How OEMs Must Adapt to Changing Markets

by Axel Heyenga

Posted on 11-16-2017

Over its life­time, every com­pa­ny in every indus­try faces threats from a vari­ety of sources. These threats can come in the form of com­pe­ti­tion from out­side sources, the need to adapt to reg­u­la­tions, and in the case of auto­mo­tive, a change in the way the cus­tomer per­ceives and wants to con­sume the prod­uct or ser­vice they are selling.

Com­pa­nies that are suc­cess­ful when faced with these types of threats are will­ing to adapt how they do busi­ness to meet con­sumers’ chang­ing needs and expec­ta­tions. Those that are unwill­ing to adapt or try to cling to the sta­tus quo will quick­ly find them­selves left behind by their cus­tomers and the mar­ket. Let’s take a look at how the auto­mo­tive indus­try is chang­ing and adapt­ing to its con­sumer base.

New Usage and Own­er­ship Patters

The con­cept of mobil­i­ty is rapid­ly evolv­ing. Although urban areas have long been known for active use of pub­lic trans­porta­tion, sub­ur­ban pop­u­la­tions are increas­ing­ly inter­est­ed in pub­lic trans­porta­tion and oth­er alter­na­tive ways to get around and move away from the two cars and a garage mindset.

Com­pa­nies like Uber and Lyft, car shar­ing pro­grams, and expand­ing infra­struc­ture projects are chang­ing the way peo­ple get around, which inevitably alters the sales cycle for OEMs. They need to tru­ly under­stand how peo­ple want to achieve mobil­i­ty as well as how they want to pur­chase it.

As an exam­ple, accord­ing to the Ernest & Young study, “Future of Auto­mo­tive Retail: Shift­ing from Trans­ac­tion­al to Cus­tomer-Cen­tric,” near­ly 25% of con­sumers sur­veyed con­sid­er car own­er­ship as “not impor­tant.” This is a fun­da­men­tal shift in how con­sumers view auto­mo­tive and the trend is occur­ring at a very rapid pace. Many OEMs are already in var­i­ous stages of real­is­ing what this means for their brand, active­ly engag­ing in busi­ness­es learn­ing to derive insights and new busi­ness approach­es. This will allow them to focus specif­i­cal­ly on the con­sumers, how they want to get around, and most impor­tant­ly, how they want to pay for it. This will allow OEMs to deliv­er the right mobil­i­ty options at the right place and time at the right price.

New Busi­ness­es and Sales Models

With the chang­ing mind­set of the auto­mo­tive con­sumer, it’s only nat­ur­al that some com­pa­nies will find and exploit gaps in the approach­es of cur­rent mar­ket lead­ers. New entrants like Tes­la are fill­ing these gaps by mar­ket­ing and sell­ing direct­ly to con­sumers in a man­ner that is fast, effi­cient, and high­ly adapt­able to meet cus­tomer needs.

This is inter­est­ing, because, by pio­neer­ing these new sales tac­tics they can influ­ence cus­tomers’ expec­ta­tions to pre­fer their prod­ucts and their approach to mar­ket­ing, sell­ing, and deliv­er­ing them.

What’s more, these new entrants do not have the his­tor­i­cal bur­den of the exist­ing indus­try lead­ers; The heavy lift­ing of man­ag­ing equi­ty, pro­duc­tion plants, or the large work­forces that tra­di­tion­al OEMs have. They inno­vate at a quick­er pace, cre­ate more stream­lined expe­ri­ences, and are set­ting bench­marks that many of the tra­di­tion­al OEMs can­not cope with. In response, exist­ing OEMs need to focus on pro­tect­ing their ecosys­tems and incen­tivis­ing their depart­ments to think dif­fer­ent­ly; to relent­less­ly push for­ward and regain con­trol of their cus­tomer expe­ri­ence across all touch­points of the con­sumer journey.

Enabling Deal­ers

Aside from rethink­ing how they approach cus­tomers dig­i­tal­ly, OEMs need to under­stand the val­ue of the deal­ers as the phys­i­cal face of the auto­mo­tive brands. They are the first point of con­tact, bridg­ing the gap between the online and the offline worlds, and are inte­gral to tran­si­tion­ing the customer’s dig­i­tal jour­ney into a phys­i­cal one.

OEMs need to enable deal­ers to lever­age the infor­ma­tion about the cus­tomer from their dig­i­tal jour­ney up to the point of con­tact. Infor­ma­tion and insight from the data col­lect­ed on the con­sumer will allow the deal­er to more accu­rate­ly tai­lor their offer­ings and have more suc­cess­ful con­ver­sa­tions with the con­sumer. Deal­ers will evolve into con­sul­tants, fueled by OEMs that are deliv­er­ing out­stand­ing expe­ri­ences and cre­at­ing top-line rev­enue by build­ing advo­cates via con­sis­tent deliv­ery of a qual­i­ty, tai­lored, cus­tomer experience.

Topics: Digital Transformation, Automotive, customer journey, customer satisfaction, Lifecycle, personalisation, UK, UK Exclusive, Digital EMEA