Over the past three years, the impact of the pandemic combined with global supply shortages and an ongoing cost-of-living crisis have resulted in the most testing market conditions in decades for automotive manufacturers.
In the UK, for example, figures from the Society of Motor Manufacturers and Traders revealed that the number of new car registrations in 2022 was still well below pre-pandemic levels (-29.5%). Online marketplace Auto Trader, meanwhile, reported that the volume of consumers viewing new car adverts and inquiring about new cars was down by more than 12% and 40% respectively, suggesting a decreased appetite among cash-strapped consumers. Similar trends are being seen globally, with the predicted worldwide sales of vehicles in 2023 expected to underperform compared to those achieved in 2019.
While there is little that automotive companies can do directly to tackle inflation or weak consumer spending, there are still new revenue streams and fresh opportunities for growth to be explored at this time.
Indeed, in 2023, the maxim of ‘knowledge is power’ has never been more true. Looking at the extensive, detailed consumer data that car manufacturers have gathered over the years, this has become extremely valuable to a range of partners. In an increasingly competitive market, how automakers leverage ‘data collaboration’ over the next few years will be crucial to their success.
The value of data collaboration
When automakers combine their customer data with the pre-existing datasets of partners, this collaboration can deliver significant benefits for marketing, such as improved product offerings, advanced analytics, and better targeted campaigns.
Volvo Cars partnered with Starbucks in the US to offer drivers discounts on coffee or snacks while they wait for their car to charge
For example, at the ‘consideration’ stage, customers are looking at the different brands and models—the fuel types, the financing, the insurance. A manufacturer could therefore look at marketplaces, dealers, comparison sites, insurance companies and utility firms as potential data partners. Meanwhile, if customers are looking to switch to an electric vehicle and exploring charging tariffs, home chargers, etc., the providers of these products and services would make for potential data partners.
As the customer moves into the ‘purchase’ phase, alongside the manufacturer’s own datasets, the customer data owned by car marketplaces, the dealer networks and the finance companies becomes increasingly relevant. Following purchase, the potential data sources change again to include value-added partners and other third parties in the automotive ecosystem. This can extend from the public charging networks to restaurant chains. For example, in 2022, Volvo Cars partnered with Starbucks in the US to offer drivers discounts on coffee or snacks while they wait for their car to charge.
Given the sensitivities and regulations around consumer data privacy, the opportunity must be approached with care. Therefore, a key component of any kind of data collaboration is technology that can help partners extract the most out of consumer data in a way that protects privacy and is secure. Thankfully, the advancement of privacy-enhancing technologies, such as those utilised in enhanced data clean rooms, has made data collaboration possible at scale, in a way that meets privacy policies from partners, and is aligned with evolving regulation.
With significant disruption and innovative new players ripping up the rules of legacy automotive marketing, now is the time for OEMs to test data collaboration solutions. The manufacturers best equipped for the future will be those that best understand their customers and recognise changes in their needs quickly. In 2023, the wisest way to do that is through data collaboration.
About the author: Graham Tricker is Commercial Director UK at LiveRamp