Martin Benders

FRANCHISED car dealers have been warned that their vehicle retailing industry is ripe for disruption and, if they do not improve the customer purchase experience, someone else will do it for them.

There are already signs of significant fragmentation in the product, the ways to market and the consumer solutions on offer said Mazda Australia managing director Martin Benders.

“This is something that always seems to happen when ICT (information and communications technology) companies stick their noses into another industry,” Mr Benders said last week while delivering the keynote address at the Australian Automotive Dealer Association (AADA) national dealer convention in Melbourne.

He said ride-sharing and car-sharing applications were growing as consumers change their transport preferences.

“There is no doubt that these types of operations will fragment ownership and car-use models and possibly result in a reduction in the number of cars sold, but key to their success is providing a human an easy way to transact solutions to their immediate transport needs,” he said.

Martin Benders

“I think we sometimes fail to come to grips with just how much the industry is ripe for disruption to its value chain, not only upstream in manufacturing, purchasing, distribution but also downstream in retailing.”

Mr Benders said dealers had proved to be resilient and resourceful in adapting to local issues and challenges in the past, but he stressed that the ICT challenges coming would be of a different magnitude.

“ICT companies will continue to look for opportunities to grab control of our customers by offering better buying experiences,” he said.

“If we choose to ignore that potential impact, we face the prospect of losing those customers to the enterprising operators who figure out a better way.

“The evolving expectations of consumers for a simpler buying, transparent and easy transactions do require a rethink of the customer interaction on their retail journey.

“We as manufacturers are already accelerating our use of new technology within the product to improve the customer experience. You also need to see how new technology can act as an enabler to enhance the retail experience.”

Mr Benders said there were two interesting examples of how to change the purchase process currently operating in the US.

“One example is Roadster. They have developed a number of online tools to allow customers to conduct more of a retail purchase transaction online without even having to walk into a dealership,” he said.

“They even offer this function as a front end for dealer websites.

“Convertica is a little bit different. They apply artificial intelligence to respond to initial online inquiries. The system engages the prospect automatically in a timely manner and moves them up to a more qualified level before it passes on the lead to a real salesperson. It operates automatically without human intervention.”

The whole idea was to provide simple, timely responses and processes, as has been done in other industries.

Mr Benders said that “the road to a sale does require careful management, given the investment in a car, but how complex does that really need to be?”

He said that the ICT industry had already demonstrated its ability to get between customers and their traditional suppliers, and dealers had to be vigilant to prevent that happening in vehicle retailing.

“What parts of the automotive value chain can be taken over by another model that provides the consumer with a one-click solution?

“Such a model could bypass entrenched behaviour and processes and potentially own the customer.

“If successful, such a model could basically remove current industry players from customer contact and see us lose that relationship and future purchase opportunities.

“A good example is the Amazon Dash Button. It’s available in the US and UK and it is setup to immediately replace consumer items that are always annoying when they run out: the coffee capsules, the toilet paper and other things.

“These buttons operate through an Internet connection and they re-order the same products for home delivery every time with just one click without even coming up against competition in the supermarket aisles.

“While the brand name may have been present at some point, the owner of the consumer today is Amazon.

“Motor cars are not quite in that same vein today. The high investment involved in purchasing a car does provide some barriers. But how old are our sales processes in the showroom? In the business manager’s office? The service department?”

By Ian Porter