Revolution in Car Retailing

ARCHIT HOODA

The car industry is finally waking up to the realisation that what happened to brick and mortar stores in the publishing and electronics industries is now at their door steps. A recent study suggests that about 5 percent of all cars will be sold online by 2020. Car companies are already starting to sell their cars online, such as Ford UK that makes deals through its website (http://www.fordretailonline.co.uk/) and similarly Dacia (http://www.dacia.co.uk/) that has shown enormous growth in Europe by pushing its online sales channels with dealerships used as a backup. New car entrants like Tesla process online.

Audi is one of the car companies that has made this vision a reality, opening digital showrooms in London and Beijing. The London Audi City showroom in Green Park, for example, is the smallest Audi dealership in the UK, measuring a mere 420 square meters of display space, featuring around four vehicle models. It has, however, been a huge success, with over 50,000 visits in its first year of operation, selling an average of seven cars per week. Visitors are greeted by customer relationship managers, who consult on the brand and advise how to digitally create a car from several hundred million potential configurations that allow customers to see it come to life. This revolutionary approach has led to a 60 - 70 percent increase in new car sales, with 75 percent of orders placed by first time Audi buyers and customers buying cars at 120 percent of the price due to high uptake rate of optional features. But most interestingly and absolutely mind blowing, is that 50 percent of customers in first half of 2013 ordered vehicles at their London Audi City store without a physical test drive, having ‘experienced’ their future car in an entirely virtual environment.

Physically displaying only three to four cars (versus around 15 to 50 cars in a conventional dealership) these future dealerships will have a virtually unlimited retail space, aided by digital tools, such as interactive full-sized power wall configurators, which will be possible to display an entire model line-up, with an infinite number of optional configurations. Customers will be able to create virtual cars and transfer them to the full-sized power walls to experience them in a 1:1 scale, such as how it is done on the previously-mentioned Audi showroom. Furthermore, as with  the virtual vehicle on-board experience (which is expected to be part of the digital showroom in the near future) comes the reality of driving these customised cars through virtual landscapes.

This new breed of urban dealerships is expected to record an extraordinary high number of visits and become a one-stop-shop aimed at providing a unique brand experience. The digital flagship store will not only be a platform to experience or buy vehicles during your ‘lunch break’, but also to sell vehicles and to drive leads into conventional dealerships. The dealership network as we know it now will change dramatically within the next few years.

A challenge posed by this change for car companies is the migration of the so-called ‘online/offline customer experience’. Nowadays the customers walks into a dealership with their homework done. They will have browsed websites, read reviews, visited social networks and community forums – and at that point, the role of the dealer will no longer be that of an information source, but that of a product experience provider. In order to avoid an anticlimax, dealers and vehicle manufacturers need to collaborate and facilitate a seamless transition from the online to the offline (dealership) experience.

Time will only tell us ,if we will create and order our virtual dream car over lunchtime to have it delivered online in a big cardboard box or through an unmanned aerial vehicle? Or will we dispose of showrooms and dealerships altogether and shop for our next car online?