3 Trends Changing the Auto Industry – A Shift to Dealer Digitization

September 4, 2020

3 Trends Changing the Auto Industry – A Shift to Dealer Digitization

According to customer THINK “research shows that 76% of companies are investing in emerging technology”. Of these emerging technologies, virtual reality, augmented reality, and artificial intelligence are driving significant changes.

These changes weren’t all positive for all sectors, but the auto industry is one that has remained mostly stable and even experienced increased demand in some areas since the outbreak.

Because of concerns over COVID19 transmissions, people started to feel less comfortable using public transport. The desire to stay separate from others and protect family members for exposure led to an increase in demand for personal transportation.

Consumers are no longer only doing research online, but also committing to major purchases without seeing the items in person. Much of this is due to the information (reviews) available, flexible return policies, videos, and Virtual Reality.

Combined, these allow shoppers to feel comfortable committing to large purchases, such as buying cars online, without the need to visit the shop or dealer in person.

COVID19 and Car Sales

While there have certainly been dips in the demand for cars, particularly in areas or countries under lockdown, as things reopen there is an increased desire to have both freedoms of travel and personal transport.

COVID19 has meant that many people feel cautious and concerned about the idea of sharing confined and air conditioned spaces with people that they don’t know. Public transport has also become less convenient in many areas, some with restrictions, shielding, face mask requirements, and more.

All of this has led to people wanting their own vehicles, to be able to travel freely and comfortably. A report from Cars.com stated that “the pandemic is causing nearly 20% of the respondents to consider buying one”. They also reported that:

“More than 40% of respondents to a Cars.com survey said they’re using ride-sharing services less often since the COVID-19 outbreak in the U.S. Of these people, 93% said they’re using their personal cars more often.

Customers are avoiding unnecessary travel and sales staff

This is not a new trend. Consumers are simply demanding a more convenient and pleasant purchasing experience. They do not want to be harassed by sales staff and don’t want to travel to several locations in order to find what they want to buy.

Even those that like to shop in person will often do a lot of online research first. They’ll want to narrow down their selection to just 2-3 possibilities before making a trip out to buy. This means that even high-street retailers need to make sure their products, offers, and service are clearly visible online to their target consumers.

Instead of simply finding the nearest dealers, consumers are looking for convenience. In the case of dealerships, some ways that this is being provided include:

VR showrooms
VR test drives
Reviews (written and video)

The virtual reality showroom is gaining popularity, as it can allow customers to see available cars in realistic ways, even being able to select different trims or configurations.

Virtual reality or augmented reality apps for car sales don’t necessarily need a headset either. Many can simply be viewed through a mobile phone screen. If you do have a headset, then the experience is almost as realistic as actually being at the showroom.

Customers are Demanding Online Convenience and Personalization from Retailers

A lot of shoppers actually don’t want to go to a store or dealership. They want to proceed through the entire process, from research to purchase, entirely online.

This is providing new challenges and new benefits to dealers. As shoppers become more accepting and trusting of online purchasing, other aspects of how dealerships operate are also changing.

Think with Google reported “dealers before COVID-19 have been able to offer vehicle delivery, [but] only a very small number have the online capabilities to execute a full vehicle sale online”.

Tesla, for example, currently has the facility for shoppers to purchase cars entirely online. They even allow a few days after delivery as a ‘test drive’ period from your home. If the buyer doesn’t like the vehicle they purchase, so long as they are within the terms, they can then return it to Tesla. They also allow for test drive bookings and contactless test drives (removing COVID fears).

Modern buyers want to be able to complete most, if not all, of the process from the comfort of their homes. This is resulting in significant changes to how dealers operate, both online and offline.

How Dealers are Digitizing Business – Online and Offline

As dealers move towards more digitization, things are changing quite rapidly. There is a need to provide convenience, and more often than not, this means entirely online experiences.

As some people like to research heavily and then check things out in person, one-way dealerships are providing more convenience to clients by allowing customers to make an “at-home test drive” booking online. The dealer then delivers the car for testing right to the customers door, which is far more convenient, especially for those with busy schedules.

As virtual reality and augmented reality catch on more and more, dealers are able to provide virtual experiences of cars in showrooms, online, and via installable apps. It can mean that dealers don’t need as many display or test drive models, as customers can be shown all cars and trims virtually. Some even provide virtual test drives, providing a realist experience of the chosen car.

This combined with digital configurations means that all colors, trims, and accessories can be demonstrated virtually. Customers can literally create their ideal combination of features, view it in virtual reality, and then test drive it virtually or from a home test drive booking.