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The Changing Face of the Car Dealership

The retail environment for the automotive industry is experiencing significant disruption which is likely to intensify over time. The 2013 National Automotive Industry Survey undertaken by Moore Stephens Automotive for the AADA, takes a look at the how the industry might evolve in the future. The driving forces of change are the mashing together of innovations in the technology, automotive and retail industries, and the increased demand from consumers for a more customised experience. 

Mobile is a Game Changer

From a technology perspective the most significant game changer is mobile, which brings the digital world into the dealership. New research has revealed that 63% of US auto shoppers used their mobile device to conduct research and shop online while at a dealership. Consumers are using their mobile devices to compare vehicle prices, check trade-in values, research financing and evaluate inventory at dealerships. This is in addition to the hours of research that consumers conduct prior to visiting a dealership, all of which means car buyers are well-armed with information when they get to the showroom. 

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Sales staff that proactively engage with consumers using mobile devices at the dealership are likely to have a greater chance of retaining showroom traffic and potentially attracting customers from their competitors. Ignoring the digital consumer is not an option.

The mobile experience facilitates not only the selection of vehicle, but also the choice of finance and insurance package. AskAuto is a smartphone and tablet application, available in the US, which offers credit union members vehicle information and loan-application assistance to simplify their vehicle-buying experience. By scanning the vehicle identification number, the member learns basic vehicle information, including average retail cost of the new or used vehicle and mileage estimates. The member can also submit a credit union loan application through AskAuto. We anticipate similar applications will appear at some point in Australia, but will it be the banks or the dealerships driving this innovation, or perhaps some other third party?

New Retail Formats Can Improve Profit Margins

As well as enhancing the customer experience, mobile is also challenging traditional assumptions about the retail format for a dealership. A recent McKinsey study has concluded that dealerships can significantly improve on the industry's average profit margin if they upgrade the capability of sales and service employees and pursue new sales formats. This report suggests that new retail models for car sales should be created that reflect changing consumer behaviours and shopping preferences, such as the rise of mobile search.

Some brands are already reinventing the automotive retail format. Take for example Tesla, the American OEM that specialises in electric vehicles, which opened a flagship London store in 2013 in a Westfield Shopping Centre. Or, Audi which has launched Audi City, also in London, described as “a new digital car showroom format that uses state-of-the-art technology to make clever use of precious city space. Visitors can experience every possible combination of the Audi range in a way never seen before in an Audi Centre.”

Customer Co-Creation is the Way Forward

Creating the customer experience of the future will be challenging for dealerships. Every automotive brand is unique and distinctive and the customer experience should reflect this. What works for Tesla and Audi may not be right for other OEMs who have a different customer base and a different brand experience. So how should OEMs go about designing and creating new retail formats that offer a more rewarding and engaging customer experience and critically help drive up profit margins? 

At ACA Research, we believe that in order for organisations to design experiences that customers truly want, their customers need to have a hands-on involvement in the design process. Customer Co-creation is a key method used in Customer Experience Design. It is the process of organisations creating services and experiences collaboratively with consumers, tapping into their intellectual capital, and in exchange giving them a direct say in what actually gets designed and developed. 

If you would like to learn more about customer co-creation and think its something your business needs click here to get in touch.

Please post your comments below and tell us how you think the digital world is changing the car dealership. Or, to stay in touch with the latest automotive news you can sign up to our monthly newsletter, In The Headlights, by clicking on the link provided.

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Topics: Market Research Automotive Research