Over its lifetime, every company in every industry faces threats from a variety of sources. These threats can come in the form of competition from outside sources, the need to adapt to regulations, and in the case of automotive, a change in the way the customer perceives and wants to consume the product or service they are selling.
Companies that are successful when faced with these types of threats are willing to adapt how they do business to meet consumers’ changing needs and expectations. Those that are unwilling to adapt or try to cling to the status quo will quickly find themselves left behind by their customers and the market. Let’s take a look at how the automotive industry is changing and adapting to its consumer base.
New Usage and Ownership Patters
The concept of mobility is rapidly evolving. Although urban areas have long been known for active use of public transportation, suburban populations are increasingly interested in public transportation and other alternative ways to get around and move away from the two cars and a garage mindset.
Companies like Uber and Lyft, car sharing programs, and expanding infrastructure projects are changing the way people get around, which inevitably alters the sales cycle for OEMs. They need to truly understand how people want to achieve mobility as well as how they want to purchase it.
As an example, according to the Ernest & Young study, “Future of Automotive Retail: Shifting from Transactional to Customer-Centric,” nearly 25% of consumers surveyed consider car ownership as “not important.” This is a fundamental shift in how consumers view automotive and the trend is occurring at a very rapid pace. Many OEMs are already in various stages of realising what this means for their brand, actively engaging in businesses learning to derive insights and new business approaches. This will allow them to focus specifically on the consumers, how they want to get around, and most importantly, how they want to pay for it. This will allow OEMs to deliver the right mobility options at the right place and time at the right price.
New Businesses and Sales Models
With the changing mindset of the automotive consumer, it’s only natural that some companies will find and exploit gaps in the approaches of current market leaders. New entrants like Tesla are filling these gaps by marketing and selling directly to consumers in a manner that is fast, efficient, and highly adaptable to meet customer needs.
This is interesting, because, by pioneering these new sales tactics they can influence customers’ expectations to prefer their products and their approach to marketing, selling, and delivering them.
What’s more, these new entrants do not have the historical burden of the existing industry leaders; The heavy lifting of managing equity, production plants, or the large workforces that traditional OEMs have. They innovate at a quicker pace, create more streamlined experiences, and are setting benchmarks that many of the traditional OEMs cannot cope with. In response, existing OEMs need to focus on protecting their ecosystems and incentivising their departments to think differently; to relentlessly push forward and regain control of their customer experience across all touchpoints of the consumer journey.
Aside from rethinking how they approach customers digitally, OEMs need to understand the value of the dealers as the physical face of the automotive brands. They are the first point of contact, bridging the gap between the online and the offline worlds, and are integral to transitioning the customer’s digital journey into a physical one.
OEMs need to enable dealers to leverage the information about the customer from their digital journey up to the point of contact. Information and insight from the data collected on the consumer will allow the dealer to more accurately tailor their offerings and have more successful conversations with the consumer. Dealers will evolve into consultants, fueled by OEMs that are delivering outstanding experiences and creating top-line revenue by building advocates via consistent delivery of a quality, tailored, customer experience.