18.01.2022
New cars will be sold over the internet, electric cars don't need an oil change, software updates are already available "over-the-air": Will car dealers soon run out of business?
Digitalization has an impact on almost every part of our daily life, and it also effects how we purchase new things. Online shopping is becoming more and more relevant, and the pandemic is pushing this trend forward. Right now, even car manufactures have to think about how they can improve their online presence to be as appealing as possible for the customer.
Today, car dealerships play an important role in the sales system but that can quickly change. Many startups like Genesis, Nio, or Tesla are already at the point where they only sell cars online. They still have image stores in metropolitan areas around the world, but these are just for self-promotion. All this has a ferly simple reason behind it. It is just a matter of cost.
Expensive distribution centers
Developing a distribution system through car dealerships is a long and costly process. Automotive manufactures spend millions to build these centers and even have to pay the dealerships a significant margin. Image wise, car dealerships have a pretty bad reputation. For many people a visit at a car dealership is an unpleasant situation.
Online configurator
Over the last couple of years many car manufactures started to develop an online purchasing experience. They started to add configurators to their websites which enable the potential customer to build their own virtual car. Even though car companies put high levels of effort into their online appearance there is still a lot of room for improvement.
Daimler case
Daimler’s target is to increase online sales to 25 percent by the year 2025. A quarter of all sales online, this will be tough business for Daimler, not only in Europe. On the other hand, the proportion of vehicles sold online over smartphones, tablets or computers would have to be much higher in the upcoming coming years in order to adapt to young customers, especially in the USA or China.
The question remains whether buying a car on the Internet can be as easy as buying a book as Daimler Sales Manager Britta Seeger demands. A car purchase holds a big investment and especially a luxury car manufacturer like Daimler should know what that means for the average customer. The inhibition threshold of buying a book is different to buying a car. Nevertheless, Tesla showed with their Model 3 that customers are willing to spend a significant amount of money within a few clicks.
What does that mean for the automotive industry?
The upcoming change in purchasing behavior is going to have a big impact on the industry. Established car manufactures will have to compete with upcoming startups. At the end of the day the company with the best online performance will win in the long run. Brands like Tesla are already setting the focus on the right track but the traditional brands still have a chance to adapt but this step has to happen right now.
Written by: Antonius Eich
Sources: Mercedes Benz - Strategy Update 2020; Focus - “Wie wir künftig unsere Autos kaufen”