Something huge is happening in the automotive sector. It’s been described as an ‘epochal industrial shift’, a ‘revolution’ and ‘a shift like moving from the horse to the car’. And that’s just by the Financial Times, a newspaper not really known for flamboyant descriptions!
This shift has massive implications for manufacturers, dealers and consumers, so it’s vital to understand it. Fortunately, Guillaume Langle, Global Automotive and Mobility Practice Leader, is the perfect expert in the sector to explain what’s happening and what it means for brands.
In a two-part conversation, he told us about the key trends and changes, and what they mean for customer management and value creation.
KEY TRENDS IN AUTOMOTIVE
Guillaume, when people talk about a revolution in the automotive / mobility sector, what do they mean?
Actually, they should be talking about multiple revolutions, not just one. There are three major transformations happening:
- new mobility models
- car connectivity
Added to that, you have new consumer expectations on the digital journey and personalization. And other factors too – such as the global shortage of semiconductors increasing waiting times for some new car models to up to 8 months.
There’s a lot of complexity here, and all these different trends are interconnected. Themes like technology, connectivity, the regulatory and policy landscape, and consumer attitudes to personalized services flow across all these trends. As we know that brands with high customer engagement and providing great experience are the brands that have the highest value, it is important to understand how this change is going to be embraced.
NEW MOBILITY MODELS
Let’s take it a trend at a time. Starting with new mobility trends.
Before now we’ve all been used to talking about the car and ownership of the car. But the younger generation today has moved away from owning things towards a pay-as-you-use approach to many aspects of life. And it’s the same with mobility.
Add to that the fact that buying and owning a car is very expensive for something that spends 90% of the time stationary in front of your driveway or in your office parking lot with its value deteriorating day after day. So, one pattern at work here is that the younger generations may care less about owning a car, and more about arriving on time and without hassle, whether that’s by e-scooter, bus, car share or anything else.
So, it’s all about Generation Z?
No, that’s just part of it. The new mobility models are also supported by the offers coming on the market, such as car sharing, which in turn have been made possible by technology development, specifically new software (like connected cars) and apps.
Interestingly, the major car rental companies are also adapting their models to answer the demand for mobility. If car manufacturers want to continue attracting demand, they will need to move from being manufacturers into going into the mobility offer and being able to deliver greater customer experience.
Do the new models mean we should stop talking about ‘cars’ and ‘automotive’ and just talk about mobility?
On the contrary, we must continue to talk about cars. Because the car is still about fashion, it’s about emotions, it’s about technology. That’s always been the case since the first car came on the scene.
And there are still car fans – you see that with the number of car magazines, TV shows about cars, motor shows, races etc. And some people will talk to you about the performance of a particular car, it’s all part of the emotion. So, we still need to talk about cars, but only strongly bound to a great experience. The ‘ultimate driving machine’ will turn into the ‘ultimate usage experience’.
The big challenge for historical car manufacturers is that they are all experts in the industrial process. Differentiation comes in the way the brand is managed. The major challenge is delegating distribution to an independent dealer network. And this model needs revisiting – I’ll talk about that later on when we talk about customer management implications of the big trends.
So, car ownership isn’t dead after all, despite the new mobility models?
It’s a complex picture! There’s a definite transformation – which we’ve already seen with the move from ‘buying with cash’ to leasing. But I see three different elements that will influence the change in the automotive sector – for example, who will still buy cars and what they will buy. These are:
- Sales channels – car sales channels include fleet sales and sales to rental companies, as well as to private consumers
- Technology – not just to allow convenient, contact-free mobility solutions, but that will allow peer-to-peer car renting, opening up an additional source of revenue for the household instead of having it sit in front of their home
- External factors – such as the increasing stringency of regulatory requirements for internal combustion engines, and the increasing trend for cities to limit the use of all cars except ‘clean’ cars.
So, no, car sales aren’t finished – after all, global sales of electric vehicles (EVs) alone are forecast to reach 10.7 million by 2025 and then 28.2 million by 2030. But the way that sales will be carried out with e-commerce development, and the way after-sales processes will happen, will be different, as will some of the players in the market (hypermarkets selling cars, mobility services to name a few).
ELECTRIFICATION AND CAR CONNECTIVITY
That takes us to your second trend: electrification.
For consumers, the big questions around electrification are around battery life and range. For example, if they live in a city, they may have to drive an EV to comply with local regulations or taxes. But will the battery range of their ‘city car’, and the EV charging network, be enough to get them to the countryside or on holiday?
But at sectoral level, the issues are much bigger. A petrol engine is much more complex than an EV drivetrain. Repairs to the car are as likely to be about a software patch as about a mechanical repair or a maintenance part replacement. The effect on manufacturers’ supply chains, revenue streams, and relationship with consumers will be profound. Hence the need to grow your customer relationship by developing a strong customer service operation.
It sounds like we’re also talking about the third trend here: car connectivity.
Absolutely, they’re linked. There’s something super-interesting happening with car connectivity. It’s already happening with some of the ‘alpha’ EVs, and will increase in future, that the car and the manufacturer will finally become connected.
Until now, if something needed to be done on the car, it had to be done through customer initiative (and the dealer); the manufacturer didn’t know what was happening with the car.
But if the car and the manufacturer are connected, this creates an unlimited number of possibilities for enhancing the manufacturer-customer relationship through the car. The car becomes a platform.
Can you explain what the car-as-platform could mean in practice?
The connectivity could mean the manufacturers knows how the car is driven, average mileage, whether it has had a bump, whether the battery performance has declined etc. The manufacturers could use this data to build predictive models – for example, proactively sending messages to the car screen to say there is a risk of battery failure, and it should be checked out.
The manufacturers could also prompt customers on how happy they were with the dealership, or other aspects of the purchasing or ownership experience.
Could the brand-customer communication be two-way?
Yes, there’s the possibility for the car to have a button that takes the customer straight through to the manufacturer’s customer care operation; again, that is a good reason why a manufacturer should have high-performing customer service. This creates options for additional paid services or access fees – like a navigation map update or for another country or POI, onboard entertainment, better warranty protection, battery range extension for a weekend, a special insurance package and so on. Brand-to-customer communication also happens through social media, where massive opportunities lie in a brand capability to ‘listen and engage’. Today, too many social media moderators are part of the marketing team, used as outbound communication channels.
THE FUTURE OF CUSTOMER MANAGEMENT
These are big changes. How do the automotive sector manage the future of customer service and value creation in the midst of these trends?
Manufacturers, dealers, customer management providers, and new entrants to the sector – from software companies to EV charging point operators – need to look at this holistically, understanding that a new ecosystem is being built. The role of customer service and customer relationship management is evolving and adapting ahead of this, and there are huge opportunities for those that get it right. Because building a great experience contributes to building a great brand.
Read Part 2 of our conversation with Guillaume Langle– coming soon – to discover the implications and way forward for the customer relationship in the automotive / mobility sector.