This article is part of the special topic "Future Mobility".
RETAIL STRATEGY Physical and virtual worlds collide to transform car shopping
The internet has fundamentally changed retail. In response, OEMS and car dealerships are providing digital and virtual retail opportunities to view, personalise, and buy cars. They’re moving beyond traditional marketing efforts to maintain relevance and prominence at a time when people are encouraged to consider alternative modes of transport.
Buying a car is a significant investment for almost everyone and OEMs are responding by cementing relationships for current and future consumers in preparation for long-term relationships that include everything-as-a-service updates and repairs and expansions of a car’s capability as technology advances and the laws allow it. Let’s take a look at how OEMs and car dealerships are responding to the challenge:
The last decade has cemented online shopping platforms as a respectable way to make digital purchases. OEMs such as BMW, Landrover, Tesla and Lexus are already offering subscription services of a variety of tiers including the choice to swap cars according to the activities of the day with the click of an app. Tesla’s success selling directly to consumers demonstrates that people will buy cars without using a bricks and mortar car dealership.
The pushy used-car salespeople might become a thing of the past, replaced by online vendors such as Carvana, which enable customers to buy a car online in as little as 5 minutes for next day delivery. The company uses patented, 360-degree vehicle photography to ensure buyers get a complete visualization of their prospective purchase. For those seeking a more physical experience, the company also operates a series of multi-storey car vending machines. Customers use a code, or in certain locations a special coin, to retrieve their vehicle.
Lucid motors has followed the trend for a deeper, personalised digital shopping experience that links the virtual and physical worlds (otherwise known as the bricks and clicks) with the Lucid Air Design Yours Configurator. It features photorealistic visuals and ray-tracing technology, the same tech leveraged in advanced video games. Further, the digital twin model of the Lucid Air is created from the data developed in designing the car itself, which means the configurator can be instantaneously updated as new features, colours, or materials are made available. After moving in-store to one of Lucid's Studios, customers can then use a 4K VR configurator to finalise their choices. Customers can also opt-in to have their information used to produce personalised visual content-including images, videos, and interactive customer pages.
The transition to virtual retail is not an easy one
In the US, the first social advocacy platform has been created to exist car dealerships with their transition from in-person to digital sales. Quantum5 was developed specifically to teach key people skills and behavioral tactics to work in the void left when on-the-lot car buying went digital overnight during the COVID pandemic. The company notes that while lecture and video-based training tools have been enough to keep up with test drives and showroom appointments until now, dealership sales teams have quickly realized outdated training techniques do not work for today’s dealership team or the digital buyers and today’s dealership needs to be able to sell value throughout a car’s lifetime.
A showroom with no cars?
Car showrooms have fundamentally changed. In anticipation of the Tokyo Olympics, Nissan launched the 10,000-square-meter, zero-emission Pavilion exhibition space in Yokohama, outfitted with solar panels and supplied with renewable hydroelectric power. However, there’s not a physical car sight. Visitors can eat at the Nissan Chaya Cafe, operating on power supplied by Nissan LEAF electric cars and solar energy. They can also enjoy virtual experiences in Formula E electric street racing or go for a ride in the Nissan Ariya EV crossover. In front of the Pavilion, a Mobility Hub offers a variety of services, including EV car-sharing and rental bicycles. Electric vehicle drivers can discharge power from their car’s battery pack to pay for parking while visiting In its home market of Japan, Nissan has forged agreements with the local government to utilize Leaf electric cars as mobile batteries. With this setup, the vehicles can supply energy during calamities or natural disasters. Nissan is also working on revitalizing EV batteries to illuminate streetlights within the city.
Tour guides and curators, not car salespeople
We are witnessing efforts by OEMs to cement their brands as part of an aspirational lifestyle beyond marketing efforts like TV advertisements and sponsoring exhibitions and events. Lexus has created Lexus Intersect, buildings in Tokyo, Dubai, and New York which are a combination of coworking and meeting spaces, restaurants and cafes, retail shops, galleries and creative precincts which according to the company offer “a sensorial experience, reflecting the brand’s design and environment ethos. Neither dealership nor traditional retail space, guests may engage with Lexus without getting behind a steering wheel. It offers guests a sense of Lexus, and the lifestyles it embodies.”
You can buy a car, but you can also book a meeting space, attend a workshop, buy locally made clothing and art work. It demonstrates a brand building a relationship - even with those who have no interest in cars. In Berlin, Volkswagen has created DRIVE, a curated space which enables visitors to find out how the Group’s brands are dealing with issues including the environment, sustainability, innovation, alternative power trains, technology and design.
Perhaps the best known and earliest example of brands creating an experience would be Autostadt in Wolfsburg, created in 2000, which attracts over 2 million people per year. It's a 25 hectare space which encompasses 7 pavilions and includes a hotel, cinemas, art spaces, a digital learning lab, 6 restaurants, and a plethora of museums and exhibitions. People can take a car for a drive or book car or motorbike training. Customers can pick up their new car directly off the factory floor.
Ultimately, it is unlikely that cars will only be bought and sold digitally. Many people want the tangible pleasure of driving away in the car after purchase. While people might shop online, they still like to window shop. Thus, there are plenty of efforts to combine the virtual and physical where buyers can do most of the hard work such as documentation and financing online and finish in the dealership showroom. A car is not a spontaneous purchase for most, but OEMs are doing their best to keep their brands front of mind for current and customers of the future and build relationships over a lifetime.