Driving Towards Digital: How The Car Industry Is Finally Motoring Forwards
There was a time when buying a car was a convoluted process.
Not so long ago, consumers would do extensive research on the vehicle they were interested in and often, that would start with a review in a reputable car magazine – What Car? or Top Gear Magazine are two of the UK's best sellers, with cars put through their paces before reviewed in-depth.
After satisfactorily reaching a conclusion, a buyer might then go to a showroom and look over the car in more detail before booking a test drive – that could mean a wait of a day or so – maybe more. Obviously, much depends on the individual, but this was the general trend.
With all boxes ticked, chances are there would be a period of negotiation over a few cups of coffee, perhaps a part exchange and a finance application. Finally, the process ended with the dealer handing the keys over and the buyer driving off happily into the sunset. Everyone was happy.
However, that was then; this is now.
Buying a car in 2017 and in the years to come is likely to be a completely different consumer journey. In fact, if you want it – and plenty do – it already is.
Click-to-buy products have become part and parcel of our daily lives over the past few years and it's not that far off being the norm. With more than £77 billion of online sales in the UK alone last Christmas, it's clear that mobile devices have taken online shopping to unprecedented levels and there is little doubt this will continue to increase. In fact, it's a certainty.
Why? The answer is simple. It's all about immediacy.
Whether consumers are on the bus, on the train, during a lunch break or wherever they happen to be, they can buy whatever they want, when they want. People don't want to wait. And they don't have to anymore.
Businesses must provide the 'anywhere, anytime' option because if a competitor does and they don't, they'll lose the business and the customer. Clothes, electrical goods, music, concert tickets, food, all delivered to your door… but what about cars? There must be limits, right?
Surely you can't beat that feeling of sitting in the seat of a brand-new car with the smell of new leather and brand new fittings?
Well, it seems you can.
Online car buying is steadily increasing and major brands, perhaps a little late to the party, are finally taking the whole process seriously. With virtual showrooms set to become a standard offering[1], consumers have demonstrated their willingness to buy without a physical test drive or inspection. With warranties and guarantees watertight and reviews plentiful, confidence in the car is at an unprecedented level.
You can even take a virtual reality test drive if you want one. All at the touch of a button and from anywhere you like. The only question, therefore, is: why did it take so long?
There are reasons, and it's not about ignorance, Luddites, or technophobia.
The automotive industry has largely resisted the online purchase option for many years, due to numerous negative experiences during the dot-com boom. It seemed buying cars online was a step too far, no matter how popular online purchases and services were becoming. So, what exactly went wrong?
The Internet boom in the late 1990s saw the spectacular rise and fall of several opportunist companies hoping to cash in and sell cars online. Autobytel, CarsDirect, CarPoint, DealerNet and many other start-ups promised US consumers that they would 'take the pain' out of buying a new car. Unrealistic expectations and economic downturn saw these dreams evaporate when the DotCom 'bubble' began to burst in 2000 and with it, car manufacturers trust in online sales.
But lessons have been learned, and burnt fingers have healed. Think of it as major roadworks on a motorway that have finally been completed. The customer journey is a lot smoother these days and the general attitude is that if you can buy virtually everything else online, why not cars?
A 'new wave' of automotive 'e-tailers' has entered the market in recent months, clearly sensing an unmet need. However, there are also an increasing number of automotive brands determined to keep pace with these disruptors, setting up their own online retail process. The question that first needed addressing was, what put people off to begin with? It seems the bigger the purchase, the more reticent consumers were to part with their hard-earned money. Plus, as stated earlier, that physical experience was absent and, after all, isn't that half the fun? Then there was the negotiation process – you can't ask a website to 'throw in carpets and you've got a deal', can you?
, however. Ten years ago, when the Cap Gemini annual 'Cars Online' survey[2] first asked the question 'are you likely to buy a car online?', it discovered more than 18% of respondents said they would at some stage. When the question was repeated in 2016, almost 75% of consumers in Germany, the US and China indicated they would be willing to do so. That's a mighty sea change.
The report said: "With almost 75% of the customers expressing a willingness to purchase a vehicle online, it is clear that there is a huge untapped interest in a radically different kind of car sales and thus new business models. Responding to this appetite will be a crucial part of the customer offer within a short period of time. Put simply, OEMs must do more to satisfy the expectations of the digitally savvy customer. Everyone knows there are obstacles, but none of them is insuperable. What matters most is how to stimulate this new digital channel for car sales."
There are several reasons. Time is at a premium for so many, with our busy lives packed to bursting that the 'always open' option has huge appeal. This, of course, applied to all online purchases who tick along whatever the hour or day.
Most car showrooms operate during normal working hours so how's that going to fit in with consumers' busy lifestyles? It doesn't. And if their weekends are as packed as their weekdays, the showroom experience isn't all that it might once have been. It's all about time, convenience and our old friend immediacy.
Consumers also prefer to explore their options at their own pace, free of the sales pressure of the traditional retail environment. Think of it. What sounds more appealing? A nice latte in a coffee house, gently perusing a website or a commission-hungry salesman watching your every move in the showroom – hmm, tough decision! Car buyers' negativity about the dealership experience appears to have only worsened in recent years. And, as indicated earlier, consumers don't need convincing a car is safe and reliable anymore – that's a given in the world we live in. And; with finance much simpler and the rise in popularity of Personal Contract Purchase (PCP) deals which mean future values guaranteed, there is little worry of the 'haggle factor'.
Car manufacturers have accepted they must adapt – and quickly.
Perhaps the most important statistics and data concerns the need for the automotive digital experience to reinvent itself for the mobile phone platform. With more than 50% of all visits to car brand websites in 2016 coming via mobile devices and tablets, auto brands are under intense pressure to make their platforms mobile-friendly or risk losing consumer interest. The need to optimise the digital showroom experience with a move towards guided selling is another development. BMW, Hyundai and Peugeot have all launched 'digital stores' which allow consumers to come close to allowing the consumer complete the entire transaction online. Auto dealers like Vertu also offer their customers the facility to conduct most of the purchase online.
The UK car market faces a tough year ahead due to economic and political uncertainty. Whether manufacturers like it or not, the customer, not the automotive industry, will define the future of the automotive industry – and less we forget the customer is always right.
Click-to-buy cars isn't one possible future – it is THE future – and it's driving forwards at breakneck speed.
References
- ^ set to become a standard offering (www.sophus3.com)
- ^ annual 'Cars Online' survey (www.capgemini.com)
