Driving Automotive Growth through Opportunities in the Digital World - Accenture
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Driving Automotive Growth through Opportunities in the Digital World
Many significant developments
have taken shape in recent years.
Among them is the resurgence of the
global automotive industry that was
teetering on the brink of collapse only
a few years ago, and the rise of the
digital world, which is dramatically
transforming the ways in which
products and services are consumed and
business is conducted.
2 Copyright © 2015 Accenture All rights reserved.
Since the economic crisis of 2008, the India, Italy, Japan, and the U.S., an are much more in touch with each other,
auto sector in large part has made steady overwhelming 93 percent of all surveyed brand owners and retailers. As a result,
progress, particularly in the U.S. market, drivers seeking to purchase a new vehicle such ubiquitous communication is making
where automotive original equipment are using some form of digital process to it necessary for OEMs and dealers to react
manufacturers (OEMs) and auto dealers research their buying preferences, while faster to car-buying needs to remain
have maintained strong performances, nearly two-thirds (62 percent) of them competitive. And, while they are doing
fueled by high demand. In 2014, sales are initiating the process online, including so in large part — responding to rising
reached an annualized 6.2 million units consulting social media, before entering a consumer demand in areas like in-car
based on a compound annual growth dealer showroom. technologies — the digital revolution has
rate of 9.2 percent,1 which was an only just begun and will affect the global
improvement over the 15.6 million cars Moreover, the study shows that more auto market that is once again on a
and light trucks sold in 2013.2 Improved than half (54 percent) want personalized, course toward change.
economic conditions; increasing consumer tailored information made available
confidence, moderate fuel prices, and via industry online channels to make Accenture has identified six key trends
greater credit availability were among the researching for a new vehicle easier. Such that will challenge the ability of OEMs
key factors contributing to the market’s an improvement is of particular interest and dealers to succeed in the future. These
rise in sales. to 62 percent of respondents in China, trends involve a shift in market conditions,
and 60 percent of those surveyed in India and a transformation of today’s business
At the same time, the explosive growth of and the U.S. market. Seventy percent environment that is moving inexorably
digital technology and its pervasive use of India’s respondents also would value toward a digital business model. It is a shift
by consumers around the world in their more comparison sites and 69 percent of that will disrupt the competitive landscape,
daily lives is having a profound impact on Chinese consumers would welcome an including auto retailing. As a consequence,
the business world, including OEMs and augmented reality feature.3 it will be important that auto companies
dealers. According to a new Accenture take these trends under consideration in
global survey of 10,000 consumers With the increasing use of social media preparation for future growth.
in Brazil, China, France, Germany, and mobile technology, consumers also
Copyright © 2015 Accenture All rights reserved. 3
4 Copyright © 2015 Accenture All rights reserved.
Six Key Trends in the Automotive and
Digital Space
1. Sales wars will escalate
are slowing due to population
decline, and economic growth
in many of the emerging
markets is slowing.4
Although global auto sales
have increased since the In addition, the dramatic sales gains
generated in U.S. market may be
downturn, there is still counterintuitive, as the market is
a degree of uncertainty expected to remain at 16.4 unit levels
through 2021.5
regarding the market’s
progress long-term. As Global market uncertainty and
constrained U.S. sales have the potential
western Europe’s recovery, to result in fewer traditional growth
for instance, continues to be opportunities and intensified competition
fragile, overall sales in Japan throughout the global market.
2. Profit margins will be under more pressure
In such a business environment, OEM The average incentive spend rose from
and dealer margins will be under greater $2,536 on Fusion, Camry, Altima and
pressure, as spending on incentive Accord models in August 2013 to $3,251
programs will increase to capture sales. a year later – an increase in spending of
In response to the downturn, OEMs nearly $800.7
from Asia, Europe, North America and
other regions implemented creative In addition, the emergence of third-party
marketing strategies to entice reluctant lead websites like True Car, which are
consumers as most experienced double- focused on providing increased pricing
digit percentage declines in sales.6 But, transparency, present the potential for
the trade off for implementing such further erosion of dealer margins. For
initiatives typically adds to margin instance, average street prices for the
erosion, and results in tighter markets. In Fusion, Accord and Altima compared to
the U.S. market, for example, incentive True Car prices on the same models were
spending in the midsize car segment, lower by an average of $800 to $1,000.8
the largest and most competitive of
the product segments, has increased In such a scenario, OEMs
significantly, impacting margins. and dealers will have to
accelerate lead generation
and lead conversion efforts
rather than engage in an
incentive war that will only
reduce profits.
Copyright © 2015 Accenture All rights reserved. 5
3. Loyalty programs will grow in importance
Sales and service customer satisfaction Today, as part of their retention strategy,
will continue to be critical to boosting OEMs typically only mail a welcome
sales and increasing service and package or send an email to customers
re-purchase retention, especially more after a purchase. Furthermore, very few
challenging. OEMs and dealers communicate with
the customer throughout the ownership
According to Accenture cycle, while most re-purchase loyalty
programs only equate to about $1,000 in
research, the top performing bonus cash.10 This may not be a strong
dealers retain less than 70 enough incentive for significant repeat
percent of consumers that business. The first brands, whether in
developed or emerging markets, to
have purchased a vehicle create a sustained customer engagement
from them and plan to return model will increase service and
re-purchase loyalty that will help drive a
for service.9 sustainable competitive advantage.
4. Car-buyers will increase mobile use for shopping
The wireless industry has observed that As the use of mobile technology
mobile subscribers are using their digital increases with a focus on research and
devices less for speaking with each other comparison shopping, not only will car
and more to consume more data services shoppers become more knowledgeable
to browse, download content, and about products of interest, but more
perform other self-serve activities. accustomed to using mobile channels to
shop compared to face-to-face showroom
With respect to auto interaction alone. This means that OEMs
and dealers will need to focus more on
shoppers, connected devices enabling customer interactions across the
are driving greater research mobile space that does not require direct
activity. customer service contact.
5.. Digital services will expand customer options
Digital technology is providing an traditional point-to-point single
increasing level of interconnectivity channel interactions to capitalize on a
between smart devices and a growing marketplace transitioning to digital.
array of digital services that run the
gamut from health and wellness to OEMs should consider
information and product needs.
re-directing inertia and
It is creating an entirely new generation aggressive investment away
of connected customers, who want
to consume on multiple platforms,
from traditional collateral
interacting with the device of their materials and one-size-fits-
choice, at their convenience, and on their all websites and focus on
terms. These consumers are even willing
to pay a premium for such flexibility. providing interactive, state-
Innovators are focusing on this trend
of-the-art digital services
toward digital services rather than that are more relevant to
car shoppers.
6 Copyright © 2015 Accenture All rights reserved.
6. Consumers will seek more control over outcomes
Increasingly, consumers want more The future levers of control
control, whether it is having the ability to
purchase online via their mobile or other will reside with customers
digital devices at anytime or anywhere; and key influencing
being able to better manage outcomes institutions and intermediary
from their fundraising support; or
securing the best financing options as a enterprises. To succeed in this
result of their own efforts. New entrants environment, OEMs will have
to the digital space like Puddle, LevelUp
and Square recognize this need for more to satisfy the expectations
control and are developing services that of consumers that are being
shift more of it to users. created by innovators in
Their open platform approach to serving other industries, which begs
users will enable such third-party
providers that are closest to customers
the question, which OEMs
to develop and integrate the products and dealers will become the
and services into their business model disrupters of the automotive
that appeal most to users. This strategy
is challenging and disrupting other industry?
industries like banking in terms of
relationship-building and meeting the
needs of today’s changing customer.
Copyright © 2015 Accenture All rights reserved. 7
Disruption will be Key to Succeeding in the Global Auto Market 8 Copyright © 2015 Accenture All rights reserved.
Disruption in the auto industry is The findings also reveal that
not new. Many have taken place consumers are open to using
in different areas of the sector emerging online channels for
over the years. Not so long ago, purchases, as nearly two-thirds
the traditional used-car buying (63 percent) of all surveyed
experience was upended by the would be interested in buying a
“one price, no hassle” concept new car through online auctions.
introduced to the market and In China, 90 percent of drivers
executed by big box auto stores. would entertain such an option,
while 78 percent in India and
Moreover, our survey suggests 75 percent of Brazilian drivers
that more disruption may lie would be interested.11
ahead, as 75 percent of all
respondents say that they would Given that many, particularly
consider conducting the entire in emerging markets, would
car purchase online, including consider a total online vehicle
financing, price negotiation, purchase and new online
back office paperwork, and options underscores the need for
home delivery. Two-thirds say OEMs and dealers to not only
they have either bought or focus on in-showroom sales,
would consider conducting the but be prepared to pursue an
car purchase online. Fifty-three aggressive digital online strategy
percent of Chinese consumers to create a seamless, integrated
alone state they would experience that accommodates
definitely buy a car online. And, all customer needs.
apart from Japan, France and
Those companies that are
Germany, more than 20 percent
first to aggressively serve the
of respondents in the other
connected customer will be the
surveyed countries definitely
digital disrupters in the auto
welcome being able to buy,
sector – an important step
finance and have their purchased
toward succeeding in today’s
vehicle delivered to their home
business environment.
via online interaction.
Copyright © 2015 Accenture All rights reserved. 9
How to become an automotive digital disrupter
There are a wide range of disruptive opportunities that auto companies can capitalize
on by re-engineering their focus on igniting sales, re-energizing aftersales, and
exploring new revenue streams. Below are some of the key questions OEMs and
dealers should ask themselves regarding engaging today’s customers to capitalize on
disruptive opportunities:
IGNITING SALES LEVERAGING TAPPING NEW
• Why does a young family view AFTERSALES REVENUE STREAMS
the same web page as a retired
grandmother? • Why can’t customers be engaged in the • Can the merchandizing of commercial
first three months of their purchase services and products be expanded
• Why does a search for a vehicle lease with the right accessories? by marketing them through vehicle
result in a page presented with only handsets or in-vehicle dashboard
inventory listings and a message that • Can service customers be engaged displays?
reads “call for pricing.” more effectively with push
notifications and radically changed • What partnerships should be formed to
• Why can’t a shopper, who did not make service? succeed in the digital space?
a purchase, but is still in the market,
receive a personalized campaign to • Can customer relationships be
re-engage their interest within hours? sustained throughout the ownership
lifecycle in a more meaningful way?
Increasing sales through digital disruption
OEMs and dealers are more likely to page are vehicles that are not aligned
boost sales by using digital channels with their intent; national lease offers
to convert and attract shoppers to instead of local offers in the area where
the showroom. They also should they reside; or poor page design that
communicate through digital channels does not drive a conversation toward the
as an aid to creating a sense of intimacy vehicle of interest.
during the purchase process, conveying
to the customer that there is strong Advertising copy also is typically not
interest in selling them the vehicle that relevant to a consumer’s situation. This
they want. It will be equally important includes advertising copy that is not
to provide information on their websites keyed to their geographic location or
that are relevant to the particular user that will elicit a call to action. Web
viewing it. pages should be interactive, displaying
one physical page that offers, for
For example, today when consumers are instance, 5000 or more variations
interested in leasing a vehicle, they will of information for each model that
first search for leasing information on consumers can access. This relevant
the model of their choice on the Web. approach will be compelling to web
Often what they will see listed on web visitors, and greatly help convert them
to customers.
10 Copyright © 2015 Accenture All rights reserved.Creating loyalty through aftersales and more
The dealer service process has remained Companies also can begin to lay the
relatively unchanged in recent years, foundation for a true loyalty program
making it a strong candidate for by benchmarking the recommended
revitalization that will help achieve practices of hotels, airlines and other
customer loyalty. In fact, the survey loyalty program leaders. Ways in which
found that the weakest areas of the today’s customer loyalty programs can
buying process in terms of digital be more effective, for example, include
experiences were aftersales and the sending a customer welcome packet and
online availability of pricing and extra email to a customer with a young family
add-on options. Twenty percent and a 10-question survey with an offer for a
17 percent, respectively, of all surveyed $25 dollar iTunes card or complimentary
feel that these areas need the most oil change if the survey is completed,
improvement. Twenty-eight percent and promoting such initiatives through
of Japanese consumers, 24 percent of digital channels. Also, in the first three
French respondents, and 21 percent months, the customer could receive an
of drivers in Germany and Brazil agree email, highlighting popular accessories
that aftersales is the weakest, while for their vehicle with a 25 percent
22 percent of Italian and 20 percent discount retail offer. This might trigger
of Indian consumers believe online additional needs, such as all-weather
information about pricing and extra floor mats or cross rails for the vehicle’s
options is another weak area. roof if the customer is an avid skier. The
result would be an additional visit to the
By creating a wave of strategic online dealer for the purchase and rails
communications to aftersales customers, installation, further contributing to the
tying incentives to them, and promoting customer relationship.
convenience, OEMs and dealers can
establish enduring loyalty. For example, Ongoing communication also should
when asked which special offers or include sending periodic “thank you”
valued customer services those surveyed correspondence to customers’ digital
would like to receive after completing devices as part of a push notification
a new-car purchase, 65 percent of all campaign based on visits to the dealer
respondent cite car insurance discounts, for service. Acknowledgements of
while 62 percent would welcome birthdays, and offers based on the
discounts on fuel. Forty-one percent frequency in which the customer returns
want mobile phone reminders for annual to the store for service also should be
service maintenance check-ups.12 communicated in the same way to help
build loyalty.
Establishing new revenue streams
The surging popularity of the in the vehicle to promote a broad range
connected vehicle has opened a of commercial services and products –
wealth of opportunities for OEMs, from entertainment, food and lodging to
telecommunications companies, and tolling – using in-vehicle infotainment
handset makers. While companies in headsets (IVI) and/or IVI dashboard
each industry are vying to become displays. By adopting this approach,
dominant players in the marketplace, auto companies can enhance their
perhaps the true winners will be those profitability, working with various cross-
companies that collaborate with each industry collaborators to create shared
other across industry lines to create new merchandising packages of interest to
sources of revenue. consumers. This approach also will offer
new avenues for reaching potential
In the case of OEMs and dealers, they customers and foster relationships via
have an opportunity to monetize their the digital space.
companies by applying application
programming interface technology (APIs)
Copyright © 2015 Accenture All rights reserved. 11Building an Effective Digital Customer Experience is a Journey 12 Copyright © 2015 Accenture All rights reserved.
Establishing a compelling digital customer experience today is made more challenging by
the fact that OEMs and dealers must keep pace with the changing needs of the connected
customer. It is a journey that will involve constantly improving the digital customer
experience focusing on continuous improvement in three distinct stages of the journey that
include pre-sales and sales, ownership and re-purchase.
PRE-SALES AND SALES OWNERSHIP: RE-PURCHASE:
PROCESS: START OFF MANAGE CUSTOMER EXECUTE WELL AND BE
RIGHT INTERACTION REWARDED
Critical digital touch points during this One of the major goals during the Ensuring that every online touch point
stage should be fully exploited to create ownership stage is to ensure customer throughout the customer experience is
awareness, consideration and the purchase satisfaction. This includes providing executed well, including providing the
of a vehicle. This includes tapping into online customer satisfaction surveys right message through the appropriate
social media and providing relevant and aggressively promoting aftersales digital channel at the right moment, will
information through mini-sites, and online accessories and service discount help generate significant customer loyalty.
advertisements. In the case of relevant campaigns through all digital channels Moreover this will aid in pre-disposing
information, the survey found that when to communicate the benefits of such customers to re-purchase, particularly
asked which kind of customized services initiatives to owners. In addition, during the period when their lease is up
would influence buying or leasing a new technical and safety campaign for renewal. And it will contribute to
vehicle, 68 percent of all polled say free information should be featured as part of executing effective re-purchase programs,
oil changes and maintenance options. enhancing customer relationship building which should include engaging all
And more than half (54 percent) want through digital channels. re-purchase touch points online to grow
access to free manufacturer partner the activity.
membership services.
U.S. drivers were most interested in
receiving free oil changes and maintenance
options, followed by China, Italy, India, and
Germany. Sixty-three percent of Indian
and 57 percent of Brazilian respondents
had the highest interest in receiving free
manufacturing partnership memberships,
while Italian consumers at 37 percent
valued it the least.13 Using analytics as part
of digital initiatives can help companies
gain insights into such preferences and
determine what relevant promotions
should be pursued via the various digital
touch points. Key shopping tools like
dealer conferencing and dealer locators
also should be readily available to
website visitors.
Moreover, sales staff should be
knowledgeable regarding information
featured on the website for continuity
when making first contact with shoppers
visiting the showroom who have viewed
the site.
Copyright © 2015 Accenture All rights reserved. 1314 Copyright © 2015 Accenture All rights reserved.
Conclusion Despite continuous growth in
the years since the economic
In addition, generating growth through
traditional car-buying methods will
become increasingly more challenging,
downturn greater challenges as consumers influenced by the
wide array of advances in consumer
for the global auto industry technology – from ever-more
may be looming. With market sophisticated smart phones to wearable
uncertainty in some emerging technology – will gravitate more toward
consuming products and services
economies, a recovering through digital means.
Europe, slowing sales overall
To sustain success in this changing
in Japan and a U.S. market business environment, OEMs and dealers
that is anticipated to stay will have to focus more on engaging this
rising “connected” customer. This will
around 16.4 million unit mean establishing a pervasive digital
sales levels through 2021,14 presence, engaging customers through
companies could face all available digital channels with car-
buying information that will take into
the very real prospect of consideration customer sensitivity and
increasing competition and be relevant to their particular
car-buying needs.
tighter auto markets in the
coming years. The growing use of digital technology
by consumers around the globe is
driving a profound change in the world
of business that will impact every
enterprise, including OEM and auto retail
businesses. Indeed, the digital business
model is on the verge of becoming the
new engine for growth in key economies,
both emerging and developed. OEMs and
dealers who are innovative, aggressive
in pursuing digital strategies that
engage the connected customer, and
proficient in communicating the right
message through the appropriate digital
channels at the right time, will become
automotive disrupters that can sustain
growth in the global automotive market
into the future.
Copyright © 2015 Accenture All rights reserved. 15For more information, please About Accenture References
contact:
Accenture is a global management 1. IHS Global Insight, 2014
Luca Mentuccia consulting, technology services and
outsourcing company, with more than 2. “IHS hikes 2014 U.S. auto sales
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more than 120 countries. Combining 17, 2014, Automotive News
luca.mentuccia@accenture.com
unparalleled experience, comprehensive
3. Accenture Digital Marketing
Jason P. Coffman capabilities across all industries and
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Managing Director business functions, and extensive
Automotive Industry Group research on the world’s most successful 4. Foresight Investor, Global and
North America companies, Accenture collaborates European Auto Market Outlook.
jason.p.coffman@accenture.com with clients to help them become February 2, 2015; Toyota Remains Top
high-performance businesses and in Global Vehicle Sales, Beats VW,
Christina Raab governments. The company generated net GM, The New York Times, January
Managing Director revenues of US$30.0 billion for the fiscal 21, 2015; “Emerging markets enter
Automotive Industry Group year ended Aug. 31, 2014. Its home page slow growth era,” Financial Times,
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christina.raab@accenture.com
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