Insights

Auto Executives Need To Reinvent How They Sell Cars, Not Just Whether It's Online Or In Person

Featured in Forbes

By August Joas, Andreas Nienhaus and Fabian Diaz
This article first appeared in Forbes on May 23, 2018.

There is no scarier word for traditional retailers than Amazon, and in Asia at least, add Alibaba to the list. Both e-commerce giants have already dipped their toes – and soon probably much more – into the car-selling business. But if automakers simply focus on the task of how to sell cars online or fighting off e-commerce aggregators, they may fail to address a bigger, more fundamental overhaul that needs to happen in the next several years.

Despite the auto industry’s long history of technological innovation, the car-buying experience has barely evolved since the first car dealership opened more than 100 years ago. Yet, the way people shop and what they expect from retailers is changing. Today, customers demand real-time satisfaction, transparency, control, convenience, and uniqueness in both the experience and product. And just moving more of the sales process online will not be enough to help automakers in a match-up against more-adept e-commerce giants. Nor would it address the new needs of customers for mobility without ownership.

The car-buying experience has barely evolved since the first car dealership opened more than 100 years ago. Yet, the way people shop and what they expect from retailers is changing

The challenge for automakers and dealers together doesn’t revolve only around selling online, but rather offering ever more flexible and transparent customer solutions that meet consumer expectations – online or offline. These range from easy-to-understand financial and insurance packages, to more advanced driver assistance technologies,  to innovative connectivity services that turn cars into yet another mobile device consumers can’t live without. But above all else, they need to figure out how to remove pain points from the car-buying exercise.

Automakers and dealers need to figure out how to remove pain points from the car-buying exercise

How to beat Amazon

Car companies and brands need to capitalize on the strengths they have that, say, an Amazon doesn’t. Thus, the question about the future that the automotive industry should be asking is not whether the dealership model will continue to exist, but rather what role it should play to give automakers an edge in the new, more exacting retail environment. How far do car manufacturers need to go with customization to let consumers make a car purchase unique – and should that customization apply to the models of ownership as well as the buying process itself? In this new environment, the correct metric of success will not necessarily be the percentage of sales completed online, but more likely how much of a customer’s journey is satisfied quickly, easily, and with transparency – regardless of the channel a consumer chooses.

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