Over the coming years, the automotive industry is expected to change drastically from the traditional dealership model we know today. With the connected car making its way onto our roads, the future of the car – in terms of conceptualisation and digitisation of the automotive industry – is set to be both dramatic and exciting in equal measures. Digitisation has slowly trickled up through lower value transactions to higher ticketed items and is now ready to shake up the automotive sector. From the user experience (UX) to the supply chain, the sector is starting to see the value of embracing the modern consumer’s lifestyle and connective expectations to influence and in turn re-invent the core values of the automotive industry.
Demographic split has a huge impact upon purchasing decisions and processes within the sector, but what dealerships need to remember is that people and lifestyle need more consideration than the product. With two-thirds of consumers now conducting the majority of their pre-purchase research online, resulting in as little as one visit to a dealership before making a purchase, the role of the salesman has changed forever. Cars are no longer the mechanical marvels of the industrial age, but a utility to the life we’d like to lead. In order for the industry to fulfil its utilitarian need and provide a service reflective of the new role cars now play in our day to day life and become the hosts of information, which is what consumers are looking for.
User experience
With consumers now having a stronger influence upon the changes in the industry, manufacturers need to realise that a retail approach, blended with an integrated UX, is needed to keep up with changing lifestyles and demands. Retailers are able to provide customers with a convenient, customised and fun experience; all values that should form a starting block to transform the stereotypical salesman that so many consumers sadly want to avoid. As the industry as a whole has realised, it’s time to up the game in terms of UX.
In response to this, manufacturers have started to incorporate virtual showrooms, where consumers are able to experience their potential future car entirely in a virtual 360 degree environment, both online and in-store. This ensures the manufacturer is one of the main points of focus for a consumer’s online research before entering the dealership. It gives the customer an opportunity to customise a model of interest with alternative fabrics, trims and colours on offer, whilst also providing transparency of cost and the financing options that are available.
However, manufacturers aren’t just stopping with the online experience. From polarisation to interactive communications, dealerships will have a strong part to play in the digital revolution and become reflective of each region. Functions of the dealership will be dependent on location; flagship dealerships will have a concentrated retail focus providing in-depth information, with a highly engaging and virtual customer experience. The smaller dealerships will provide a virtual experience on a smaller scale, but will ultimately give those that need to interact with something tangible the opportunity to do so. However, the big questions is: with customers more concerned about connectivity than ever before, will the automotive experience go as far as encouraging purchasing online, almost leaving the physical dealership redundant in sales process? Will the automotive experience just become the final link in an extended and complex value chain of companies tasked with meeting customer needs, in this case focussed on supporting and enhancing the user experience?
For the growing group of consumers that prefer a service instead of a product (e.g. Spotify and Netflix), there is the genuine option of ceasing to own a car outright but instead utilising a car-as-a-service (CaaS) approach. In these cases, the “buying” decision is more about what car services a user’s immediate needs. The CaaS providers who will win in this space will be those that can be flexible enough to meet a wide variety of demands from inner-city, one-person, short journeys to grand touring holidays with four children and towing a boat.
Software dependency
The huge advances in the automotive industry in the hundred years or so since Henry Ford introduced the first affordable car, have led to a fragmented buying market which has become software-dependent, not just from the buyer’s perspective but also the dealer network.
Worryingly, with individuals prioritising connectivity over functionality, car manufacturers ultimately rely on software to deliver their best and most customer-relevant features. However, the old quality assurance paradigm just isn’t designed to find problems associated with a future of software-centric vehicles, meaning those that can apply rigorous quality assurance to the intangible world of software will have a distinct advantage in satisfying customers’ demands. Software development along with affordable sensor and hardware technology will be the key enablers to both full autonomy and semi-automation going forward.
Digitising the supply chain
Digitising the value chain can optimise profits by highlighting the various cost components, such as the creation of virtual showrooms which have given consumers the ability to customise a car, placing an increased importance on zero inventory. Vehicle manufacturers are worried not just about a lack of suitable suppliers, for example for high volume electronics systems, but also about the ability of those that do exist to deliver components at the speed and volume required by the vehicle manufacturers. There is a perception that suppliers in many countries lack the technical or processing capability to undertake the business.
What can the automotive supply chain do to address these concerns and ensure they can offer the kind of world class, high technology products required by these manufacturers – and offer them quickly, efficiently and cost-effectively?
For many years the manufacturing sector has struggled to successfully implement Product Lifecycle Management and Enterprise Resource Planning (ERP) software systems. Despite the fact that ERP was initially developed to help the automotive sector manage increasingly complex supply chains and process automation, many firms can find themselves wrestling with what CIO.com calls one of “the most expensive, time-consuming and complicated tasks an IT department can take on.”
However, in an increasingly IT-enabled, machine-to-machine, Big Data world, creating and delivering world-class parts and systems relies on the effective use of software at every stage. From research and development through to production, performance and distribution, and even within the parts and systems themselves, software is everywhere, embedded and critical. Software is the enabler, but when it becomes excessively complex or even fails, it becomes the barrier, halting operations and even growth in its tracks.
With the industry set to become increasingly digitised, many may question whether it would be easier for a software company to integrate the features of a car which drive user experience and let traditional hardware suppliers provide the parts. As a connected car now requires more coding than a space shuttle, it will be vital for software to become integrated within the whole manufacturing process, ensuring software testing is included within the final safety checks as cars come off the manufacturing line.
In turn, the coming digitisation will lead us to ultimately question the role of a traditional vehicle manufacturer; will OEMs simply become a host of information to guide the purchasing process, reversing the roles and giving customers the upper hand? Or will manufacturers find a way to gain in-depth customer insight to influence the online journey and claw back glory?
Dr. Martyn Jeffries and David Rigler
