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Health check: What’s the future of car sales?

The pandemic has caused big shifts in car buying, as retailers have adapted to click-and-collect services to keep their businesses going. But is the future really a digital one or will we still be visiting showrooms to buy our cars?

To discuss how we will buy our cars in the future for our latest Business Live webinar, Autocar was joined by Lex Kerssemakers, head of global commercial operations at Volvo Cars; Daksh Gupta, CEO of the Marshall Motor retail group; and Michelle Wells, marketing and communications director at Keyloop, which provides digital services for car retailers.

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What’s been the biggest challenge in switching to a digital world?

LK: “Within Volvo, we want to create the best online/offline experience possible. At the end, it’s up to the consumer as to where he or she wants to go to buy, subscribe to or loan a car. So our challenge as a manufacturer is to ensure we have the systems in place, we have the digital infrastructure behind every moment the customer is entering our brand. The entrance point can be home, a Volvo retailer or a Volvo pop-up store; it doesn’t matter. And our biggest challenge is to make all those systems digitally connected and give them one language to get one message across.”

DG: “Yeah, I completely agree. We don’t know whether it’s going to be between 0% and 100% online or physical. I think it will be a hybrid of the two. And the key thing is that it’s about making that experience for the consumer seamless.

“Throughout the past 30 or 40 years, it has been exactly the same process. What has changed is the digital arena and how that influences the consumer and how they have the data at their fingertips. And I think it’s quite a difficult process for a consumer to navigate through.

“That’s not necessarily because manufacturers make it difficult or we as retailers make that difficult. Part of it is regulation: if you look at the number of forms that a consumer has to go through – the regulatory environment, the invoicing VAT purposes, the FCA requirements – it’s quite a tortuous process for them.

“I think one of the challenges is with previous ownership and with dealer management systems and their lack of investment. It’s why you have a proliferation of all these third-party software companies coming together and then [being] bolted on, which makes it even more complicated.”

MW: “I think that’s fair. One of the challenges the industry has is that it has a lot of data, but it’s not necessarily easy to turn that data into insights – things that are as simple as ‘I just got a lead from Carwow’. Did that turn into a sale?

“From a consumer perspective, the move from a product-centric approach to a consumer-centric approach is a big challenge. Consumers are a lot less brand-loyal than they might have been previously, and I don’t think anyone has really solved the challenge in understanding the features that are really important to a consumer. That’s a real gap.”

Keyloop’s research says 90% of people research a car online. Are they finding what they’re looking for, and are customers turning up better informed?

DG: “Selling has never been easier, quite frankly. I think it’s better for consumers, because access to online research makes it significantly easier for them. So the customers are literally walking in and saying: ‘I know that I want an XC90 and I know that I want it in this particular colour.’ What online doesn’t quite give them is that final element: what’s the stock availability, what’s the driving experience? Our job is to help them close those final questions that online can’t.”

MW: “The research certainly backs that up. So, 62% of consumers across the six different markets we surveyed preferred the hybrid model in terms of research online but still visited a dealership as part of the process.”

What about car subscription services?

LK: “We will extend our number of online offers, and now we will go with Care by Volvo. It’s very important that, at the end, the customer needs to decide where he or she wants to go. Some feel very comfortable with pushing the button, while others want to touch, so they go to the dealership. I keep on emphasising that I don’t think there will be a world where everybody will order cars online.”

Are people happy to buy cars without taking test drives?

LK: “We see that, yes. If I go back to our Care by Volvo, we achieve 90% conquest sales. Only a small percentage are going to the dealer for a test drive. Instead, they go into the dealer to pick up the car. So they enter a dealership yet feel comfortable enough to subscribe to that car without a test drive. But it could also depend on the make; I think Volvo is a rather trustworthy brand.”

DG: “I think it will vary depending on the commitment that customer is making.”

Do huge dealer showrooms still have a future?

DG: “I think you’re going to get consolidation. There are [around] 40 manufacturers [selling cars] in the UK. As an operator, that isn’t sustainable. So I think we will see consolidation at manufacturer level. We’ve seen that recently, with PSA acquiring Opel [and Vauxhall] and then merging with FCA [to form Stellantis].

“There will be a rationalisation of the number of retail points as well. Volvo is a great example. There are around 96 or 97 Volvo retailers in the UK. If you look at some of the other premium brands, like Mercedes or Audi, they operate with around 110 or 120 retailers in the UK. But if you look at some of the other brands, particularly some of the volume manufacturers, they have double the network size, despite the fact that market shares are probably less than some of those premium makes. So you will see a natural reduction in the number of retailers. However, while the number of retailers is rationalised, throughput per site will go up. Therefore you will need these bigger sites.”

Are online platforms like Cazoo and Cinch pioneering a simpler, digital way of selling cars?

MW: “From a consumer perspective, I can see that perhaps some of these disruptors do add real value, because what they’re looking to do is take some of these frictions in the car-buying experience and turn it on its head. But from a retail perspective, I think it’s about understanding each platform individually and what they bring.

“Could they be a partner [for Keyloop]? For example, working with such a firm, you would assume that they can bring you leads from perhaps a wider prospecting area than you might have had historically. So I don’t think you can have a one size fits all to online platforms. They all have to be taken individually and considered for what they bring or potentially what they take away.”

DG: “If you look at some of these pricing platforms, one of the reasons that they exist centres on the point that you made around pricing and the ability for customers to take a look at the price: to make it more transparent. But this is something that Volvo did and we’re doing as well, hence why we’re standing behind a 14-day money-back guarantee. If [traditional retailers are] going to be far more transparent on pricing, then you have to ask why these disruptors exist.”

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