How to adapt to the agency sales model: A 4-step guide for car dealers
According to an exclusive investigation by Car Dealer Magazine1, 18 car makers have already switched or are planning to switch to agency sales in the UK, while only eight have ruled it out completely. The rest are either silent or undecided. Agency sales model is coming and aims to significantly change the business model and large part of operations of a typical car dealership. The profitability, among other parameters, is under attack here. So how can a dealership adapt and protect its business?
The agency sales model is a new way of selling cars that is gaining popularity among car manufacturers and consumers. In this model, the car manufacturer sells the car directly to the customer via its own website, and the dealer acts as an agent who delivers the car and provides after-sales service. The dealer receives a fixed fee from the manufacturer for each car sold, instead of earning a margin from the sale price.
The agency sales model has several advantages for both the manufacturer and the customer. For the manufacturer, it allows them to control the pricing, distribution, and marketing of their cars, as well as to collect valuable customer data. For the customer, it offers a transparent, hassle-free, and consistent buying experience across different channels and locations.
However, the agency sales model also poses some challenges and risks for car dealers, who have to adjust their operating model and strategy to survive and thrive in this new environment.
So how can car dealers adapt to the agency sales model and maintain their profitability and relevance? Here are some recommendations based on best practices and expert opinions:
Focus on customer service and retention
The agency sales model reduces the dealer’s role in the sales process, but increases their role in the service process. Therefore, dealers need to focus on providing excellent customer service and building long-term relationships with their customers. This can help them generate repeat business, referrals, and loyalty. Dealers can also offer value-added services such as maintenance packages, accessories, insurance, and financing options to increase their revenue streams.
Embrace digital transformation
The agency sales model requires dealers to adopt digital tools and platforms to communicate and interact with their customers and manufacturers. Dealers need to invest in online presence, e-commerce capabilities, CRM systems, and data analytics to enhance their efficiency, effectiveness, and customer satisfaction. Dealers can also leverage social media, online reviews, and content marketing to increase their brand awareness and reputation.
Collaborate with manufacturers
The agency sales model changes the relationship between dealers and manufacturers from adversarial (or at least cautious and tense) to collaborative. Dealers need to work closely with their manufacturers to align their goals, strategies, and operations. Dealers can also benefit from the manufacturers’ support and resources in terms of training, marketing, technology, and incentives. Dealers should also provide feedback and insights to their manufacturers to help them improve their products and services.
Diversify your portfolio
The agency sales model may limit the dealer’s ability to negotiate prices and discounts with their customers and manufacturers. Therefore, dealers need to diversify their portfolio of brands and products to cater to different customer segments and preferences. Dealers can also explore new opportunities in the used car market, which is expected to grow in demand and profitability in the era of transformation towards electromobility.
The agency sales model is not a threat but an opportunity for car dealers who are willing to adapt and innovate. By following these recommendations, car dealers can create a competitive edge and a sustainable future in the changing automotive landscape.
Do you want to help with the digital transformation of your sales, marketing and aftersales care? Our consultants are happy to discuss your current issues. Contact us!
Care for dealer service customers has changed
Coronavirus has changed the rules for automobile repair shops, and not only in terms of operating hours. Due to the fact that some customers postponed the purchase of a new car and some could not or did not arrive for their regular service interval, in 2020 the usual course of things changed. How do you deal with these changes?
End of service as we know it
The lifecycle of automobile repair shops was quite simple until 2020 (and let’s add even until 2008/2009). A portion of revenue was more or less fixed and predictable, thanks to regular warranty inspections. These revenues increased with special events from car manufacturers, or with seasonal inspections as part of the importers marketing activities, while a significant portion of the revenues were from random but regularly occurring traffic accidents. More or less, after the end of the factory warranty, some clients would leave the branded service, usually part of a dealership, to a generic service. Some branded services have been trying to address this customer outflow for some time with discounts on their hourly rate for servicing older cars; not always successfully. Overall, however, there was not much pressure on the automobile repair shop. This was all true before the arrival of coronavirus. But what does the situation look like now?
Planning sales and service work is suddenly much more difficult
Most automobile repair shops have always focused primarily on capacity planning. The financial side of things then followed. However, now the situation has changed. It is no longer enough to do what you used to do to maintain service sales. Some customers suddenly cannot afford a complete service, some will look for cheaper alternatives including purchasing parts (typically brake pads, discs, and engine oil) directly. There is also an element of fear that at the service center, other, unexpected and expensive repairs may emerge. In addition, many companies are saving on service. A bit of certainty comes from cars that are operationally leased, where service was included in the price. Automobile repair shops still have high fixed costs and firing capable mechanics is not exactly the optimal solution for the future. What can be done then?
Even a car service will have to do marketing and sales
Marketing and sales need to be engaged. How? There is new demand for extending the lifecycle of a car. If you know which of your customers decided not to renew their fleet at the originally planned interval, it will be easier to offer them your service. Perhaps with some discount, but it is not necessary. Sometimes a well-targeted marketing message is enough.
Targeted marketing is the first step that will help auto services maintain as much of last year’s revenue as possible in 2021. Many practical insights into improving marketing and business practices can be gathered from receiving service technicians. Utilizing their input is a relatively cost-free way of improving the quality of your targeted marketing campaign.
Engage social networks
Social networks can also be a valuable source of completely new income. Today you will find there all customers of your competitors, whether branded or non-branded. You should not forget about the fan sites either. Today, fans of almost every carmaker have their own group on Facebook or on a discussion forum. There you will find a lot of owners of older vehicles who also want to keep their car in the best condition possible even if they no longer visit branded service centers. All that matters is just data analysis and the desire to experiment.
How to ensure sales for the service center? Join data with your dealership
You may have a rather relevant question about how to manage all this or set it up in your service center where practically neither sales nor marketing were done before. It’s simple, you’ll just need the appropriate specialized IT tools. An example of such a specialized solution is Automotive CRM from Konica Minolta. It can connect data from the service, social networks, and even your dealership (including all its branches, or other brands), giving you a 360° vide of each customer. And for any type of targeted sales or marketing activity, this is the most important thing to have. It can be implemented for the entire dealership and service center in just 30 days.
Sometimes in CZ, there is the management of the implementation. I dont think the separation is necessary and could just be implementation.
The end of internal combustion engines will change the rules of the game
Internal combustion engines are nearing the end of their lives. In Europe, a deadline of 2035 has been set and, in the US, they have begun talking about a similar date to come into effect, which is already valid in California for example. But the end of internal combustion engines will change the car market in one fundamental way – it will remove the main barrier to entry for Chinese carmakers, and they cannot wait for this to happen.
Inconspicuous China is dominating the EV market
Anyone that knows at least a little about the Chinese car market knows that there are dozens of domestic carmakers that are literally fighting for a piece of the local market. And it’s not a small market. In 2010 it reached a million cars sold per month and just before the onset of the pandemic it was more than three million. The pandemic and ensuing global chip shortage pushed June sales to just over two million, a 28% drop from December 2020, but brought record sales of electric vehicles. They already account for 15% of all vehicles sold and their share is constantly growing (by 160% year-on-year). And Chinese carmakers are continuously pushing out new models. Even compared to the locally very well-established Tesla, the pace of production is breathtaking. At the same time the Chinese market represents 50% of the global EV market and McKinsey expects that by the year 2030, 9 million EVs will be sold in China yearly.
In the first half of the year, 1.1 million EVs were sold in China, while in other than the Tesla Model 3 and Model Y, the ranking of the top 10 best-selling brands was occupied exclusively by Chinese manufacturers. The Wuling Hong Guang MINI EV minivan is enjoying massive success, with an
incredible 181,810 units sold. The monthly sales of this mini-truck in China reach similar numbers as the European sales of the Volkswagen Golf. The top 10 is completed by BYD, Great Wall, GAC (GAIC), Li Xiang, Chang’an and Chery. BYD has been aggressively targeting Tesla, especially in recent months. However, Chinese carmakers are now chomping at the bit in other markets as well.
The fact that the Chinese can gain significant traction is best shown on the Russian market. Russia does not have as strict emission limits as Europe or the US, so the Chinese can even compete with internal combustion engines. The Geely Group, the Chinese owner of Volvo and the 9.7% shareholder of the German Daimler, which last year founded a new EV brand called Zeekr to be launched this autumn, best shows how quickly the Chinese carmaker can succeed here. Geely only entered Russia last year, as part of its expansion out of China to markets in the Philippines, Kuwait, Saudia Arabia, and Myanmar. In Russia it offers the SUVs Atlas, Coolray, Tugella, and Atlas Pro. The latter, built on Volvo technology, climbed up to the ranks of the top 25 best-selling cars in Russia in June 2021, with sales increasing 300%. Coolray can be compared to the Škoda Karoq in terms of size, technology, and performance. In a price comparison, the Karoq starts at 14% more expensive for the base model, but is almost twice as expensive as a Geely when fully equipped. The Geely also comes with a 5-year warranty. Geely’s approach to the Russian market gives an idea of what such an expansion in the EV area might look like. The above mentioned Wuling Hong Guang MINI EV will cost only 4500 USD, a third less than the comparable Citroen Ami.
Western joint ventures in China will help the Chinese in the West
In fact, the expansion of the Chinese to the West may happen much faster than expected. The Chinese can benefit from their current joint ventures (e.g., SAIC Volkswagen, SAIC Volkswagen, SAIC GM, BAIC Hyundai, DPCA (Dongfeng and PSA), GAIC Toyota, GAIC Tesla, and many others), which Western carmakers had to establish as a condition of entry into the Chinese market. Additionally, the Chinese carmakers can benefit from their holdings in Western carmakers such as in the case of Geely or SAIC (GM, Roewe).
China took Norway by storm
The Chinese expansion into lucrative Western markets has already begun. The most lucrative market, Norway, where B/PHEV has reached an incredible 84.9% of total sales in July 2021 with 17,323 cars sold, has seen the entrance of the Chinese BYD with its family SUV Tang. BYD wants to sell 1500 of those vehicles this year and is already operating on Scandinavian markets with its electric buses. On one hand, entry to Norway is much easier than to other European markets, but on the other hand, it is the most competitive electric vehicle market in the world.
At the same time, BYD, as in China, will meet its match mainly with Tesla, who has nearly doubled the sales of the 2nd most popular electric car, the Ford Mustang Mach-E, with sales of the Model 3 in Norway. The target of 1500 cars sold in the first half of the year in Norway could be enough to place BYD in 10h place, which was occupied by the “British” MG ZS EV with 1579 cars sold. But it may be worth remembering that MG Motor was bought in 2005 by the Chinese Nanjing Automobile Group, a member of none other than SAIC, which is actually has a joint venture between VW and GM in China. In addition, the 9th place position with 2349 cars sold in Norway belongs to the Polestar 2 model, part of the Chinese Geely. So, in fact, Chinese electric cars have been quietly building a presence in the West for quite some time.
How to prepare for the Chinese? They are not afraid of new business models
Chinese carmakers have long understood that classic sales models are dead, or that they do not work so well with EVs. In addition to the classic model of owning a car or leasing, you will often come across a model for battery leasing in China. You can buy a car from the carmaker, but you will get its battery in the form of a service. Therefore, you don’t have to worry about its capacity decreasing, subsequent exchange, or disposal. The Chinese thus eliminate the biggest barrier to purchase, especially for cars with low battery capacity, which are logically cheaper.
In addition, some dealers have started offering another model – you own a vehicle without a batter, you are leasing a battery, but not a specific one. So, when you need to hit the road quickly, you just have the battery replace by a freshly recharged one and you’re driving. Naturally, such cars are built for this service so that the replacement only takes a few minutes. Carsharing is also very popular, which allows you to rent an EV for a specific number of minutes.
So how can you prepare for the expansion of the Chinese? It is important to know your customers and what they expect from their car. But you must also be prepared for the rapid introduction of new business models, which are so far unusual for Western carmakers. A specialized flexible cloud-based Automotive CRM for car dealers can help you with this, which will not only easily help you add new brands and models to your portfolio, but also introduce new sales and service models using all the existing information you have about your customers.
A car subscription added to operational leasing
A new car every month. A car subscription is exactly what some car manufacturers and leasing companies are offering in selected countries. This relatively new service is intended to complement increasingly popular operational leasing and could quite possibly shake up the car market. What will be the impact?
What is a car subscription?
A car subscription is a kind of intermediate stage between a rental company and a traditional operational lease. As with a car rental company, the customer does not need to worry about anything – service intervals, tire changes, insurance, road and environmental taxes, and in the case of electric or hydrogen cars, sometimes even charging is included in the service. The user only has to take care of refueling, windscreen washer fluid, tolls, and parking fees, nothing more – in short, a car as a service. Many subscription services even include delivery of the car to an agreed address.
The key here is the duration of the subscription – it ranges from a single month to a quarter, half year, nine months, or a year. Sometimes, for example with Porsche USA, it is possible to rent a car for a single day. Car subscriptions are offered in various markets either directly through car manufacturers, leasing companies, or rental car companies. It is a special market where all these players compete at the same level. After the end of the several-month contract, it is possible to continue with a new car or terminate the contract.
Subscription vs. leasing
At first glance, the differences between a subscription and leasing may not be obvious. The main difference is the duration of the contract. The second difference is that opposed to a regular lease, it is not possible to buy the car at the end of the contract, like a car rental service. A key difference compared to operational leasing is that car does not have to be new and that it is not possible to choose its configuration. Most offers include cars that are up to two years old and a pre-selection of models, engines, and equipment.
The truth is that current operational lease offers are sometimes very similar to subscriptions. There are leasing providers that offer only annual or even six-month contracts, and in addition to insurance and taxes (road and environmental), they include tire rotations and service in the lease. These offers are not available in all markets, and they are also not always welcomed with open arms. Car subscriptions can also be attractive from a marketing point of view. In the days of Spotify, Netflix, Adobe Creative Cloud, and Microsoft Office 365, more and more companies and consumers are getting used to everything in subscription form. In many markets there are even mobile phone or laptop subscriptions. So why not “sell” and especially promote cars in the same way?
Who will benefit from a subscription?
A subscription would be ideal for new drivers. Of course, most providers know this, and that’s what they’re trying to prevent. Many services require a minimum age of 25 and several years of driving experience. So, for new drivers, the service is, so far mostly unavailable.
However, there are other usage scenarios for the retail segment. A family car for a few months is suitable for employees who have been recently fired and need to return their company car, or for those who take a so-called sabbatical for exactly six months or a year. In some countries, the possibility to cover the absence of a company car applies to a large group of customers who would welcome such an offer with open arms.
Car enthusiasts might enjoy another option with brands such as Porsche. Having a new, and especially different Porsche every month is a childhood dream of many boys. But few can afford it. At $3100 a month plus tax, which is the price of Porsche Drive in several major cities on the West Coast of the United States, such a dream becomes a reality, if only for a few months.
The ideal target group is also companies, especially those running a seasonal business. With limited contracts, they can rent company cars only for a few months, for example during a given season. However, it could also be advantageous for companies employing interns or employees from other branches. Another interesting target group could be contractors who are in a location for only a few months before they finish their contract.
And then we have an electric car subscription. For many companies they serve as a demonstration of the company’s commitment to the environment. And being able to show purely electric cars at summer company events for example, is something that many companies would be interested in. After all, Citroën chose to cooperate with selected companies to offer its utility vehicle, Ami, as a subscription. And other manufacturers such as Mercedes-Benz or Ford have also begun to offer a subscription service for their commercial vehicles.
Car subscriptions are gaining traction
But do car subscriptions have a chance to gain traction in the market? Definitely yes. It just may not be a widely available service. They can be expected to address only specific segments and parts of the market. However, as you will not find them everywhere in the US, the same is true for Europe. But how will car subscriptions change the market?
Some automakers want to go the way of direct sales or sales through their own financial institutions. Of course, this will not please dealers much, especially if the pricing policy will be more favorable then buying your own car. But carmakers will not be able to service the cars themselves. Dealers will be needed for this. For dealers, it pays to cooperate with car manufacturers. Those who are more proactive will have an advantage. This will especially apply to larger dealerships with multiple locations.
Those who have solid CRM data and know their clients will have a better bargaining position for car subscriptions, not only in cooperation with manufacturers. Dealers using advanced specialized CRM systems such as Automotive CRM, which offers a 360° customer view including social network interactions, will be able to generate quality leads for subscription services.
In addition, dealerships will be paid a handsome fee for providing quality leads, just as they do today with leases and loans. At the same time, winning a customer if only through a commission on the car subscription and service can be a source of new income. After all, it can be expected that car subscriptions will be purchased by different customers than those who typically come to buy a new car. And how are you prepared to take advantage of the opportunity that car subscriptions bring?
Loaner cars as a hidden opportunity
Many dealerships with their own service centers consider loaner cars a necessary evil. As part of the car manufacturers’ mobility warranty, they must keep a certain number of cars in stock, while others keep them for their clients to remain competitive with other car repair shops. But what if you can get even more out of it? What if a loaner car is a way to increase sales of new and used cars?
How we buy a new car
Countless surveys of pre-purchase of those interested in buying a car shows that a very important part of the whole shopping process is their own experience with the vehicle, a test drive if you will. And for some drivers, a test drive can be the main initiator of the whole purchasing process. The brands and models still exist, that serve to fulfill dreams. And it’s far from just the most luxurious or sporty segments. The problem is that it is not always possible to identify which car is the dream one for any individual. Many dreams come alive within the brand the customer has already purchased. So quite commonly the owners of a Golf dream of a Passat or Arteon, the owners of the BMW 3 series turn to the 5 or 7, while owners of a Yaris dream about the bigger Corolla or Land Cruiser. But many of them first need their own driving experience to begin to make the dream a reality. These dreams can often be fulfilled by a used model of the previous generation. Especially if their own lower-class car is several years old.
“User experience,” or the actual “ride” in the car world, is absolutely key in many other industries. However, with cars, this experience is relatively complicated, especially during coronavirus. The customer must order a test drive from a car dealer, and often feels some obligation to the dealer, which paradoxically creates a barrier to the user experience. Some dealers are very well aware of this, so they organize various open days, skid schools, etc., where they try to provide potential customers with an obligation-free user experience. This is expensive and complicated.
Loaner car as a new user experience
Every branded service center must keep loaner cars in stock. In conjunction with the dealer’s test cars, it is generally a good-sized fleet of cars covering a variety of models, equipment, and engine options. In addition, some dealers include current used cars in stock into this fleet, often out of necessity, when loaner cars run out. However, these things can be arranged differently.
Imagine that you lend an older Passat, that has been in stock for some time, as a loaner car – naturally for a very attractive price – to the owner of an aging Golf headed for warranty inspection. Or that you will lend a new electric MX-30 to the owner of an older Mazda CX-3, who uses it mainly for city driving. Or you will lend a Corolla Sports Touring that can easily fit a stroller to an expecting young newlywed couple who currently drive a Yaris. Do you think those people will be more likely to buy a new car? And how will that probability increase if you prepare a targeted offer for the loaner car, including the purchase of their existing car?
Gather information about who to lend to
That’s exactly what it’s all about. The moment you know the needs of your customers, it is much easier to sell them cars, and at a higher overall margin. The problem may be how to figure out who wants what. And then how to arrange that they get exactly the loaner car they want. Fortunately, today there are advanced CRM systems that can capture and process exactly these situations. All comments when communicating with any dealer or service, whether in person, by phone, email, or on social networks. All this is offered by Automotive CRM, a cloud-based system from Konica-Minolta for car dealerships and service centers, providing a 360° customer view. With it, you can put all your customer wishes into context, together with their currently owned vehicles and their condition. You can then easily prepare personalized offers including the targeted rental of a suitable loaner vehicle.
Automakers already sell electric cars this way, so use it for everything else
Carmakers have already caught onto the fact that loaner cars are a very elegant opportunity to support sales, especially of new and revolutionary models. Presently, they use this approach for electric cars. For example, Mazda, which relies heavily on the driving experience, has launched a targeted campaign in several markets, offering the rental of the electric MX-30 as a loaner car during service completely free for a limited time. In certain markets, this has helped to completely sell out stock of this model. But why focus only on electric cars? With virtually zero effort you can use this approach to sell any other model. Every customer has a dream car. You just need to know what it is.
2030: Electric Odyssey – Electricity Is Changing the Way Cars Are Sold
More and more brands are moving towards complete electrification. Volkswagen, Ford Europe, Jaguar, Volvo, General Motors, and soon other carmakers will soon likely switch to electricity. Jaguar will be the first to do so by 2025, and most of the others will do so by 2030, with General Motors coming in last by 2035. However, with the change of propulsion, the business model will also change. What will this change mean for dealerships?
Say goodbye to internal combustion engines
Volkswagen will no longer develop new internal combustion engines, and the existing ones will ride out the era. At the beginning of March, this news unsettled the share price of the 2nd largest carmaker, but in a positive direction. During March, the share price jumped by an incredible 34.3%. By 2030, 70% of VW brand cars sold in Europe will be electric. In China and the US, it will be half that. By 2025, the carmaker will invest 16 billion Euros in e-mobility, hybridization, and the digitization of its cars. Autonomous driving should arrive by 2030.
Volkswagen is far from the only manufacturer to follow this trend. In January this year, General Motors announced the full electrification of all passenger cars, trucks, and SUVs. They came with his announcement just a day after the new American president returned to the fight against climate change. However, car manufacturers have other motivations for electricity. Jaguar Land Rover, which will convert its Jaguar brand by 2025 and the Land Rover brand by 2030, is looking for additional reliability that comes with electric power. The carmaker has been battling with reliability for a long time, and with electricity, it might finally have a way to get rid of the “unreliable” label.
Volvo will switch to a new sales model, and they’re not alone
Volvo, which in parallel has already launched its fully electric brand Polestar, that deals with certain childhood illnesses, has also opted for electricity from 2030. However, the propulsion system is not the only thing that will change. The carmaker plans to start selling all of its cars directly and online, similar to Tesla. From 2030, it will “sell” its cars in the form of a fixed monthly fee, including all service, insurance, and assistance services. This business model has long been used by Toyota worldwide for its Mirai hydrogen vehicles. However, Volvo and Toyota are not the only carmakers to toy with this business model. Many car manufacturers, most notably Volkswagen, play a key role in the area of finance, specifically of course, operational leasing. A car in the form of a service is popular in more and more countries around the world.
Direct sales from car companies will also radically change the dealer’s business model. They will continue to earn money from the service of these cars, perhaps much more than before because this business model will de facto end non-branded services. But then again, they will lose some of the commission from car sales. However, they may be able to sell different “things,” and we do not mean only accessories.
What does “digitization” mean?
As we said above, part of the 16 billion EUR that Volkswagen will invest over the next four years will go to digitization. This trend is also being followed by other car manufacturers such as Daimler (Mercedes-Benz) and BMW. But what does digitization mean? The idea is simple and again it is partly inspired by Tesla. As early as 2019, Mercedes-Benz stated that it wanted to earn from the sale of additional services and functionalities through its new MBUX on-board system platform. Initially, it started selling features such as Digital Radio, Apple CarPlay/Android Auto, and on-board navigation. In the future there should be many more features on offer. The car comes with all the features, which makes it cheaper to manufacturer at scale, and then they are only activated remotely.
A major breakthrough in distance-selling digital services will be autonomous control, which VW for example, has promised from 2030. There will be many more digital services, perhaps those we cannot imagine at the moment, and which will be location dependent. Today, we can mention for example, an overview of free parking spaces, or even automatic payments for parking, which are features that carmakers are currently testing in some German and American cities.
Of course, all these services will be sold directly by the carmakers. The transition to on-board systems with over-the-air updates will allow them to do so without any problems. But what carmakers cannot always do directly is sell the SIM cards that the cars need for connectivity. In addition, some customers will need help with the installation of some services, and that is something the carmaker will not be able to help with directly. It can easily happen that dealers will also perform the role of “user support” and training, as was once the case with computers, and later with mobile phones. Additionally, there may be potential for the sale of telecommunications services.
Will dealers also sell electricity?
Electrification brings another key element that not only automakers will have to tackle, and that is recharging. At the beginning Tesla incorporated a dumping policy, offering electricity at its own network of Tesla Supercharger stations to its car owners free of charge. Later, however, they started selling Supercharger access. Other carmakers are also building their own charging networks, usually in consortiums. The most important of these is IONITY, which currently brings together BMW, Ford, Hyundai, Mercedes-Benz, Volkswagen, Audi a Porsche. But most charging takes place locally, at a customer’s home or work, where the car is parked for many hours at a time and can be recharged in a slower and more battery-friendly way. However, customers then need to purchase the electricity from someone. In the European Union from an energy trader as European regulation has unbundled the electricity business into separate services of production, distribution, and sales to end customers.
At the same time, the electric car will need much more electricity and thus possibly a different supplier or tariff from the home or business. And within the sale of electricity are similarly high commission as in the sales of loans or insurance. This is a great opportunity for dealers, because the concept of local electricity sales and distribution are infeasible for car manufacturers. In addition, some owners of electric cars are of course interested in solar panels. It is no coincidence that Tesla bought the company SolarCity, which produces photovoltaic panels. So even this could be a very interesting new opportunity for dealers.
Say goodbye to your current business model
Thus, by 2030, a large part of car dealers will have to say goodbye to the existing business model and reorient themselves to the completely new operating conditions of the market. At the very least those selling Volvos. Most do not have the appropriate know-how or equipment to sell services, consulting, training, or especially electricity and photovoltaic panels. But a flexible and professional CRM system can easily help with this. For example, the cloud-based automotive CRM tool can perfectly cover existing sales, service, marketing, and customer car processes of the car dealer. However, thanks to its flexibility and cloud platform, it can quickly learn any other processes. Extending the existing CRM to the sale of services or other products is a breeze, especially when the company behind this system, Konica Minolta, has been supplying CRM systems in the fields of energy, including electricity distribution and sales, or service companies for years. And how are you prepared for Odessey 2030?
Google: Coronavirus has changed the automotive market. But in a different way than you might think
The fact that Google is looking into the automotive market is nothing new. Today, however, we will not be speaking about their efforts to develop autonomous vehicles, but about a total of 11 market surveys that they conducted during the coronavirus pandemic. The results of these surveys are critical for car manufacturers and dealers, and quite surprising.
Customers are already looking for something else in their cars
Google is primarily a search engine. For a long time therefore, it has observed trends in what its users are looking for. In the area of car sales, much has changed over the past year. Google has seen an 80% year-on-year increase in searches for “best car under,” and even a 200% year-on-year increase in searches for “nearest RV (caravan) rental.” The pandemic has reduced family budgets for the purchase of new and used cars, and at the same time changed travel conditions. Many people, rather than book hotels (which were often closed anyway), began looking to rent caravans for longer trips to the countryside.
The pandemic attracted new interest to the automobile
However, these are not the only changes that coronavirus has brought to the passenger car market. In a survey from May 2020, PwC noted that 77% of American consumers perceive commuting by public transportation as a health risk in terms of the disease. In addition, 30% of Americans that took a trip by car, did so just for a “change in scenery.” A completely new segment of customers began to emerge, not only in America, for whom public transport or taxis were not sufficient for their needs. They no longer wanted to risk infection and/or they wanted to travel somewhere further out of town to clean their heads from the persistent lockdown and working from home.
During the coronavirus pandemic, cars were sold differently
All of us can probably guess that last year, cars were sold differently than in the showrooms of car dealerships. But Google took the trouble to measure what changed. While for the whole of 2018, only 1% of car sales took place online, in the first half of 2020 already 1/10 cars were sold that way. The big surprise, however, was the fact that 73% of buyers fully accepted this channel, and were able to easily negotiate all the conditions, including financing, fully online. As many as 24% of buyers received a dealer offer for a test drive from home. 98% of them considered it important for their final purchase decision.
As car sales shifted to online during the lockdown, customer expectations also changed. As many as 65% of buyers expected more options when shopping online. This is due to a much more competitive and less geographically limited environment. Suddenly, the approach to customers began to play a more important role. In addition, for new customers, the complexity of the pre-sales phase has increased. On average, while previous car owners are considering between fewer than 2 different models, new customers are considering more than 3 different models. The dealership is not only fighting on its behalf but must also be able to sell a specific type of model which is currently in stock.
The way car dealers communicate with customers has changed
Last year it became clear that customer communication played a very important role in sales. And especially the electronic communication channels – advertisements, social networks, newsletters, etc. And the Google data shows why. Every searcher needs their own messaging. Personalized advertising showed an 11% higher intent to purchase and a 7% higher clickthrough rate. In addition, meaningful messaging was 31% more important to brand love and 28% more important to brand trust than people realized.
The key to success were narrowly targeted offers, for example to new parents, a customer group that from 2021 has begun to grow rapidly worldwide. In 2021, it is not a question of selling a specific model of a specific brand, but of being able to responds to the needs of a specific SUV customer who wants the most rear space, the best family SUV, or the safest mid-sized SUV.
CRM in car sales brings measurable benefits
The only chance to succeed in a significantly transformed market is to have an accurate understanding of your customers’ needs as well as more flexible, targeted, and faster communication than your competition. This is impossible without the use of professional CRM software for car dealerships. If you do not have the tools in your dealership that provide a comprehensive view of each existing and potential customer while being able to incorporate data from social networks, you will have a problem in 2021. Google research has clearly shown that an investment into a tool like Automotive CRM from Konica Minolta, will pay off.
Think with Google, Rider to Driver Auto Trends 2020, https://www.thinkwithgoogle.com/consumer-insights/trending-data-shorts/rider-to-driver-auto-trends
Too many cars on stock?
How to quickly sell stock automobiles and prepare for new models? Automotive CRM can help.
The production of automobiles is rapidly declining. This is due to the sharp drop in demand for new vehicles as a result of the coronavirus. However, what can be done about stocks of aging models and how can we prepare for the arrival of MY2021? Automotive CRM can help!
CRM that is ready for crisis as well as distance selling
Those of you, that remember the crisis of 2008 to 2010, know that sales are simply different during a crisis. All of a sudden, customers have more options to choose from. The ability to hear customer needs and the art of acting quickly and precisely to those needs now takes center stage. Sales has always been about the art of creating a lead from an opportunity and turning that lead into a sale. However, this type of art, as opposed to painting a picture, is not about talent, but about technique. Additionally, as was shown by coronavirus, sometimes it is necessary to radically change our approach and learn to apply our sales skills even to distance selling. However, some processes and older systems are not ready for that.
Developed by Konica Minolta, Automotive CRM is a professional comprehensive business solution for sellers of personal and commercial vehicles including motorcycles. Konica Minolta gathered industry experience during the crisis and post crisis years, which morphed into a solution that is accessible anywhere, anytime and on any device without requiring any of your personnel capacity for system administration. Salespeople and customers can interact with each other from their homes the same way as they would in the showroom. Automotive CRM offers them the same information, the same tools, the same processes – all of it with 100% salesperson substitutability.
Customer insights from every angle
The key to success is a 360° view of every customer on two levels. Automotive CRM can combine all customer information that your company has on file. Even if the customer was in contact with a different branch or discussing a different brand that you sell. Test drives, service, purchased vehicles, sent questionnaires, information requests, catalogs, etc. – you will find all of it in one place. Questions like “what type of radio was in the car that I test drove?” will no longer catch you by surprise. And you won’t be surprised when the customer asks the question on newly relevant channels like Facebook or Instagram, instead of contacting “their” salesperson in a traditional fashion.
Automotive CRM gives you a 360° view of all customer communications. What they said in person, what they asked about over e-mail, social network interactions, and their satisfaction with the service department. Everyone that comes into contact with the customer has all of that information at their fingertips with one click on a PC, mobile, tablet…pretty much anywhere.
Those who hesitate will have a bigger problem than “just” too many vehicles on stock
Customer knowledge and a fair approach build trust, which is rare into today’s uncertain times and can be appreciated by the customer. Often, trust, complimented by the ability to quickly react to customer requirements, means more money in your pocket. In fact, why would a customer risk feeling unwelcome for just a small discount of 1-3% somewhere else. Additionally, a new car buyer will happily return for service to the same location they bought their vehicle. Automotive CRM can be implemented in your company within one month. Connecting to existing systems and multi-brand incorporation is naturally part of the solution.
Do you want to know more about Automotive CRM? Contact us.
3 reasons why you might not need to sell electric cars
The McKinsey EV index shows that sales of electric cars increased by 65% in 2018. But last year, dealers showed sales of electric cars rising by onl y 9% more year-on-year, and in the first quarter of this year, even before the coronavirus crisis, sales of electric cars fell by 25%. And it will get worse. What is happening with the electric car market and why do people suddenly not want them?
Sales built on government subsidies
One of the main reasons why electric cars are starting to lose their momentum is a decline in subsidies. A typical example is Norway, a country with a huge landmass, low population density, and enormous distances between cities. The most electric cars are sold in Norway out of all of Europe.
Norway has been systematically promoting electromobility since 1990. During that time, it prepared a wide range of various incentives, which, however, made the purchase of an electric car economically beneficial the end consumer. In short, an electric car often has a lower TCO than a similar car with an internal combustion engine. The success of this strategy is also evidenced by the fact that in April 2020, 10% of vehicles on Norwegian roads were purely electric.
Tools to support EV sales included zero import duties, zero VAT on purchases and leasing, zero annual registration tax, zero tolls, zero or reduced ferry fees, free parking in cities, access to bus lanes, and reduced taxes for companies. However, some of these benefits have already been canceled or reduced by the Norwegians. In some cities, it has even become problematic to park a car with an internal combustion engines. And government support is changing even in other countries. An example is Hong Kong, a former exhibition of electromobility, where a significant reduction in government support for EVs in 2017 literally killed all sales of electric cars, especially Tesla, which had an 80% market share.
Tesla is a seller of user experience, not electric cars
It was Tesla who became a symbol of electromobility, although it has still failed to reach the first place in EV sales. According to JATO Dynamics, it has long belonged to the strategic alliance of Renault-Nissan-Mitsubishi. But Tesla does not owe its success to the chosen drivetrain. Its popularity is based on a completely different, and at the time, innovative user interface, on the user experience, when the car acquires new functions even after its purchase. And in recent years also on Autopilot. That is, on the relatively average set of assistance systems that are now offered by a number of other car manufacturers. Only Tesla can sell them much better. However, Tesla’s marketing also seems to have convinced a number of carmakers that the future must be electric. But sales numbers don’t show that, and in recent years there have been more and more pitfalls around EVs.
Where should I charge my electric car?
The main pitfall is already being shown to be charging. By this we do not mean the length of charging time, but rather the lack of charging points and the blocking of charging stations by cars with internal combustion engines or unruly EV drivers. The problem with charging stations is even more complex. The bottlneck is the electrical distribution network. Modern 350 kW and soon even 1200 kW charging stations need adequately dimensioned high-voltage distribution and, of course, energy sources.
And this is where electric cars take a hit for a second time. It turns out that the illusion of zero CO2 emissions is really just an illusion. One after another, studies are showing that modern diesel or gasoline engines actually produce much less CO2 than EVs. The amount of CO2 / km produced naturally depends on the structure of energy sources. In India, EVs produce 370 g CO2 / km, in China 258 g CO2 / km and in the United States, 202 g CO2 / km. In France, where they have the highest share of nuclear power plants, their EVS produce “only” 93 g CO2 / km. Just a reminder – the limits set by the EU regulation EC 443/2009 for next year are 95 g CO2 / km. And when it comes to ecology, the issue of lithium, its mining and recycling cannot be avoided. And even that is now being addressed more and more. Does it matter thatWell, maybe in the next 10 years it won’t matter at all…
“Let your heart beat faster” or how not to advertise a car
The whole world knows about the ad for the new Audi RS 4. However, this is not due to the qualities of the car. The Audi brand has escaped relatively unscathed. However in the hands of dealerships, such advertising could have catastrophic consequences. How do you actually make a good advertisement, and what should you watch out for?
Just a bit of a pedo-feeling
“We sincerely apologize for this insensitive image and ensure that it will not be used in future. We will also immediately examine internally, how this campaign has been created and if control mechanisms failed in this case.”
Audi is eating a humble pie for their advertising campaign with a four-year-old defiant girl in a mini dress, dark glasses, and a large banana in her hand, leaning on the front of an Audi RS 4. All that with the title “Let your heart beat faster – in every aspect.” Audi was apparently referring to the fact that: “The Audi RS 4 is a family car with more than thirty driver assistance systems including an emergency brake system,” which incidntally will be required on all new vehicles in the EU from May 2022. However, it seems that the public, at least the one on Twitter, saw this advertisement as more of an attempt to transform a tiny girl into a kind of sexual symbol. This sparked an unprecedented wave of resentment. At first, Audi tried to “put out” the situation, by releasing an apology only 26 hours after publishing the advertisement.
We hoped we could convey these messages, showing that even for the weakest traffic participants it is possible to relaxingly lean on the RS technology. That was a mistake! Audi never intended to hurt anyone’s feelings. (2/3)
— Audi (@AudiOfficial) August 3, 2020
However, part of the public does not understand what is actually happening at all, because they do not see any phallic symbol in the banana and do not perceive a girl wearing certain clothes and posing as an adult as sexual. This is probably also the reason why this ad passed through Audi. No one realized another possible interpretation of what someone internally presented as the communication concept of the Audi RS 4 as a family car.
Advertising that can destroy you
In the days of coronavirus and the coming crisis, this exorbitance will be forgotten as quickly as it arose. For Audi, which produces almost 1.9 million cars a year, this is unlikely to have any economic consequences. But if it were to happen to a dealer, the consequences in the local market could be fatal. The dealership will get negative publicity for its target group, and the importer will be doubly unenthusiastic about the move. Regardless of whether he had previously approved the ad or not. So the first piece of advice is – show your ad to someone “on the street”. Someone who is unfamiliar with the creative process and who is ideally outside your target group. To be fair, most Twitter commentators in this case were also not high-performance Audi owners.
Three things to watch out for when advertising
This is certainly a question that many advertising agencies ask themselves. In reality, however, the preparation of an advertising campaign may not be as risky as it may seem in the light of Audi’s slander. Just follow three simple rules:
- Do not sexualize children, not even teenagers. People who have children of the same age will always be very sensitive to this.
- Don’t sexualize women. Yes, it is still true that sex attracts attention. But it no longer has to be true that it sells as well. Moreover, that interest has long been no longer positive. Sexism is not in. Photoshopping women in advertisements is no longer in. The former is awarded national and international sexist anti-prizes, and the latter is the subject of a number of influencers around the world. After all, women also buy cars, and not just family ones. So you do want to attract women with advertising, just not offend them.
- Forget about “funny” double meanings. As much as someone may like it, part of the audience will always be offended. Maybe also because they do not understand the joke straightaway.
Take advantage of the mistakes of automakers
And is there any guide on how to guarantee a “good” advertisement? Yes, just learn from the mistakes of automakers. There are highly rated ads, such as the one from Porsche. And sometimes you can use that disgrace to your advantage. More than one Audi dealer started offering free bananas with a purchase. Those who hate the advertising with a girl see this as a mockery of Audi. Those who do not see anything wrong then can make fun of those who find it offensive. And the dealers? They just make money on it…