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The Customer is also driving change in the auto industry

An advertisement caught my eye recently, image attached, as it illustrates how far the consumer has come. This is the key. As Tim Hughes rather eloquently put it, the transformation we are seeing today is not in how we sell as that is only a reaction to the changes in how customers buy.

For those that do not read Swedish, there is a link to a copy of the advert at the bottom of this article.

The key points:

  1. This is a print advertisement, mainstream daily press
  2. The headline says, the street is our showroom, the showroom is in your mobile

The small print 

  1. Welcome to a website
  2. Pick a model that suits you, with an example given
  3. Order direct
  4. Pick up the car at one of our resellers

The offer 

  1. Private leasing deal
  2. No deposit
  3. One monthly fee
  4. Servicing and insurance included

The implications

  1. Buy a car online, direct from the provider – little or no need for the dealership
  2. Monthly fee – you do not need to own a car

This is not something that is thrust upon customers. It is a response to how customers are now buying, even significant purchases/commitments. Online is where the decisions are made, the dealership visit to make sure/confirm. This is confirmed by Per Anderberg of QEM Consulting who works with auto dealerships who is finding footfall at dealerships to be down by about 50% in the last 3 years but sales are up. In addition to this purchasing pattern, ownership is no longer the only option preferred by the majority, the shared economy trend is now also becoming evident.

While this in itself is not a major finding, the implications are and will continue to be part of the transformation drivers. Once the customer is used to a way to purchase, change and adaptation of new service options happen very quickly indeed. In our full analysis we are finding that so many industries are going to be impacted. From the auto manufacturers themselves to the insurance industry to finance. This is before we even mention the new developments with battery powered and self drive, both of which will have a profound impact not only on the above industries but many more as well as national economies.

Takeout 

Auto manufacturers will still make cars and be needed. However to capitalise on consumer changes, making more cars and becoming more efficient is not the solution. Just consider the classic strategy case of the ice making industry and its reaction to fridge freezers. The auto sector is about to have its own moment of transition and it will be led by how customers buy. How they react to that will determine who will gain and who will loose out. As always the future is closer than we might think.

This post is a good example of what we are finding during the strategic review that I am currently undertaking of the auto industry. It is a fascinating exercise and as we map out all the factors and changes that are coming it is clear that many industries are about to be turned upside-down or eliminated altogether. Naturally in such situations there are also opportunity abound to those that are ready.

You can download a PDF of the complete article which also includes a copy of the advert, click here.

By | 2018-06-06T15:17:36+00:00 July 21st, 2017|Strategy|0 Comments