The role of online channels within the automotive sales industry is currently limited to information gathering with few links to sales. The OEMs need to integrate this channel in their sales concepts as a fully-fledged option as overcoming this challenge has the potential to vastly improve sales performance in some customer segments. Arthur D. Little’s (ADL) viewpoint “Online Sales in the Automotive Industry” highlights the opportunity for online car sales by evaluating barriers and identifying solutions.
For many people, the act of buying a new car is transitioning from a very emotional purchase to a rational decision; a car will simply become part of their mobility package instead of a status symbol. ADL’s survey of 1,000 customers across Europe, America and China show that a significant proportion of customers would buy a car online, with Chinese customers twice as likely to do so as their European and American counterparts. However these customers want more interaction along the sales process. Interestingly, while price remains the most important factor for American and European customers, Chinese customers are more interested in exclusivity.
“Online channels are increasingly used in numerous industries and automotive companies can tap into these benefits” says Andreas Gissler, Director for the Automotive, Manufacturing and Mobility Group at ADL. “The sales process is inevitably expanding to the digital world and automotive companies need to realize it has the potential to significantly lower operating costs across the sales process.”
Opportunities to switch between sales channels during purchasing, support from call centres and the use of external providers throughout the sales process will be of utmost importance. Despite the clear demand for online retail, it is also evident that OEMs need to consider implied risks when extending their sales channels. Legal concerns and risks related to the company’s distribution policy and the dealer partnership must be analyzed. Nevertheless OEMs should not offer their whole, freely configurable product portfolio online. Moreover a set of vehicles from stock or pre-configured vehicles are more suitable for the online offering and will avoid full price transparency, price fights and cannibalization with other product channels especially the dealer network.
Despite certain risks: online sales of new cars offers revenue and profit potential to the OEMs, making the development of a virtual sales channel inevitable.
The full report can be downloaded at
www.adl.com/Online_Sales