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5 Challenges in the Automotive Industry - TLS Automotive Summit

5 Challenges in the Automotive Industry - TLS Automotive Summit

Fresh off the heels of the TLS Automotive CX Summit in Los Angeles it’s clear that this is an intriguing industry which has many complex concerns, but is at heart it’s no different to any other retailer or manufacturer. It just happens to have a number of layers which give it some extraordinary challenges.

Manufacturers control the industry’s overall marketing strategy. If they come up with a week-long test drive program or a certain return policy, for example, the dealer must abide by it. Dealers, on the other hand, are responsible for their own advertising and data. They sell cars but their profits actually come from service packages and financing. They work closely with the manufacturers on this but have their own independent businesses, targets and objectives.

And that’s just scratching the surface of this complex supply and customer service chain and it was fascinating to hear about the challenges and innovative solutions in this industry during the auto summit. Here are five key takeaways which we picked up while hanging out with the auto crowd:

1) Who Owns the Customer?

It’s a bit chicken and egg, the question of who owns the customer - the manufacturer or the dealer? Actually, the question isn’t so much about who owns the customer but rather when do they own the customer?

The manufacturer only sells to channels but advertises directly to consumers via every conceivable platform. They have resources far beyond any single dealer – so when does the lead move beyond the nurture of the manufacturer and into the hands of the dealer? At the end of the day, a sale is a sale, but how many are being missed because of a poorly defined handover process?

Customer experience begins long before a person ever decides to buy a car. A consumer sees themselves in that Jaguar or that Jeep or that Mustang long before they make the leap to actually buying. So, it’s important that manufacturers and different dealerships have the ability to share data so that customers have a cohesive experience throughout this journey. Dealerships will need to be on board, but this has to be owned by the manufacturer, as they’re the ones with the means to invest in the proper infrastructure to make this happen.

2) How Do You Put the Customer First?

It used to be that when someone wanted a new car they’d go to ‘their guy’. The only difference in the ‘guy’ was whether he was a ‘Chevy guy’ or a ‘Ford guy’. As things developed, there was more choice, digital got involved and the ‘guy’ disappeared. But with the amount of data available, today’s salespeople can once again become someone’s ‘guy’.

The trouble is, there’s still a huge disconnect between the data available and the data being used. Over half (59%) of car buyers spend time online researching their cars before ever interacting with a dealer . Most prospects are armed and ready to do business but the dealer doesn’t have the data necessary to building a relationship. Until there’s a way to connect the online experience with the in-person experience, truly putting the customer first will continue to elude dealers.

Retailers have been working on the perfect algorithm for great customer service for years. Some claim that Amazon is on the right track while others argue that a legacy store like Walmart has the inside track. Nonetheless, at the end of the day, manufacturers and auto dealers alike sit in the retail space. They’re trying to sell cars. So it stands to reason that the same technology which powers retailers can also have the same effect in the auto industry.

3) What Is The Art and Science of the Deal(ership)?

Consumers want convenience but buying a car isn’t quick. In fact, the average time that it takes to purchase a car in a dealership is around six hours. And that doesn’t even include the research done beforehand.

According to Autotrader, only 4% of shoppers prefer the current car buying process . Nearly three quarters (72%) of car shoppers would visit the dealership more often if the buying process were easier.

Solutions are shaping up quickly. You can find financing paperwork available online, more seamless test drive experiences, and even someone who will pick your car up for a service. But, as technology advances, the dealership itself will likely become more and more virtual.

Much like the ‘guy’ is no more, so is the traditional way of buying and selling cars. There will always be an art to the deal. Salespeople aren’t going anywhere. But, much like animation has gone digital, so too is the auto dealership. The ‘artist’ is no longer a slick talking guy with a firm handshake, but someone who understands the multichannel approach which their customer has taken and that he’s a part of a process which is now much bigger than it was even just a decade ago.

4) How to Handle the Merger of Software and Auto?

It’s clear that the auto industry is taking a turn toward the tech industry. Companies like Uber and Lyft are becoming a viable transportation source instead of purchasing a vehicle. Another alternative is car sharing services like car2go.

From a service perspective, subscription options from dealers show that the industry is starting to be run from apps rather than gas. New cars feature voice technology and sensors so that service departments have real time access on how a car is performing. Electric vehicles are turning mainstream and will autonomous vehicles be far behind? The auto industry wants to get in front of these trends but the solution is proving elusive.

Technology has always been a driver for the auto evolution, so this is nothing new. The pace of the technological evolution is only highlighting how difficult it can be for any manufacturer to keep up. I saw some extraordinarily smart people in the room in LA and it’s apparent that they are going to do what it takes to keep up. The auto industry doesn’t have a lack of ideas, it’s figuring out where to start that is the biggest challenge.

5) Is the Future Car Free?

This question is a bit of a bonus but this is one of the most interesting ideas from the week. Just as we use the social media platforms for free today for the cost of our data, could a car eventually be used in the same way?

Take the time to think about all the data that your car can gather from you, which with voice technology, is a lot. As auto and tech continue to merge, what your car knows about you will only increase. Would you ever trade your privacy for the use of a car? It’s more than just a possibility, this is already being considered.

Although this is a very personal decision, I have a feeling that this would be a very popular trade-off for a car, especially as most people already possess mobile devices which collect roughly the same information.

The auto industry is unique, but its uniqueness is somewhat of a self-fulfilling prophecy. In one session, it was mentioned that the average consumer isn’t aware that the manufacturer doesn’t own the dealership, which further frustrates the customer experience, as consumers don’t know to be sympathetic to their plight. As the auto industry progresses into the future, software will not be its salvation, rather its partner. A solution that de-silos the industry and allows the customer to be placed front and center throughout the buying process would be the most practical place to begin.

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Douglas Eldridge Douglas Eldridge

Doug Eldridge has worked in marketing and communications for fifteen years, with experience in marketing agencies and software vendors, he’s written for CMSWire, eContent Magazine and various industry blogs. Doug is based in Denver, Colorado, is an alumnus of censhare US and while he is not writing, he is a typical Coloradan, which means a lot of time in mountains and breweries.

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