What will the future hold for OEM dealerships?
A lot has changed since 1913, when Ford Motor Company implemented the world’s first automotive assembly line to mass-produce vehicles for consumers around the globe. With this came dealerships that allowed potential automobile consumers to consider and test drive cars before making an acquisition and selling their old vehicles. The rapport between Original Equipment Manufacturers
A lot has changed since 1913, when Ford Motor Company implemented the world’s first automotive assembly line to mass-produce vehicles for consumers around the globe. With this came dealerships that allowed potential automobile consumers to consider and test drive cars before making an acquisition and selling their old vehicles.
The rapport between Original Equipment Manufacturers (OEMs) and car dealerships has remained the same for quite some time. OEMs work directly with car dealerships around the world to market, sell, and service their cars. In contrast, dealerships rely on OEMs to provide them with vehicles and their parts.
However, since then, the world, along with society and culture, has undoubtedly transformed once again. Most notably, the advancement of technology and the internet. While traditional car dealerships have remained mostly the same, people are beginning to turn to online options to purchase their vehicles, causing a shift in customer experiences and the purchasing/selling process.
So, what does this mean for OEM dealerships in the future as consumer expectations change? And what can traditional car dealerships do to prepare for the inevitable shift as technology continues to advance?
We’re going to be delving into these questions in further detail throughout our article so businesses can begin preparing for the future.
Keep reading for more information so you can adequately prepare your business for what’s next to come.
What role do car dealerships play in the future?
Digitization of traditional business models is becoming more common, regardless of the economic sector they operate in. Therefore, it is up to companies, including car dealerships, to begin strategizing ways they can remain an essential role in the consumer purchasing process.
Fifteen years ago, viewing and purchasing a vehicle online wasn’t possible. Today, 59% of Canadians looking to buy a new car will begin searching online before they step foot into a dealership. Online vehicle companies such as Canada Drives, Clutch, and Car Nation Canada are all examples of dealership business models that traditional dealership owners need to consider.
What these businesses have in common is a seamless purchasing experience that empowers vehicle buyers to search for and buy a car from the comfort of their own homes. No pressure from salespeople to purchase a vehicle the same day, no waiting period for lender approval, and no lengthy paperwork to complete at once. So, why exactly is this important? It’s important because it empowers buyers to be in charge of their decision-making process from start to finish, which in turn, streamlines their purchasing experience.
Therefore, traditional car dealerships should consider:
Online and In-Person Experiences
Offering buyers the chance to select whether they would like to purchase a vehicle in person or complete the process online. You can do so by establishing an automated platform that works in real-time with consumers to guide them through their decision-making process without making them feel overwhelmed. For example, offering suggestions on vehicles that match their specifications and more.
On the other hand, should a buyer wish to purchase a car in person, provide them with the option of scheduling an appointment to test drive a vehicle, speak to a representative about financing options, and have access to your current on-site vehicle inventory to remove ambiguity while ensuring the process remains efficient.
After spending time on the lot and finally agreeing on a vehicle, no one wants to spend the next 30 minutes to an hour filling out paperwork. So, dealerships and lenders must create ways to reduce the waiting period and the amount of paperwork that comes along with purchasing a vehicle to keep your customers happy.
All in all, consumers want fewer in-person interactions, and many feel that the majority of contact between them and a car salesperson can occur online. Therefore, to stay in tune with consumer needs and expectations, finding strategies to digitize will keep car dealerships competitive and relevant in the future.
taq Automotive Intelligence is an innovative technology that provides solutions to dealerships by helping them measure consumer engagement to improve and streamline customer experiences. By doing so, dealerships can begin preparing for the future while remaining at the forefront of industry advancement. Here is a closer look at how taq Automotive Intelligence can help:
- Measuring lead response times
- Identifying quality lead responses
- Matching sales
- Analyzing data to improve customer loyalty
What does the Automotive Sector have in store for the future?
In the future, digitization and connected cars are going to be at the centre of the Automotive Sector of the economy. Car companies will begin designing and manufacturing vehicles that will ultimately become more connected with more AI. In addition, as the Automotive Industry progresses towards focusing on electric vehicle production, we can expect to see a shift in global supply chains as they will need to become more segmental and adaptable to the exponential advancement of technology.
In addition, because the Automotive Sector will likely follow technological trends, the workforce will also need to change along with it. For example, training will need to focus on new EV technology and its software. Therefore, businesses must look towards finding solutions that allow them to seamlessly train current employees while attracting new ones that have technological educational backgrounds.
Nonetheless, to remain current and on-trend, automotive businesses at all levels of the global supply chain must get on board with strategizing for the future sooner rather than later. Innovation is at the forefront of success, and it is up to industry leaders to remain flexible and open-minded when facing the inevitable changes an altering automotive landscape will experience, especially when it comes to preserving existing operations while maintaining their profitability. Thus, it is crucial to find the right balance between remaining profitable while positively disrupting your own business model enough that you can confidently manage these shifts.
What are the most recent trends for OEM dealerships?
Current trends for OEM dealerships focus on:
- Developing remote software update capabilities to reduce in-person contact.
- Fostering direct consumer relationships through subscription models that allow consumers to pay a monthly subscription fee or pay-per-use for vehicle access.
- Taking back control over consumer relationships from dealerships to create direct relations without having dealership representatives, can take profits away from traditional dealership locations.
To tackle current trends, OEMs and dealerships need to reconsider their revenue models and the relationships that have remained the same for the last 100 years.
Will auto dealerships be obsolete in the future?
Traditional car shopping experiences are going to be a thing of the past, whether we like it or not. While opportunities for revenue increases are becoming more available for OEMs, the profit margin for traditional dealerships is beginning to decrease. The following services formerly under the discretion of dealerships are most likely to change:
- When a car protected under warranty is repaired, the dealership that works on the vehicle is paid by the OEM that manufactures the car. The dealership professionals will choose what is needed before speaking with the OEM.
- If a consumer requires an upgrade for their vehicle software, they visit a dealership to perform the update, which is also paid for by the OEM.
Dealerships are the point of contact between consumers and OEMs. They are directly responsible for building good relationships. These features effectively trigger the relocation of revenue away from dealership networks and channel it towards OEMs. This is because dealership profit margins and opportunities for customer interaction will likely be reduced as consumers seek to use online platforms as opposed to in-person aid.
This doesn’t necessarily mean that dealerships will be completely obsolete in the future. Essentially, dealership owners must find new ways to generate direct relationships with consumers and consider changing their business model, including the services they offer, the chance of remaining a critical player in the changing automobile industry landscape.
What can OEMs do to help future dealerships?
Demands in the way consumers purchase and own vehicles are changing. From electric cars to car share options, to help dealerships in the future, OEMs need to begin examining the following:
- Providing incentives to dealerships that enable them to drive more online traffic to digital showrooms.
- Rewarding dealerships when consumers engage with the brand, such as test drives or signing up for dealership subscription services.
- Redesigning dealership space to enhance experiences and optimize the desires that consumers purchasing a vehicle want, including looking into methods that reduce carbon emissions produced by dealership locations.
- Determining whether dealerships in specific areas are appropriately distributed to meet demands.
- Offering consultation services to ensure partnered dealerships have the required knowledge and expertise to perform optimally.
All in all, OEMs need to focus on establishing solid relationships with dealerships to ensure they can meet the changes and develop prosperously over time. In addition, they must allocate finances that won’t necessarily increase revenue in the short term but rather as a long-term agenda.
taq Automotive Intelligence provides OEMs and dealerships with innovative software solutions that allow businesses to manage and schedule leads, reach out to credit lenders, and organize customer portfolios while tracking performances to increase customer retention and more. With the help of the team at taq Automotive Intelligence, automotive companies, from dealerships to OEMs can begin preparing for the future while streamlining their daily operations to increase productivity.
For more information on how taq Automotive Intelligence can help you settle into the future, visit our website for more.