Digital Transformation Trends in the Car Industry
The coronavirus pandemic has led many companies to digitalise their operations, as well as marketing and sales activities. These include the car manufacturers and dealerships, which have been prepping their digital showrooms in the last couple of months.
While the pandemic hastened the digital transformation process in the car industry, it has been going digital even in the pre-COVID “normal” times.
With the growing number of people spending more time online, automotive brands and dealers have been integrating digital technologies and strategies into their business processes to boost sales. These include:
Social Media Engagement
Like most companies in various industries, car manufacturers and dealers are now heavily dependent on social media to engage with customers, as well as monitor customer experience and satisfaction.
The way brands portray themselves on these platforms is what will determine the next step of their journey. To attract more followers and clients, car companies post information that is helpful to their targeted customers, like the latest models, fuel consumption, car services, and insurance.
Automotive competitors are using digital channels in their marketing campaigns. Using integrated digital marketing tools like Facebook Ads that not only can target clients but also provide insights into their customers’ behaviour can help them attract and convert more customers in the future.
Two popular digital advertising platforms are:
Platforms such as Instagram, Twitter and YouTube allow brands to be more innovative with their campaigns. They also target specific buyers depending on their buying habits.
Help businesses receive more impressions and clicks on their website faster. They also improve chances of appearing above organic search results and on the first search results page.
Video Marketing and Virtual Reality (VR)
A growing number of buyers and car shoppers are using digital stores that offer interactive experiences using videos and VR technology. With these tools, car dealers can offer customers with an immersive experience that can enhance their shopping and buying experience, as well as drive more referrals.
This approach makes vehicle buyer’s research process a lot simpler while creating an experience that is substantially more applicable and customized to customized. From virtual test drives, 360-degree view on the interior, or exterior walkarounds. Research shows that about 56% of vehicle buyers said they could be persuaded to purchase a vehicle from a 360-degree video without even going for a test drive.
Virtual Reality (VR)
With the release of virtual and augmented reality, VR is already making waves across industries globally. It is safe to say that the automotive industry is one step ahead. Car manufacturers are trying to use both virtual and augmented reality technology to deliver the best vehicle experiences to their consumers.
Using VR technology and specialized apps, almost every showroom in any dealership can become a virtual reality showroom. Brands like Audi and BMW have already jumped on this phenomenon. Vroom has even created a virtual reality showroom to display their available assortment that allows a customer to view cars from the comfort of their home.
Car manufacturers and dealers are improving how they reach and engage customers along their sales funnel by providing:
- Product information, including digitized brochures, videos, and product specs using downloads, chat, and texts;
- Product engagement, using online interactive tools, videos, and virtual reality experiences; and
- Purchase engagement, by making available online vehicle reservation tools and accessible virtual documentation, e-signature, and delivery options.
Using interactive videos, virtual reality tools, and self-administered surveys that reveal consumer interests about the risks and rewards aftermarket products address helps to increase product sales. At the same time, digital lending, contracting, rating, and remitting speeds up transaction times to get the customer to delivery more quickly.
Additionally, having a digital subscription model platform in place, dealers will be able to streamline, manage, control, and ensure customer satisfaction from this new profit centre.
In the future consumers will increasingly move to complete retail product transactions virtually.
ID Check Before Test-Driving or Renting a Car
Letting someone take out a car, whether car rental or a test drive at a dealer, entails enormous risks for the rental agency or dealer. Scammers with fake identification or a forged driving license can get access to a car at practically no risk. Employees frequently lack the relevant experience to be able to evaluate the authenticity of a document. There is also a black market for German ID documents that makes it possible to obtain a forgery that can’t be distinguished from a real ID with the naked eye for less than € 100.00. If the scammer disappears with the car, it’s not theft, but rather misappropriation. The consequence: it is not covered by insurance because misappropriation is excluded from coverage.
Car dealerships and car rental companies now protect themselves against misappropriation efficiently and cost-effectively using ID-check.
Here’s how it works:
- A new customer wants to rent a car or take a test drive
- The customer’s identity is verified at the car rental agency or car dealer using an ID reader from the Federal Printing Office
- ID-CHECK recognises identification documents from 180 countries (driving licenses, ID cards and passports) and flags irregularities
- The results of the authentication process (verification report) can be accessed from all workstations at the car rental agency or car dealer
- Data from the report can be automatically entered into pre-defined forms, such as the rental agreement, test drive contract or money laundering form for parties paying in cash
- Data is entered into the customer information system.
More Upcoming Trends
Car manufacturers and suppliers will seek partnerships with technology vendors and specialists for cloud computing, cybersecurity, telematics, connectivity and 3D printing solutions. Robert Bosch, Harman International, Continental, Magneti Marelli and Denso are focusing on digital initiatives. Companies such as Ford, GM, Tesla, Volkswagen and Toyota, which focus on connected cars, autonomous driving, and mobility, will compete with technology, semiconductor manufacturers and mobility companies.
Other upcoming market developments including:
- Robust technology investments from automotive companies to realise recurring revenues from new services; IT spend will increase from $37.95 billion in 2015 to reach $168.8 billion in 2025
- Investment focus on electric vehicles, new mobility services, multi-modality, artificial intelligence, and autonomous vehicles
- Disruption of the automotive industry supply chain as more than 1,700 new digital startups enter the market
- Enhanced security across both horizontal and vertical business layers as businesses integrate IoT and big data analytics
- Country-specific, digital retailing strategy for new/used cars in addition to aftermarket and servicing
The rapid pace of digitalisation is transforming the component hardware-driven automotive sector to a software- and solutions-focused industry. In future, all aspects of the mobility value chain will be digitalised: From the shortening of product life cycles due to higher software dependency, over the transformation of car dealerships to the actual sales process and maintaining the relationship with the user – everything will be coined by the opportunities and challenges digitalisation offers.