at a car dealer!
It makes sense. Even those who have a long history of purchasing vehicles have a difficult time navigating the process. These high dissatisfaction rates, coupled with sweeping digital disruption across the industry and scaled demand for digital and contactless service in the aftermath of COVID-19, have created this perfect storm that everybody in the sector needs to start navigating.
Virtual showrooms and immersive experiences
Customers are looking for more than just comprehensive information about vehicles, pricing, and financing options. They also want an experience. This is more than the standard car configurator you can find online.
We’re talking about a complete virtual showroom minus the pushy sales staff. In addition to 360 degree HD images of the car’s exterior and interior, it is now possible to get behind the wheel without your front door. Virtual Reality (VR) and Augmented Reality (AR) make it possible to view specifications and features and even test drive vehicles from home.
Does that replace the full driving experience? Absolutely not. But impressive features like these are what will get people into the showroom for real. And for the growing number of buyers interested in completely digital transactions, this may be what pushes them over the edge to purchase online.
The impact these technologies have on customer interactions is similarly noteworthy. With digital media, automotive retailers have more touchpoints for brands strengthening loyalty and customer relationships.
In many ways, this will allow retailers to claw back elements of the customer journey that shifted online while simultaneously being a fresh start for the relationship between retailer and customer.
Harnessing the power of AI
When most people think of artificial intelligence in the context of the automotive industry, autonomous vehicles come to mind. While self-driving cars will completely revolutionize mobility in about ten years, AI applications in automotive retail have already transformed the car buying experience.
AI is focused on more than delivering efficiency. In fact, the largest gains have been realized in facilitating personalization. Personalization allows dealers to deliver service that feels unique and tailored to each customer.
It’s much more than just an email newsletter than says, “Hi X, we appreciate your business” but includes delivering relevant information and recommendations that customers appreciate. It also reduces friction, which consumers are less tolerant of than ever.
Further, it allows OEMs and third parties to scale companion apps and connected services through smart data management tools. This directly contributes to the buying cycle as it facilitates brand sympathy and encourages existing customers to stay with this manufacturer as they graduate to their next car.
Digital is a win-win for everyone
While consumers seem to be the primary benefactors of new technologies and platforms on the surface, that’s far from true. Digital technologies facilitate deeper and extended relationships between manufacturers and drivers. Meanwhile, they enable retailers to more effectively market and build relationships with existing and new customers.
More than anything, they create infinitely valuable data treasure chests that help OEMs to build better products, retailers to sell them more efficiently, and buyers to be more informed. What could be better than that?