Icons must become challengers: reinventing automotive retail


Engaging the next generation of consumers is a huge challenge for traditional vehicle manufacturers, writes Tom Knox

To gauge the pace of change in the automotive industry, consider this: at its peak in the autumn of 2021, Tesla’s market cap was equivalent to all of the next ten most valuable carmakers combined—not bad for a company that was less than 21 years old. Times are changing, and it’s not just about the shift from the internal combustion engine to electric. Even the most cherished car brands are racing to find new and better ways to connect with modern audiences.

Engaging the next generation of consumers, who are environmentally conscious, digitally savvy, and have higher expectations of brands than ever, is a huge challenge for the traditional manufacturers. From the billions BMW has spent modernising the Mini to the queue of companies announcing plans for an all-electric future, classic car brands are reinventing themselves across the automotive world. Heritage and status aren’t enough today—a challenger mindset is critical to stay ahead.

Skoda voice assistant
Skoda’s vehicle assistant ‘Laura’ proved so popular that it was “promoted” into a sales support role

Simultaneously with the product transformation, the retail experience must also be reinvented, given that consumers expect to be able to experience and buy almost anything online. While a car will never be a one-click impulse purchase, EY’s Mobility Consumer Index has indicated that up to two-thirds of car buyers now use digital channels to gather information. That figure is highest among Gen Z and Millennials. Meanwhile, a recent McKinsey survey found that 29% of European customers want to buy their next car entirely online.

Therefore, a shift from traditional showroom models to digital-first retail experiences is underway in the automotive sector, and the most successful brands are getting ahead by crafting an online customer experience that fires on all cylinders.

Digitalising the retail experience

Aided by emerging technologies like augmented reality (AR), virtual reality (VR), 3D visuals and the metaverse, some automotive brands are now offering customers immersive online experiences which allow them to explore car models, customise features, and take virtual test drives from the comfort of their homes.

Brands including Audi, Skoda Auto and BMW were the first off the starting grid. Recently, Ford unveiled a virtual test drive experience for the launch of its all-new electric Explorer SUV, available on desktops and mobiles. For Ford, this is only the start. Two months after launching the Explorer, it announced plans to transform the customer journey for EVs, introducing digital touchpoints at every stage.

Last year also saw Fiat dive into the metaverse. Accessed directly through Microsoft Teams, Fiat’s virtual dealership recreates the feeling of a showroom.

Fiat Metaverse
Fiat believes the metaverse showroom represents a revolution in customer experience

Leveraging cutting-edge technology will likely separate the winners from the losers. The tech allows automotive brands to reach new and existing buyers at a far greater scale, while still providing the personalised experience of a traditional showroom.

Building trust in online

But there’s still a lot of work to do to build trust in online car-buying. Most buyers still want to physically inspect and test a vehicle, and, according to EY, only a quarter prefer online channels for their final purchase. Innovative solutions like virtual consultations can help to build that confidence. Fiat isn’t the only brand experimenting with AI chatbots as part of the sales process. Skoda’s in-vehicle assistant ‘Laura’ proved so popular that it was “promoted” into a sales support role, acting as a personal consultant for customers. Laura has since been rolled out across several European countries.

New, digitally-enabled financing options are also becoming increasingly popular. Subscription models, which give drivers access to cars without long-term financial commitments, aren’t new, but the rising cost of living has generated new interest. McKinsey’s survey indicates that 33% of buyers are now open to trying them.

If more is needed to show the direction of the automotive industry, just look at Amazon. The tech giant is a bellwether of e-commerce, and this year, the platform intends to begin selling cars. To survive, past icons must become the bold challengers of today. That means adopting a positively dissatisfied mindset: never settling and always striving to be one step ahead. In an ever-changing digital landscape, brands can’t afford to be slow- especially when some are already speeding ahead.


The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.

Tom Knox is Chairman of MullenLowe

The AutomotiveWorld.com Comment column is open to automotive industry decision makers and influencers. If you would like to contribute a Comment article, please contact editorial@automotiveworld.com



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