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Where Do Dealerships Fit Into a Landscape of Automotive Loyalty, Data, and Mobility Transformation?

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The automotive industry has 3 overarching priorities that every OEM is wrestling with and thinking about:

  1. Gaining a close relationship with their consumer
  2. Discerning who controls the data and how they leverage it to create a better consistent omnichannel experience for the consumer
  3. Successful dealer transformation to address changing consumer preferences and the evolving automotive and mobility landscape

Let’s walk through each one together.

Closer Relationships Between OEMs and Consumers

OEMs in the past had largely outsourced the consumer relationship to their dealerships, but they are realizing that is not working for them in today’s competitive and consumer-driven environment. Some of this thinking is the result of moving away from viewing consumers as transactional. Instead, OEMs are expanding the lens of the consumer journey from just shopping activities to overall lifecycle of the vehicle. Even more importantly, they’re expanding the lens to the whole life of the consumer. The goal is no longer only getting a consumer to purchase a vehicle, but rather getting them to buy into a brand and become a lifetime customer, thus becoming a brand ambassador for the OEM.

I want to emphasize that this is a huge shift in the way that OEMs are thinking and operating, expanding the shopper journey to one that is focused on shop, buy, own, and retain. It sets up the need for personalization, which is becoming table stakes in the automotive industry. Also, it is driving the need for endless content, which we are now calling the content supply chain. Generative AI will play a big role here in assuring that consumers get the right content for them at various times in their journey.

We are seeing this shift in a variety of things, such as direct-to-consumer frictionless buying experiences. OEMs are now empowering consumers to not only perform shopping functions online, but also complete part of the buying function with tools like build-and-price, reservations, and placing orders with deposits all online. Being able to complete much of the purchase paperwork online improves the consumer experience and enhances the perception of the brand.

Despite all this, these D2C options for heritage OEMs stop far short of buying the vehicle online, at least currently.

While some dealers worry that the closer connection between OEMs and consumers will exclude them from the opportunity, it’s important to note that dealerships play an important role in D2C, one that is evolving and growing. Dealerships can receive recognition and awards based not just on sales and service, but also on guest experience. At times, the OEM and dealership relationship can be characterized as transactional, but it really is a lot more than selling vehicles. In fact, today there are fewer new vehicles in dealerships, and consumers are placing orders and deposits for vehicles that they will then pick up when available at their preferred dealership. It is at this point that the dealership product specialist would kick in. There is a huge opportunity here to create an outstanding experience for the consumer and get them set up with aftermarket and service opportunities.

How Should Automotive Companies Handle Data?

One way that OEMs and dealerships can work better together is to share customer data. For example, OEMs have all the data on build-and-price, orders placed, and insights on customer preferences from their websites. If this data were shared with dealerships, they would be able to create a more seamless omnichannel marketing journey for retail.

Today, vehicle and repair data are siloed. Dealers use a variety of third-party management systems that house servicing schedules, vehicle information, and diagnostic data, while OEMs have their own proprietary data systems. OEMs typically do not share the data when a vehicle is resold, making it hard for dealerships to forecast service and have parts ready. By sharing the data, dealerships could be more proactive in forecasting servicing needs and actively keep inventory for parts that will be needed to reduce consumer wait time.

By partnering with an experienced and innovative consulting firm, OEMs can start a connective data accelerator that automatically connects different players in the ecosystem, resulting in better service to the customer at a lower cost. OEMs would be able to properly harness and utilize their data and facilitate an improved consumer experience throughout not only the lifetime vehicle ownership but the lifetime of the consumer’s connection to the brand.

Real Answers to Questions About Dealership Transformation

Dealership transformation is a hot topic right now as D2C is becoming a perceived threat to dealers. Most consumers do not want the hard sell focus of the dealerships of the past and would rather conduct their own research and shopping in the comfort of their homes.

The advent of EVs changes a lot as well, and OEMs are advocating different approaches with those vehicles. For OEMs to compete with EV-only manufacturers, D2C approaches are necessary. EV drivers often boast of an exclusively online shopping experience for their vehicles, putting OEMs at a disadvantage if they sell solely in person. Instead, OEMs want their EVs to be sold in a much more frictionless way online.

If D2C becomes the OEM preference, what becomes of the dealership? OEMs should encourage dealerships to transform into an experience-driven environment rather than one based on transactions. Dealerships can best serve today’s customers by educating them about the products in a showroom environment and offering excellent servicing to vehicles.

EV adoption also requires dealers to transform to become EV-certified, including the installation of chargers, training product specialists, and renovating service areas. While EVs are currently at 6% penetration in the United States, they will continue to increase on the roads and will need to be serviced. EVs may have less service overall, but their service is more expensive than gas vehicles. All of this creates a huge opportunity for dealerships.

Overall, dealerships must evolve beyond just sales to create an exceptional consumer experience for both buying and servicing vehicles. All efforts should have the end goal of anticipating customers’ wants and needs throughout their journey and limiting their time spent in the physical store as much as possible.

Perficient is actively offering solutions to the challenges brought about by these important transformational shifts for OEMs in the automotive industry. Reach out to our automotive experts if you would like more information on our strategic positions and innovative solutions.

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Keith Tomatore

A long-time senior executive in the auto industry who has held the position of SVP, Retail Marketing at Global Team Blue (GTB, a WPP Company) on the Ford Retail Business. In this role, Keith worked with the Ford Dealer Associations across the country to help them with their Precision Marketing and digital efforts. Also, he served as CEO of iFrog Marketing Solutions, which focused on Automotive advertising solutions for Tier 2 and Tier 3.

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