How Virtual Reality Will Impact Auto Sales
June 29, 2021
The automotive industry is known for its willingness to embrace new technologies. Over the last several decades, the industry has used GPS, bluetooth, electromagnetic sensors, on-board diagnostic systems, cruise control, and other technologies to create more advanced vehicles. Many major players in the automotive industry are now turning to another technology in an effort to boost their profits: virtual reality.
Virtual reality is not a new technology. In fact, it’s been used in gaming, shopping, and other industries for years. However, it is fairly new to the automotive industry, and many experts believe that it will help automotive companies boost their sales.
How are automotive companies using this technology? How will it impact automotive sales? Here’s what you should know:
What is Virtual Reality Technology?
Virtual reality is a type of technology that is used to generate a simulated environment with scenes and objects that feel real. The user is completely immersed in this simulated environment and is even able to interact with their virtual surroundings. Because virtual reality is fully immersive, everything the user sees, hears, and experiences is part of the simulated environment.
Users typically need a virtual reality headset in order to experience this technology. Some of the most popular virtual reality headsets include the Oculus and HTC Vive. However, sometimes it is possible to experience virtual reality using just a smartphone or computer.
Virtual reality is often confused with augmented reality, but these are two very distinct technologies. The main difference is while virtual reality completely immerses the user in their simulated environment, augmented reality combines elements of the digital world with the user’s real world.
How the Automotive Industry is Using Virtual Reality
Automotive companies have found a number of different ways to use virtual reality technology. Some of its many applications in the automotive industry include:
- Market Research
- Automotive Design
- Employee Training
- Virtual Showrooms
- Virtual Test Drives
Before designing new models, automotive manufacturers often conduct market research by hosting car clinics. During these clinics, automotive consumers are asked to provide feedback on the latest models. This gives automotive manufacturers an opportunity to find out what consumers like and don’t like about the newest designs.
Hosting a car clinic is not cheap. Manufacturers must book a venue, pay for the consumers to travel to the selected location, and transport vehicles to the area as well. But now, manufacturers are drastically cutting costs by hosting virtual car clinics.
At these virtual car clinics, consumers can evaluate countless different makes and models of vehicles using a virtual reality headset. They can explore the interior and exterior just like they would if they were seeing the vehicle in person, but at a fraction of the cost.
In fact, using this technology allows manufacturers to solicit feedback on a wider range of vehicles since they are no longer limited by space or budget constraints.
Using virtual reality technology in this manner has significantly enhanced the market research process for automotive manufacturers.
Designing a new vehicle is not easy. Every design may go through dozens of rounds of edits and tests before it is finalized. Every time the design changes, the design team must take the time to create a new clay prototype that reflects the latest revisions. This is why designing a new vehicle is so time-consuming and expensive.
But now, automotive manufacturers are streamlining the design process with virtual reality technology. The design may still go through dozens of rounds of edits, but the team doesn’t need to take the time to create new clay prototypes for each round of revisions. Instead, the design team can quickly create a new virtual model. This is far less expensive and much faster than building a new prototype, which allows manufacturers to speed up and save money on the design process.
Using virtual models also allows teams to collaborate on a design from thousands of miles away. This brings global design teams together in a way that was not possible before.
Automotive manufacturers are also using virtual reality technology to improve employee training programs.
In the past, maintenance and manufacturing workers were trained under the supervision of more experienced employees. Because of the complex nature of the work, new employees often made costly errors even though they were supervised.
But now, these employees can receive hands-on training in a simulated environment thanks to virtual reality technology. This gives them the opportunity to learn from their mistakes in a safe environment before they start working on vehicles in the real world.
Maintenance and manufacturing workers aren’t the only ones who are being trained in virtual environments. Some automotive companies are also using virtual reality technology to provide training to sales employees.
In this virtual environment, sales employees are taught about each model’s different features and selling points. They are also trained on how to interact with customers, guide them through the sales process, and close the deal. This virtual training thoroughly prepares sales employees for the showroom sales floor.
Before the introduction of virtual reality technology, automotive consumers had to visit multiple dealerships in-person to research different vehicles and narrow down their options. However, it’s no longer necessary for consumers to travel to different dealerships to explore vehicles they are considering purchasing. Now, they can use virtual reality technology to visit a virtual automotive showroom without ever leaving home.
Inside this virtual showroom, consumers can explore the interior and exterior of countless vehicles just like they would if they were in a dealership’s showroom. They can see what a vehicle looks like in different colors, from different angles, and even see what it’s like to sit in the driver’s seat.
This makes it far more convenient for consumers to research and compare vehicles when deciding which one is right for them. It also makes it easier for automotive dealerships to cater to consumers. Because of this technology, consumers can explore a wider range of vehicles, so dealers don’t need to pay the costs of keeping as many on-site.
Virtual Test Drives
Automotive consumers can use virtual reality technology to do more than just explore the interior and exterior of the vehicle. This technology also gives automotive consumers the power to take a virtual test drive without ever stepping foot inside the actual vehicle.
Because virtual reality technology creates a fully immersive experience, a virtual test drive feels just like a real test drive. Automotive consumers will still get the chance to see what it’s like to sit behind the wheel of a vehicle, but they won’t have to travel to the dealership to get this experience. They can also test drive as many vehicles as they want without spending hours in a dealership’s showroom.
Plus, consumers won’t need to invest in a virtual reality headset to take a virtual reality test drive. All they need is a smartphone or computer to hit the virtual road in a car of their choice.
Many automotive manufacturers are already using virtual reality technology in this manner to make the car buying journey more convenient for consumers.
What Challenges Will Virtual Reality Present to the Automotive Industry?
There are always challenges associated with using new technologies, and virtual reality is no exception. Automotive companies must be willing to invest in virtual reality technology in order to experience its benefits. Even if the upfront costs are steep, using this technology could translate to higher sales, so companies could recoup the money they invested in the long run.
It could also be a challenge to get certain segments of consumers to adopt this technology. For example, researchers asked consumers of all ages to rate the usefulness of different information channels at automotive dealerships. Thirty-six percent of younger consumers were able to obtain useful information from an augmented or virtual reality headset provided by a dealer.
However, only 6% of Baby Boomers found this information channel useful. This could indicate that older consumers are less likely to adopt new technologies like virtual reality, which could present a challenge to automotive companies targeting this demographic.
How Will Virtual Reality Impact Automotive Sales?
There’s no question that the automotive industry has warmly embraced virtual reality technology. Although utilizing a new technology is always risky, many experts believe that the decision to use virtual reality technology in so many different ways will pay off for the automotive industry.
Using virtual reality technology to streamline employee training, the design process, and market research will save automotive companies a significant amount of money. By reducing these operating costs, automotive companies can boost profits or allocate the money toward other areas of importance.
Other uses of virtual reality technology, including virtual showrooms and test drives, may have a direct impact on automotive sales. The idea of purchasing a vehicle online is becoming increasingly popular among automotive consumers. In fact, 60% of automotive consumers in the U.S. are at least interested in the concept.
These consumers are interested in moving different parts of the sales process online in order to minimize the amount of time they spend at the dealership. By offering virtual showrooms and virtual test drives, automotive companies are giving consumers exactly what they want. Offering these virtual experiences may help automotive companies set themselves apart from their competitors, win new customers, and increase automotive sales.