Automotive OEMs see the digitization of their businesses – everything from selling cars online to remote service and connected vehicle technology – as a key to future profitability.
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According to Frost & Sullivan’s recent report, “OEM Disruption in Automotive Retail and Aftersales,” vehicle manufacturers will combine connectivity, e-tailing, direct parts sales and service marketplaces in a strategy to improve their share of the aftermarket.
This is also playing out on the front-end of car sales. “The links between the bricks and clicks are increasingly blurred,” says Dr. Julie Saini, global vice president for mobility aftersales and retail at Frost & Sullivan. “Customers want an omnichannel, anytime, anywhere shopping and service experience.”
According to Frost & Sullivan, the automotive industry invested nearly $20 billion in digital transformation initiatives in 2015, including smart manufacturing, connected living/Internet of things technologies, security, big data analytics, digital retailing and mobility.
“The future of auto retailing is digital,” Saini says. “Digitization allows for the display of an unlimited product range in a relatively small showroom space. This is expected to continue as more omnichannel capabilities become the norm in the industry.”
Customers want the same type of experience with their auto dealer that they get with Netflix or Amazon.com. BMW, for example, is moving toward online car sales. Carwow in the UK, meanwhile, allows customers to configure their ideal vehicle and then get quotes from multiple dealers.
Hyundai dealer Rockar is another good example. The company sets up business in shopping malls with a few models on display and minimal staff. Customers can purchase a car online in just a few minutes. According to data from Frost & Sullivan, the company boasts a 96 percent customer satisfaction rate.
The future of parts and service
Digitization is also affecting parts and service. “Every aspect of the business is being changed in some way or another,” says Kumar Saha, director of aftersales mobility at Frost & Sullivan. “From order fulfillment and warehousing, to how tires are sold, or how services or parts are sold.”