The commercial model for selling cars is shifting, with manufacturers adopting the direct-to-consumer (also know as the agency model) trend being witnessed by a wide variety of business sectors as people look to simplify the buying process.
This is a sea change for vehicle producers. It’s also complicated to navigate in terms of the agreements that will still be required with dealerships.
The net result is that automakers are experiencing major and sustained pressure on their bottom lines.
Tackling the industry’s shifting vehicle retail sands requires a three-pronged approach: sell more; sell better; seek out new sales streams.
Of course, it looks obvious on paper. But far from being a rousing sales team pep talk, these concrete steps form the basis of the modern motor trade. Let’s look at them in detail.
This is not the obvious admonishment to sell more vehicles (although that of course is important); rather it focuses on increasing the ‘extras’ sold to someone who has purchased a car.
Currently a buyer visiting the manufacturer’s website a week after placing their order is likely to be offered another car. This doesn’t work for anyone.
Contrast that with a consumer buying a car who, on returning to the website, is shown a range of available ancillary options — extended warranties, accessories, service specials etc (and even specific offerings such as seasonal items, based on their geographic location — snow-tires in winter for example).
This personalized approach, undertaken in close collaboration with dealers, extends the carmaker’s relationship with the buyer from the current period of one to two years, potentially to between five and eight years. And by increasing this customer lifetime value, it opens up a range of revenue-generating opportunities that add value to the end user.
Looking outside the automotive sector provides further inspiration on how to ‘sell more’.
Telecom company Orange, for example, sells a wide variety of accessories such as earbuds and phone cases as a result of the personalization of its website and after sales advertising campaigns.
And travel specialist Pierre & Vacances Center Parcs, operating a voucher system as the pandemic forced people to cancel their holidays, encouraged travelers to supplement trips planned for the future with incentives such as bigger rooms and additional activities.
Making these as appealing as possible required the company to minutely analyse its customer data in order to offer experiences that were relevant to different customers; leveraging the initial ‘big’ purchase to position the follow-up messages in order to sell more to already acquired customers and realise more profit is a key piece of the most effective digital strategy.
Currently carmakers control only a small part of the purchasing experience.
A potential buyer might approach the manufacturer, only to be guided to the nearest car dealership, where they test drive the car, negotiate the price, agree a sale, provide their details and with whom they arrange subsequent services. This information is all vital — but it belongs to the distributor.
However, as DTC