THE DIGITAL TRANSFORMATION OF THE CAR BUYING PROCESS

Even before the pandemic, the Automotive Industry was already facing potentially highly significant disruptive forces. Pressure on margins was intensifying. New business models challenged established ones. And the economic uncertainty caused by Brexit and the economic war between the United States and China were destabilising factors.

In a recent study on the future of sales and after-sales, the consultancy company Deloitte estimated a drop in sales in Europe and a 2% loss of revenue by 2035, in the traditional business segments. When all of this was added to the fast and growing evolution of consumer demand, new trends in mobility, and strict regulation, particularly with regard to meeting environmental targets, we could truly understand the range and dimension of the enormous challenges (and opportunities) that were presenting themselves.

And now, the effects of COVID-19 may well be a catalyst for a huge change that was already creeping up on us.

If, on the one hand, we are witnessing a profound, albeit circumstantial and temporary, the drop-off in everything concerning shared mobility, on the other hand, all aspects related to the digitisation of the purchase process will now be the subject of increased attention and acceleration on the part of manufacturers, dealerships and technology suppliers.

Changing consumer buying patterns and the requirement to refocus on the customer rather than on the product are undeniably problems that had long been diagnosed and widely discussed, but in fact never seriously addressed by the industry, despite various approaches and attempts.

This point now plays a central role, in the wake of the shock caused by the Coronavirus, which has left distribution networks on their knees, with doors closed and very limited in their ability to establish contact with consumers, while humankind has made a massive transition without precedents to the digital.

Car buyers of the future will be online, offline, and omnichannel. If, on the one hand, this multiplicity of possible paths and online/offline points of contact results in tremendous complexity, all the more so as it requires mandatory integration with external entities, on the other hand, the generation via this route of an incalculable and precious amount of data leads to a whole other added level of personalisation and relationships with brands and retailers.

A few years ago, Tesla opened Pandora’s box: direct selling. Without a dealer network, growing sales numbers, and a legion of fans, it illustrates that an eminently digital retail process is perfectly feasible, and even financially beneficial when compared to the costs associated with the current physical model. It should also be added that it is the used car market that has innovated the most in this area. Take the example of the American company Carvana, which offers the possibility of buying a used car through an app and a myriad of associated digital services, including financing, trade-in, and home delivery. Last year it was number 8 on the Automotive News Top 100 list (with over 94,000 used cars sold in 2018) and in the most recent, it had reached number 4 (with more than 175,000 in 2019).

The question that now arises is how these examples can offer clues regarding the future of digitisation of the purchase process, it is clearly acknowledged that, more than a technological issue, what is involved in these cases is the creation of a completely new purchase process, built from scratch, and that, most likely, one of the reasons for its current success is that it is not anchored in any legacy system. We must also admit that there will certainly be no single customer archetype and only one way to deliver a great shopping experience. The fully online journey will be just one of the possible paths available.

But even though we can say that only a small portion (today) may prefer this model, I would dare say that it is approximately the same number of consumers who prefer everything to take place in the physical environment. And what do we have in the middle? An overwhelming number of multiple unpredictable paths that the buyer might want to take and countless ways to serve them.

Car buyers of the future will be online, offline, and omnichannel. Their well-known dissatisfaction with the current buying process offers growing signs that each buyer aspires to define his or her own journey and not follow those (few) that have so far been imposed on them. If, on the one hand, this multiplicity of possible paths and online/offline points of contact results in tremendous complexity, all the more so as it requires mandatory integration with external entities (financial, but not only), on the other hand, the generation via this route of an incalculable and precious amount of data leads to a whole other added level of personalisation and relationships with brands and retailers.
We will soon see a genuine revolution in the digital transformation of the car buying process. A significant improvement in the customer experience and the construction of processes that are more resilient to shocks. And it cannot be any other way, otherwise, we could see the Amazons, Ubers, and Airbnbs of this world fill this void.

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All opinions expressed are my own and not to be associated with my employer or any other organization I am associated with.