Online sales are currently one of the hottest topics in the automotive industry. Customers have been wanting to buy vehicles online for a long time. Lately, car manufacturers, as well as independent third-party players, have started building solutions that offer vehicles on online platforms. The question is whether this development will be an opportunity or a risk for the automotive retail industry.
As the previous articles in our blog series show, automotive retail is currently being shaken up by changed business models, formats, process automation and digital revolutions in the car dealership. Vehicle sales via online channels could lead to further distortions in the near future. This is already evident from the dealer contract discussions among some manufacturers. But what exactly does this mean for automotive retail, if manufacturers want to sell vehicles themselves online?
“Online” sales do not always imply everything is done online
Following the automotive press releases of the last few months, you can quickly gain the impression that additional vehicle online sales platforms are being launched every week. However, looking at the approaches in detail, it quickly becomes apparent that most of the offers are lip service, rather than sophisticated, user-friendly end-to-end solutions.
In particular, third-party suppliers, who are independent of manufacturers, are often unable to provide the end-to-end experience. Most of the time, their platforms act as intermediaries rather than actually being able to offer a contract online. However, our Cars Online Trend Study shows that customers place particular emphasis on complete, simple and transparent processes when purchasing online. More than half of those surveyed stated that convenience and time saving were their main motivations for making an online purchase.
No successful online sales without the involvement of dealers
The advantages that OEMs have over third-party suppliers are obvious: they have control over the vehicle stock, as well as an established and – ideally – cooperative relationship with their dealer network. Dealers can help manufacturers to offer online customers a seamless brand experience. Dealers remain indispensable, in areas such as ‘emotional vehicle delivery’.
As our Cars Online Trend Study shows, customers also attach great importance to being able to purchase vehicles that are available nationwide. This opens opportunities for both manufacturers and dealers to market their inventories beyond regional boundaries and reduce standing times. Therefore, it would be a good idea to pilot an online sales platform for stocked vehicles, so that the dealers can see, first hand, the benefits of a new digital sales channel.
Online sales: New profit generator for dealers
Already today for many dealers, the sales of vehicles are not so much a cash cow, but rather a way of initiating the profitable after-sales business. With online channels, OEMs can actively support their dealers in sales and relieve them of tedious and unprofitable work. In the classic sales model, dealers have to invest a lot of time and effort in customer acquisition and, in particular, the processing of transactions. This can be largely handled by the OEMs through a fully integrated online sales process, with the subsequent involvement of dealers.
Sales staff can thus invest more of their efforts into customer relations and advising customers on how to proceed through the online process, according to their needs. They will also remain the first point of contact for questions related to vehicles, the purchase process and the service, which therefore offers them further business potential. After-sales and the repurchase phase are two key areas in which dealers should focus their attention on in the future.
Online direct sales: Dealers are still indispensable
Even if manufacturers initiate online direct sales, retailers remain an elementary component of the customer relationship. Dealers will remain relevant for the physical communication with customers. For instance, customers will continue to demand test drives, expect personalized delivery which will drive an emotional connection with the brand. It is undisputed that the triangular relationship between customer, dealer and manufacturer changes significantly in this scenario. Manufacturers and dealers should understand the importance of working together from an early stage, so that they can leverage the benefits of both physical and digital communications with consumers. In particular, manufacturers should use their established partnership with dealers to succeed over third-party suppliers and new competitors, such as Amazon. Simultaneously, retailers must be prepared to participate in the online sales realm, in order to still maintain a strong presence in the automotive industry.