A host of changes are on the horizon for the auto industry. The emergence of electric vehicles (EVs) will be a powerful force that’ll shape the automotive industry, as well as other industries. Globally, EV sales continue to rise. That’s just the tip of the iceberg, though. Numerous factors are poised to shift the automotive landscape, and a significant factor in the way forward for major players lies in effectively utilizing data.
A shift in consumer automobile purchasing habits is just one of the hurdles being faced by the automobile industry. In addition to EVs growing popularity, the demand for the vehicle ownership experienced a temporary drop. It could be a consequence of “the advent of car sharing, ride-hailing and self-driving vehicles” eroding the desire for younger generations to own a vehicle and a side effect of millennials’ economic woes.
Even if millennials’ economic situation rebounds and the demographic find themselves in the position to purchase vehicles, it doesn’t necessarily mean that they will. According to Scott Kelley, of the University of Michigan’s Energy Institute - “It appears that younger people are willing to treat transportation as an on-demand service, rather than paying the fixed price of owning a car.”
For those that do elect to purchase a car, their buying preferences will be much different than that of previous generations, with the younger crowd placing a higher emphasis on practicality and affordability.
At the same time, the main consumers of traditional vehicles, the baby boomers, continue to age and shrink as a demographic. The audience for a once well-established product and marketing strategy is starting to disappear, leaving both auto manufacturers and dealerships to wonder who they will sell their cars to in the not-too-distant future.
Then there are issues arising in dealerships themselves, such as a lack of skilled staff (resulting in lower sales) and high turnover rates. How will dealerships tackle these new realities and come to grips with the triple threat of new competition, a dwindling base of traditional consumers, and abysmal employee retention?
As we alluded to above: where there are challenges, there are also opportunities. Data is more abundant now than ever, and just as savvy entrepreneurs have used it to transform other realms like food service, it will have an impact on the auto industry as well.
Take the concept of the connected car for example. Though the technology for these automobiles with “internet and Wi-Fi access” is still in its infancy, they have the potential to bring sweeping change, as they may enable data collection on drivers’ habits and interests at an unprecedented scale. The use of such data stands to influence not just the in-vehicle experience, but the whole of the vehicle discovery, purchasing, and servicing process.
Imagine a potential dealership, where data from multiple sources enables staff to engage in more relevant conversations with prospective clients about their needs, increasing sales and providing a better experience for consumers.
Data could be used to enhance predictive maintenance and automated service scheduling, better prompting drivers to care for their vehicles and enabling greater long-term vehicle health. Even the design and production process could benefit from learning what consumers want and what they find most useful.
Data is already well on its way to transforming the auto industry. Current platforms are already capable of using real world datasets to define the brand affinities, interests, favorite hangouts, income groups, etc., of client and competitor audiences. This information, in turn, can aid auto players in their messaging and marketing strategies.
Near’s recent study found that Tesla is the go-to brand for the urban audience with higher income levels in California, compared to BMW and Mercedes. While 22% of car buyers visit dealerships of all three brands, a stunning 25% only visit Tesla. At an aggregate level, car buyers are spending the same amount of time at each of the brands. Insights like these can help these brands fine-tune their strategy to stay ahead of the competition.
Furthermore, tying information like this together with the abundance of first party data will enable dealerships to segment their existing customers better, gauge how their interests are changing, and identify the best time to upsell/cross sell products to them, train employees as to what features/conversations they need to engage with their consumers. Efforts are already being made to manage data transmitted from car to car, server to car, and even car to infrastructure installations (such as traffic lights) for the benefit of general public.
To stay ahead of the curve, auto players need to look at effective data management systems which can share actionable intelligence, thus preparing them for coming changes. Early investment in data technologies will grant the best chance to maximize the likelihood of future success.
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Also published in the MarTech Advisor.