So far, so normal. But it fails to take into account the changing nature and expectations of both customer experience, which are polarising into efficiency on the one hand and immersion on the other, and indeed the role of car purchases themselves.
The rise of online research
Despite the high-ticket value of cars, the customer journey is increasingly omnichannel and planned. Bain and Co statistics posted on Greenslips.com.au in April this year show that dealerships are still part of the buying process, but decreasing, as 50 per cent of customers start online, 60 per cent decide on brand, model and price before going to the dealership, and they switch four times between online and offline channels.
Mirroring other categories and channels where shoppers are pounding less pavement, the Bain Australia study put dealership visits per sale at 2.4, and a global 2018 BCG study of 3000 car shoppers pegged the total dealer visits per sale at just 1.4, down from four visits 10 years prior. That study also found that 95 per cent of shoppers spent four-plus hours in online research prior to a dealer visit.
And according to a January McKinsey study, new car purchase journeys will shift to 10 to 25 per cent entirely digital, and used cars increasing to 25 to 50 percent digital.
Shoppers are increasingly using third-party digital channels for research, such as Autotrader, CarGurus, Cars.com, and TrueCar in the US, and Carsales.com.au and Drive in Australia. Digital vehicle purchase enablers such as Carvana, Shift and Vroom are increasing vehicle pricing transparency and enabling consumers to make product comparisons more easily.
In an answer to the GoGets of the world, some brands such as Ford, Porsche, Volvo, BMW and Mercedes are testing car subscription services in several US cities. These are offering use of a vehicle for a monthly fee that covers insurance, roadside assistance, maintenance and the option to trade in the vehicle for a different model on short notice. Effectively it’s a longer-term car rental.
Playgrounds and putting greens
The increasingly planned nature of the purchase journey means the car dealerships need to become less about selling and more about a collaborative approach. Tesla was one of the first in the industry to employ in-store concierges.
Dealerships – like shopping centres – are increasing the amenities offered, under the assumption that customers are going to be at there for a while. Galpin Motors in California has a full-service Starbucks and restaurant; Berman Subaru in Chicago features a cafe, wifi lounge, chandeliers, phone charging stations, a putting green and a children’s play area, including a video game console.
Some US dealerships serve breakfast or lunch out of a full kitchen, and host fundraising events such as poker nights. Mercedes-Benz’s Mercedes Me “event space” concept, with a number of locations running from Melbourne to Moscow, uses its outlets as a customer brand introduction. With no dealers and only one vehicle, the sites are cafe-restaurants and are available for public hire. More traditional elements include digital displays and brand ambassadors who share car model information and answer questions.
Thomsons Toyota in California takes the dealership experience to the customer by sending Google Cardboard headsets to target audiences in their own homes. The Cardboards feature a QR code linked to a video introducing the dealership, showroom and some popular vehicles.
Digital use in-outlet and personalisation are increasingly commonplace, driven by manufacturers. Spanish manufacturer Seat’s Westfield London outlet mixed-reality test-drive facility allows shoppers to experience a test drive through the virtual streets of Barcelona. Audi City launched its first all-digital showroom in London in 2012, in which shoppers could customise their vehicles. Toyota’s similarly purposed, award-winning 360 showroom launched in Australia in 2016. Australian Subaru buyers can customise models online before buying at a dealer. BMW buyers can build a 3D model of their chosen model and features in the showroom or at home.
Home visits and vending machines
SellMyCar in Australia comes to your house to buy your car from you based on a booked online appointment. (Some customers may need to take their car to a SellMyCar location). Subaru runs a similar at-home service for test drives, and if happy, customers can complete the transaction at home also. Subaru also operates mobile servicing vans in Sydney.
Shopping centres are increasingly embraced by landlords and consumers as a car shopfront. Westfield London was one of the first to offer Tesla an outlet and the trend has since spread, with Toyota Australia’s first retail shop at the GPT-owned Rouse Hill Town Centre in Sydney. In 2016 Subaru opened its mall-based experience centres in Australia, including one in Melbourne’s Northlands.
For several years, Hyundai operated showrooms in upscale UK shopping centres through a partnership with automotive e-commerce platform Rockar that improved foot traffic and in 2018 decided to run the mall-based showrooms on its own. In 2018, Ford started selling cars at the UK’s Next retail chain in Manchester in a partnership with Rockar.
Small-format car dealerships are common across space-constricted Asian cities and are attracting those who might not want to visit a suburban arterial road dealership. Or shoppers might not go to a shopping mall or dealership at all, and buy a car from a vending machine with their phone instead.
In 2015 Carvana built its first used-car “vending machine”, a form of multistorey parking garage holding around 30 vehicles. Shoppers choose the car they want from the company’s website and go to the appropriate physical location to pick it up. Not to be outdone, in 2017, a Singapore luxury car dealer opened what it billed as the world’s tallest auto vending machine, a 15-storey tower displaying up to 60 used BMWs and Bentleys.
Not limited to used cars, Alibaba has begun opening technology-based kiosks to sell new vehicles. Alibaba has also launched test-drive centres in tier-1 Chinese cities through its Tmall platform and Taobao app, signing up customers in 10 minutes.
Some car companies are creating online-only divisions to sell new brands and models in order to avoid compromising dealer partnerships. Lynk and Co, created by Chinese automaker Geely Automotive which also owns Volvo, started selling new compact SUVs built on Volvo chassis and engines in China in 2017 and is expected to expand into Europe and the US in 2020. Subaru was one of the first brands in Australia to sell vehicles direct online.
In a Trivago of cars scenario, US sales aggregators such as TrueCar and CarGurus help consumers research and buy cars, and buyers then pick up their vehicles at a dealership that is affiliated with the site and pays it a finder’s fee.
Car manufacturers and dealerships need to juggle the competing needs of efficiency and immersion with multichannel opportunities, as well as leverage social media monitoring and personalised marketing tools, to ensure relevance in a future where owning cars is optional.
Norrelle has 20 years’ experience in retail, category, channel and customer, working in and with global retailers, manufacturers and consulting houses. Contact Norrelle on 0411735190 or email email@example.com