How digital and electrification is driving the transformation of the automotive customer experience

The way we buy cars is changing. Where once engineering prowess was the differentiator, buyers are increasingly judging original equipment manufacturers (OEM) on their customer experience. In fact, 78% of consumers consider the experience they receive as either a “very important” or “somewhat important” factor in choosing where to buy a car.

Three companies changing the car customer experience

This might not seem new. After all, the experience of buying a car from a dealer has always been a factor in purchasing decisions. What is changing is how that experience is being delivered. A McKinsey analysis of search trends suggests that just under two-thirds of car buyers under the age of 45 are likely to purchase their next car online. This aligns with what Rockar, an omnichannel automotive retailer that counts Jaguar Land Rover and Ford among its partners, has seen: it claims that 64% of the sales it handles are completed fully online.

This shift is here to stay. China’s NIO, for instance, sells primarily through its website and app. It operates only a limited number of showrooms, known as NIO Houses. However, these showrooms are less marketplaces for cars and more akin to what Car Magazine termed, “a private member’s club. Users can visit 13 NIO Houses dotted across the major cities in China, where they can use cafes, auditoriums, libraries and hot-desking areas for work or pleasure.” The brand also runs an advocacy points program, which can be spent on drinks, merchandise and events.

Lynk & Co, a global mobility brand formed as a joint venture between Geely Holding, Geely Auto Group and Volvo Car Group, is another example of a change in the automotive customer experience. It recently launched its “always connected” car, which uses Internet of Ihings (IoT) infrastructure from Orange Business Services to deliver connected services to drivers. The vehicle can be owned outright or leased on a monthly basis as part of a car-as-a-service offering. Like NIO, it has eschewed the classic showroom format for self-described clubs.

Then there is Tesla. CEO Elon Musk said back in 2011 that, “Purchasing a Tesla should be a delightful experience,” highlighting the company’s stated aim of reinventing car buying. Customer experience author Jon Picoult noted that the company’s “rave-worthy experience is shaped not just by the Tesla vehicles themselves, but by all the live, print and digital touchpoints that the company has with car buyers and owners.”

A matter of digital and electric

What is notable about these examples is that none of them existed twenty years ago, and while they have all progressed well beyond the start-up stage, they are still very much new players in the world of car selling.

Does that mean only new entrants can dramatically change the customer experience? No, but as with all industries, it is usually disruptors, unencumbered by legacy infrastructure, that redefine what a good customer buying experience looks like.

So, established OEMs and their routes to market need to adapt to keep up with these disruptors. If that was simply a case of digitally transforming the relevant aspects of their operations, it would be one thing. But there is another factor that is shaping the automotive industry and having a profound influence on the customer experience: the electric vehicle.

It’s no coincidence that Tesla and NIO are not only transforming the customer experience but doing it with electric vehicles. Over time, the parts of any vehicle, whether powered by electricity or fossil fuel, will degrade. Yet while combustion engine-powered vehicles can have all their parts replaced, the vehicles themselves are not really designed to be endlessly updated. While a well-maintained petrol or diesel car can last for many years, that requires significant care on the part of the owner.

Electric vehicles, on the other hand, are increasingly designed to be upgraded. Batteries are being designed to be replaced. The technology is developing so quickly that consumers want to upgrade their batteries to access longer range and faster charging. And if every part of the vehicle can be replaced, the car is no longer something that needs to be swapped every five years or so for a more efficient or updated model but is a collection of services that can be upgraded as and when required. Or, as McKinsey puts it, “a smart device on wheels where [EV customers] can work, socialize and be entertained—and which will constantly improve.”

The recurring services pot of gold

This means that the value of the customer shifts from being purely transactional and at the point of purchase to more relationship driven over time. The initial outlay will still be significant, but rather than everything needing to be agreed upfront, customers can go back and add more to their package over time.

This could significantly impact OEMs’ bottom lines – McKinsey estimates that recurring services could boost revenue from car sales by 30% in the next decade.

In addition to recurring revenue, this ongoing relationship gives the manufacturer data: information on how the owner is using the vehicle, what features they rely on and what they don’t. This in turn informs updates and new services, so the experience is continually personalized, leading to greater levels of customer loyalty.

The data driver

Established OEMs are not locked out of this. Whether through their own EVs or other connected vehicles, they too can gather significant levels of customer data. This can then be used to inform everything from the online research and buying journey many prospects go on to the services installed into the car itself.

It’s not just vehicles that provide data, of course. Other areas to look at include partnering with car review sites and online media to acquire data that can then inform and activate a buying journey. For instance, viewing a certain car online should trigger a path that leads to further, more detailed information on the vehicle in question to the manufacturer’s website for full specification and personalization opportunities. This hopefully would eventually lead to a buying moment, whether at a dealership or direct.

Knowing what the expected experience is

Selling direct via an app, delivering a connected omnichannel experience, using a classic dealer-based showroom model – whichever routes OEMs choose, the days of the car being the sole selling point are numbered. Customers expect more. Generations that have grown up with instant access to whatever they want are becoming drivers. Whether they own outright or pursue a car-as-a-service model, these consumers are going to choose to buy from sellers that deliver exceptional experiences. The challenge for OEMs is to know what that looks like. The data they gather will be key to unlocking this.

The automotive customer experience is just one aspect of the mobility revolution. As transport and travel services evolve, a new blueprint for the future of mobility is required. To find out what that looks like, take a look at our whitepaper on The Mobility Blockchain Platform.

Josh Turner
Josh Turner

I am a technology writer with a decade of experience in business, technology and logistics. From starting off my career writing questions for a TV quiz show, I’m now spending my time looking at how the world of business is going digital and transforming a variety of sectors and industries.