This is Part 9 of a 10-part series of Digital Customer Experience in the automotive industry. Use the links below to navigate between parts:
< Part 8 | Part 9 | Part 10 >
The traditional business model of Original Equipment Manufacturers (OEMs) has always been focused on selling cars. However, the prolonged lifetime of vehicles, considerable price pressure and increased usage of mobility services (see the results of our Cars Online Study and the results of our Trend Study on Automotive Online Sales), will lead to declining margins in new vehicle sales. At the same time, the classic aftersales business of OEMs is becoming increasingly under pressure.

In this context, investing in innovations and new fields of businesses becomes a crucial game-changer for OEMs. A core piece of their future strategies must be to digitalize, innovate and make their aftersales business customer-centric if they want to avoid being replaced by new competitors or downgraded to pure hardware suppliers.

Daimler CEO Zetsche even believes that taking advantage of the opportunities of the digital transformation will determine whether „Daimler survives the next 130 years“.

Disruptive technologies

Disruptive technological developments such as connected or autonomous vehicles and increasingly available customer and vehicle data open up completely new fields of business for automotive aftersales.

The increasingly connected vehicles represent only one of these elements. Customers show an enormous interest in connectivity services such as infotainment, safety features, navigation services and diagnostic functions. For many customers, purchasing a new vehicle without connected car features is no longer an option.

The increasing market volume of connectivity services (experts expect a fivefold until 2020) turn connectivity services into a central competitive factor. This development will not only shift market shares but will also completely change the aftersales business.

The acquisition of the former Nokia maps services “Here” as a response to Google’s and Apple’s dominance by the unexpected alliance of BMW, Audi and Mercedes is one of the most prominent examples of this transformation.

Through the intelligent usage and analysis of vehicle and driver data (for example based on telematics), parameters such as driving behavior, wear and tear as well as mileage can be analyzed and the necessity of maintenance or repairs can be predicted. This ensures the best possible service for the customer, provided that they have previously agreed to the usage of their data.

Also for OEMs, this data is extremely valuable. It enables them to perfectly target their customers based on their individual needs and thus increase customer loyalty. Given these considerable advantages, telematics services are predicted a growth by around 40% until 2019.

The digital transformation also takes place in the workshop. Inter-connected systems, digital and mobile solutions as well as technologies such as augmented reality, enable to completely reconsider workshop processes and render them more efficient. In addition, the analysis of customer and vehicle data and its smart linkage to other data sources are cornerstones for providing the customer with personalized and value-adding offers.

Disruptive competitors

Regarding many of these disruptive technological developments, new competitors are far ahead of traditional OEMs. New players such as technology companies and agile start-ups break up old structures, put customer needs at the center of their business and are threatening to outpace OEMs.

To provide an example, Tesla has managed to revolutionize the after-sales market with innovations, customer orientation and lean cost structures. Tesla does not think and act like a traditional OEM but more like an agile customer-oriented software company.

Among various other services provided to its customers, the company offers over the air software updates such as the “ludicrous mode”. This performance package enables the Model S to accelerate from 0 to 60 mph in 3 seconds and can be easily installed via the Internet. A (potential) recall regarding Tesla’s Model S in the US-market was also solved via software update, which the customer could conveniently execute from home.

In addition to technology companies, independent providers, such as A.T.U., Pit-Stop and Bosch Car Service push into the aftermarket space (see our Aftermarket Study). These providers focus on customer-oriented innovative services. With online service offers such as online appointments, online purchase or click & collect, they are able to fulfil customer needs faster, more transparently and across more channels.

These customer-oriented services meet the pulse of time. Customers are increasingly connected by digitalization and expect OEMs and car dealerships to meet their expectations. As our Cars Online Study shows, over 90% of the customers expect a response to their inquiry within 24 hours. If they don’t receive the expected feedback, 45% are even willing to switch the dealership (also read our article on the subject of customer care).

Additionally, increasing transparency through the availability of online service and comparison platforms is putting traditional OEMs and their dealerships under pressure. Specialized online shop portals such as Autoscout24, EasyAutoService and Werkstars compare workshop services and serve as feedback and communication platforms. OEMs which don’t fulfil the customer needs of excellent services and fair prices are quickly overtaken by the new providers.

Which fields of action can be derived for automotive manufacturers?

Surviving among increasing and disruptive competitors and successfully positioning themselves with a future-oriented aftersales business requires traditional automotive manufacturers to scrutinize their business models and focus on innovative customer-oriented fields of action. Among others, these include the following topics and initiatives:

Personalized services through the intelligent use of customer and vehicle data:

The increasing availability of customer and vehicle data offers a huge potential for customer-oriented aftersales services, personalized marketing and an enhanced brand loyalty. Customers expect more and more personalized offers that are tailored to their individual needs. The analysis of customer and vehicle data and their smart linkage with other data is the foundation to increase customer loyalty and to access new business opportunities.

Omni-channel sales of aftersales services through online and in-vehicle commerce:

Customers expect flexibility and comfort. Maintenance services can be conducted comfortably without visiting a workshop, e.g. over-the-air. Services should be available through online bookings and available from anywhere. Integrated platforms which enable to book a wide range of individual services “on demand” must become an integral part of the after-sales strategy.

This requires integrated e-/s-/m-commerce solutions, e.g. for parts and accessories but also for connected services. Thus, the seamless integration of different stationary and online sales channels, as well as in-depth cooperation of OEMs with old but also with new partners, are crucial success factors.

Transformation approach based on a clear roadmap and supported by change management:

For the successful implementation of new business fields, a clear roadmap and a sustainable implementation within the organization is required. Based on our project experience, we often see that various digital initiatives are implemented without having previously set up an overall transformation approach. Hence it becomes crucial for OEMs to develop a clear roadmap with specific milestones and to derive pilots that can be quickly implemented. Within this approach, it is necessary to include all relevant stakeholders (e.g. of manufacturers, NSCs, dealers and workshops) and to continuously evaluate the success of the measures and accordingly adapt them.

This aligned transformation approach enables OEMs to offer their customers future-oriented and customer-centric aftersales services, securing future sales and strengthening their market position.