In light of digitization, the automotive trade industry is standing on the brink of change. In the future, cars will be sold completely differently to how we imagine today. Over 500 experts from the automotive industry, including the management teams from the sales and marketing departments of Germany’s major manufacturers as well experts in market research and from academia, listened intently to the presentations of Google, Volkswagen, Skoda, Nielsen, MeinAuto.de and trade researcher Prof. Gerrit Heinemann.
Dr Gilbert Heise, a marketing strategist from Volkswagen, outlined the key relevant trends for the automotive industry: “always on”, mobile internet, urbanisation, sharing economy, digitalisation and the car’s general loss of societal status. These key trends are prompting the automotive industry to develop new, service-orientated business models. Meanwhile, the car is moving away from being a symbol of status to instead embody the concepts of real and virtual mobility. Members of Generation Y differs vastly in their consumer behaviour to their parents. More than two thirds of these new consumers seek more information about offers during the average 6-month pre-emption period via their mobile device. Potential buyers will only visit a dealer before the decision to buy has been made. In 2007 there were four dealers. Fifty percent of buyers will make the purchase online. Furthermore, after purchasing, 8 out of 10 drivers would also be willing to share data on their driving behaviour if it would benefit them and data protection could be guaranteed. For Volkswagen, this entails offering virtual services such as the digital display of and access to information and presentations as part of their “blended retail” in showrooms. By tracking where in the dealership and which information customers have retrieved via Bluetooth, it is possible to reconstruct their paths and use this information to optimise POS systems. During aftersales, Volkswagen offers its customers dongles with which they can access service data from their vehicle’s on board diagnostics and through which Volkswagen has been able to generate 260,000 additional workshop visits. Moreover, customers are offered additional online services in the form of apps, designed to increase the usability of the vehicle itself e.g. breakdown assistance, performance optimisation based on driver behaviour and peer-to-peer parking recommendations.
However, Prof. Heinemann from the eWeb Research Center questions whether online services in Germany have really proven their strengths and argues that the technical infrastructure is insufficient: “The digital agenda is a lie.” Moreover, he accredits the fact that digitization of trade in Germany has yet to happen to observations that a change in the way of thinking has not yet occurred in over-the-counter trade. Although e-commerce has been significantly increasing and the majority of customers browse the internet via their mobile devices, only a small fraction of dealer websites are optimised for the use on smartphones. In addition, real interaction with customers such as online consultations via video chat or normal chat is missing entirely. Lastly, it is common for the over-the-counter pricing information and information on product ranges to contradict the information offered on the dealer’s website and simple, seamlessly working order processes (see for example the American IKEA e-commerce platform) are an exception to the rule. When measured against these criteria, the individual initiatives of BMW, Mercedes and Tesla lag far behind companies such as Asos, Butlers, Levis and Amazon. However, it is important to note that the customer does not wish to entirely dispense with over-the-counter trade. Contrary to popular belief, it is not the product’s price that forms the decisive reason to buy but rather the availability of the product. Furthermore, the real-life inspection and testing of the vehicle before purchase is extremely important. Unfortunately, dealerships fail to demonstrate how to successfully combine the online and offline retail worlds. In this sense, the Ebay Inspiration Store is a benchmark for online merchants.
Mathias Bernhardt from the market research institute Nielsen illustrated how to motivate customers to buy online via data from television consumption. Clearly the trend goes towards using tablets and smartphones as a second and third viewing screen. This can be explained by the consumer’s wish to discuss films. Put simply into an equation: “video programming + social media = engaged audience”. In other words, yesterday’s TV crime thriller is now discussed both online and in real time whilst the show is still running.
Because these discussions are transferring to the realms of the internet, they become a valuable source of customer reactions.
It is precisely this that Dr van Deelen from Consline focuses on. He argues that customer reviews on the internet are a better source for identifying the quality issues of a car than market research. The internet is a good early warning indicator and facilitates uninhibited exploration of a topic without needing to know beforehand what it is exactly that you are looking for. However, popular well-known search engines are not suitable for this purpose for two reasons. Firstly, they do not focus on “non-owned media” but which from experience contain 90% of all feedback. Secondly, they cannot recognise the context of opinions (e.g. “I think so, too”) nor interpret ambiguous statements accurately.
According to Pedro Pina, Google’s Managing Director, OEMs who wish to actively control their popularity online should take Google search criteria and the preferences of its users into consideration. Establishing a media-specific presence with a concise and effective key message can generate more attention than is possible with a television advert. See, for example, Geico’s “unskipable campaign”. As the internet forms the first and foremost source of information prior to a car’s purchase, dealers’ internet pages should be based on the customer’s information needs, sorted according to individual levels of information for each purchasing phase. Crucial criteria are one click functionality, a stimulating page design, the optimisation for usage on mobile devices and a seamless integration into ordering processes. One excellent example can be taken from Tesla’s extremely simple online information retrieval and ordering process.
However, Alex Bugge from the comparison platform MeinAuto.de points out that even in the future, dealers will continue to be necessary. But dealers will need to immediately drive the deal home in their pitch to the customer. As the customer has gathered all the information they need online, they will usually only visit the dealer from which they wish to purchase. Therefore the dealership must have a strong internet presence if the customer is to choose their showroom in the first place. And it is on this weakness that the business model of MeinAuto.de is based upon. The independent price comparison website takes on the pre-sales period on behalf of the dealer and forwards them potential buyers. For customers the platform is the ideal combination of the advantages of the internet (easy, quick and a source of diverse offers) with the benefits of the showroom with its personal service and the comprehensive service offers of a car dealership. On the other hand, the dealer receives a multitude of leads but enters into a tough battle of prices with their competitors. As a consequence, the dealer relinquishes their title as the sole king of sales and information in order to save the service side of their business.
All in all, the podium discussion that took place after the presentations concluded that the above signifies the start of a gradual farewell.
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