With the biggest battleground being the fight for the consumer journey, automotive retailing will evolve over the next decade – as the industry shifts from being less product-centric and more consumer-centric. According to many blue-chip consulting firms (Deloitte, EY, PwC, McKinsey and BCG to name a few), a few trends will drive this evolution – most notably: product innovation; mobility as a service (MaaS); direct-to-consumer competition; and, changing consumer preferences.

1. Changing customer preferences:

• Consumers have shifted from expecting their offline bricks and mortar experience to ladder up to online; instead, they will expect their online experience to be extended offline – into all dealer touch-points throughout the customer lifecycle.
• Consumers will move from multi-channel to omni-channel retail engagement – where they will demand a seamless and intuitive digital experience that brings together their mobile, in-vehicle, and offline lifestyles.
• Consumers will evolve the way they use digital to include voice, visual and in-car search.
• Consumers will safe-guard their data and will look to understand privacy requirements within their purchase decisions.

2. Product innovation:

• Connected cars will seamlessly link vehicle data into an enterprise infrastructure, influencing parts and service purchases, loyalty/CRM, sales and marketing.
• Autonomous cars will require new business units within the dealership including: parts and service, infotainment, education, and concierge for in-car experiences. A future world might just feel a bit more like spending time at the Apple Genius bar — learning how the latest technology within your vehicle can make your life more effortless.
• Consumer and federal pressures towards higher adoption of electric cars will continue as will OEMs intensifying commitment to electrification – as they work towards reaching a tipping point, where desire for EV’s delivers profitability.
• New staffing and training solutions will be required to effectively sell and service electric vehicles as demand scales up.

3. Direct-to-consumer:

• Consumers love subscription models; and, it’s not unrealistic to think that subscription-based third-party companies could hold inventory and sell direct.
• The business plan for Hyundai's Genesis and Volvo's Polestar is to sell direct-to-consumers. Expect that OEMs segment new innovations into separate business units in the future.
• With growing MaaS demand, there will be more entrants in automotive retail, offering different and innovative direct-to-consumer business models. They will create easy access to products and the experience of accessing a vehicle – not unlike how UBER or AirBnB created seamless access to products and services within the taxi and hotel industries.

4. Mobility as a service (MaaS):

• Car-sharing is predicted to be a $6.5 billion industry by 2024.
• An adapting dealership model for mobility services may include having mobility as a separate business unit within the dealership.

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The net effect of these market pressures will be a challenge to existing retail models along the future customer journey. Adopting new consumer-centric approaches and challenging existing paradigms can create new agile business models within the franchise. Here is some of our thinking about the Consumer-Centric Consumer sales journey._‍

Wall Street analysts used to value OEM stocks based on product – the ability to manufacture, sell and service vehicles that drive demand. That has changed. Powerhouse OEMs with healthy balance sheets seeing softened valuations based on the markets’ perception of how fast they can shift their business to adapt to consumer preferences in innovation, mobility and authenticity. The OEMs and dealers that will best succeed in the next decade, will be looking to adapt and transform – taking the lead in adopting a consumer-centric retail model.

While there is no certainty that these predictions will come true, it is certain that the current dealership model will have to evolve in a retail landscape – based upon shared, autonomous and electrified vehicles, with increasingly empowered customers who are expecting personalized on-demand solutions.

Our talented, imaginative, phenomenal group of originals at 7 Communications are here to help as needed. Contact us here if you would like to continue the conversation.