The Future of Automotive Retail Online Sales and Direct-To-Consumer Models

Automotive retail is shifting, with new trends and entrants challenging traditional dealer models. Innovative EV brands like Tesla and Byton offer new, direct-to-consumer sales models that make online car buying possible.

But implementing these models will require rethinking the relationship between OEMs, national sales companies (NSCs) and dealers. Here’s what it will take to succeed.

OEMs and Dealers Need to Rethink Their Sales Strategy

For the longest time, automobile buying has relied on a dealership model. But that’s changed dramatically. Today’s tech savvy consumers are used to segueing seamlessly online and offline and expect the same when car shopping.

OEMs that can offer a digital retail experience will build trust with consumers and gain market share, while preserving the dealership channel. But the industry needs to move beyond “enhanced lead generation” and invest in real automotive digital retailing.

A direct sales model can help OEMs achieve cost of distribution below 10%. However, executing a seamless transition to an auto agency model is no easy feat. Whether it’s legal hurdles, restructuring dealership organizations, or integrating IT systems, the process can be complex and disruptive. But overcoming these challenges can unlock significant value. In the long run, an agile transition to an auto agency model can benefit both dealerships and OEMs. Ahead of the curve, some automakers have already started to do just that.

OEMs Need to Integrate Online and Offline Data

As more and more of the automotive buying process moves online, customers want to seamlessly connect from one experience to another. For example, if they start out by designing their ideal vehicle on a digital configurator, they expect to be able to easily move to the offline world and test drive it.

Consumers also want to be able to complete next steps online, such as calculating their payments on dealership websites and exploring financing options. But they still want to visit the dealership to get a full product demo, interact with sales staff and discuss features and options.

These shifts present many challenges for dealers and OEMs, but they also create huge opportunities for companies that can innovate. By developing solutions that meet customer expectations, automotive manufacturers can establish themselves as leaders and drive loyalty. Those that fail to do so risk losing valuable customers. The time to act is now.

OEMs Need to Build New Capabilities

While some consumers prefer the one-to-one service of a sales representative, many want to complete all or part of their purchase online. For example, they may wish to use the dealership website to value their trade-in vehicle, get pre-approved for a loan or calculate monthly payments before visiting the showroom.

Using digital retailing solutions, OEMs can create seamless transitions from an online to a physical sales experience. However, it will take time and money to develop these capabilities and for OEMs to adopt new business models that rely on them.

Automotive digital retailing also requires that the OEM invest in new automation and data intelligence to support a hands-off, fully online end-to-end vehicle purchasing experience for consumers. This will require a different mindset and culture for the company, including an appreciation of the value of reinvesting profits to fund innovation. It will also involve retraining staff and embracing the shift to an omnichannel approach. These investments will help the company differentiate itself and attract customers.

OEMs Need to Reimagine the Vehicle Buying Process

A digital sales model that allows consumers to experience vehicles and take their next steps at home or on the go without having to visit a dealership can provide greater transparency and control for OEMs. However, it also requires that OEMs build and scale solutions that will thrill customers and generate revenue – an ambitious goal given the complexity of the automotive industry and the number of touchpoints in the car-buying process.

Many consumers are dissatisfied with the traditional automotive purchasing process and expect to be able to research, configure, price, and purchase vehicles online. But a vehicle is an expensive and complex purchase, so some buyers still want to visit dealers to complete certain steps of the buying process. To help them make this transition, automotive innovators are introducing low-stress in-person experiences that can serve as touchpoints on a nonlinear buying journey. These can include virtual showrooms, video-based test drives, and home delivery of a purchased vehicle.

Leave a Reply

Your email address will not be published. Required fields are marked *