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The current pressures facing the industry

The automotive sector was truly tested during Covid-19 and now further global pressures on the market mean that consumers who want to spend are finding it difficult to do so. This has been largely due to microchip shortages facing OEMs, meaning that parts just aren’t available at the speed that they are needed to meet the demand for new vehicles. This is hitting retention hard, as manufacturers battle to hold on to long-term customers in the face of frustrating buying delays. Customers unable to buy new are now seeking out the next best thing, meaning that the value of used vehicles has soared. Against the backdrop of legislative pressure to reduce emissions and move to Net Zero by 2030, it’s easy to see how the sector is on the hunt for ways to maximise revenue, increase efficiencies and reduce overheads due to increased manufacturing costs for AFVs.

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A move to the agency model

The traditional dealership model has been a topic of discussion over recent years with a move to an agency model being discussed as one option. Nobody has really got to grips with the future retail proposition although many are working really hard to maintain their brand identity against a backdrop of competing larger dealer groups and digitally forward thinking disruptors making strides to offer an alternative solution.

Where digital transformation can play its part

All of the above are impacting traditional sales and aftersales models within a manufacturer. In Sales, the ability to make intelligent use of customer data to boost conversion rates will be required. In Aftersales, there’s a need to plug the reduction in service content in the new AFV market with additional ‘connected’ services and improved customer retention schemes.

This is where the opportunity for getting ahead with digital transformation offerings comes into its own. Improved digital processes and self serve online options help:

  • Improve customer relationships
  • Tailor customer offers and services
  • Control business planning, forecasting and reporting internally
  • Use data sources to make better informed decisions
  • Streamline the supply management in automotive manufacturing
  • Expand into new markets with auto parts or supply sales via ecommerce solutions
  • Offer omnichannel experiences in sales and customer care
  • Provide post-sales support and monitor customer satisfaction
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What the automotive buyer expects in 2023

The ever increasing expectations of the automotive buyer in 2023 call for digital to be at the heart of the purchasing process. Consumer needs are evolving, with increasing demand for a more environmentally sustainable option. Hybrid and pure EV requests are dominating sales enquiries. The growth in AFVs to date has tended to be driven by sales of larger vehicles but the future demand will be for the same technology in smaller more reasonably priced vehicles. 

The automotive buyer’s relationship with a vehicle is changing. Consumers are looking at mobility as a service rather than the ownership model. There will always be a place for the ownership model but manufacturers are looking to offer the best subscription based service to satisfy the future needs of their customers. With MAAS comes an increased expectation of digital and connected services; consumers demand an online experience that is engaging and relevant. Mobility services need to be easier to use, taking away friction and effort.

The industry in 2023 is struggling to meet all of the buyer’s expectations, but not all of it is within their gift to influence. The EV infrastructure in the UK is not geared up to support all potential owners which is a challenge for the government. For example, the person who lives in a flat but wants to own an EV doesn’t have anywhere to charge their vehicle. Most, if not all, OEM’s are enabling a subscription model but have had little time to really understand how this works within the traditional dealer/manufacturer relationship. Automotive is generally geared up to have a great, digitally enabled, customer journey but sector-wide there is still a lot that is not applied at an individual business / dealership level.

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How is digital transformation already supporting the automotive sector?

When the automotive sector does embrace digital, the following benefits are quickly realised:

  • Improved visibility of the retail opportunities dealer partners have
  • Increased service sales through online service booking platforms. In real terms, this is up to 50% increase in customer booking versus traditional channels
  • Increased control over parts and accessories stock and sales
  • Reduction in internal time needed to produce reports
  • Improved dealer partner satisfaction – a one stop platform for all their aftersales measures and results
  • Ability to use digital channels to deliver training and skills to their technical teams – reduced downtime away from the dealership
  • Ability to consume different data sets from a variety of sources into one place – holistic view of each area of their business
  • ‘Always on’ approach for their customers. No longer restricted by the dealership opening hours
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What is stopping everyone across the automotive sector benefiting?

Sadly these benefits are not felt by everyone in the industry, such are the barriers and concerns to adopting new ways of digital working. Concerns lie around how to use the data from ‘connected’ vehicles to add real value. For dealers of varying size and digital maturity there’s a question over how they can digitally enable internal processes and teams, as well as how to really manage a customer through the optimum engagement lifecycle using digital channels. As physical visits to dealerships are reducing, those dealerships are seeking ways to maintain a high-value relationship with the customer. And they’re juggling day to day questions about the technology itself – for example, does an App really work?. This is all with longer term strategic challenges around how to make customers keep coming back to their brand.

When recognising the need to embrace digital, members of the automotive industry should ask themselves the following questions:

  • What is the problem I am trying to overcome?
  • Is digital the right way to approach this?
  • What am I expecting as my ROI?
  • Do I have the time and resources available internally to support a digital implementation effectively?
  • Do we understand the data, who owns it and where it is coming from? Can we manage our risk?
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A trusted digital partner will be able to support you through all of the above concerns offering very specific solutions to address key challenges. 

Examples of what to look for in a digital partner and areas of expertise they may be able to support with include:

  • Specialism in dealer and manufacturer data sources
  • Bespoke CRM systems
  • Digital marketing expertise
  • Bespoke systems including:
    • Sales funnel reporting
    • Electronic parts catalogues
    • Dealer scorecard reporting
    • Training platforms
    • Internal reporting dashboards
    • Technical reporting portals
    • Vehicle health check systems
    • Real time API links to dealer DMS

It’s clear as pressures on the market continue, the automotive industry needs to seek options that help maintain competitive advantage. Consumer demands will be best met with digital options that allow for a fully integrated, seamless and personalised user experience. There are currently gaps in that experience but digital is certainly well placed to plug them.

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