THE motor industry services division of Deloitte has drawn on its overseas resources to develop a vision for the future on both the wholesale and retail sides of the automotive industry and says that it sees a clear trend towards decarbonisation, digitisation, and mobility. 

The report, Charging Ahead: Pioneering the next chapter of the Australian automotive industry, says that the pace of these shifts is uncertain, but they are inevitable. 

It said that in a world without fossil fuel cars, where cars are connected and shared mobility is commonplace, OEMs and dealers will face a series of new opportunities and threats.

OEMs

Opportunities:

Understanding of car condition. OEMs will have near real-time understanding of a car’s condition providing unprecedented insight into how cars are used and maintained, and what faults may have arisen. How they act on this information in tandem with dealers will be key to customer loyalty.

Connected car subscription and platform fees. Connected cars offer opportunities to sell subscription services to premium software for car performance and personalisation. In addition, OEMs’ ownership of the ‘platform’ may enable charging fees or commissions for third party access to the cars’ systems.

Electrification and mobility ecosystem.  Charging infrastructure and the push towards shared mobility offer OEMs the ability to expand beyond the car ecosystem to offering electrification and mobility solutions.

Threats:

Shifting core competencies. Connected electric vehicles are shifting manufacturing expertise from mechanical to electric. Connected electric vehicles require new materials, parts and production processes in addition to relying more heavily on software design and technology. 

This lowers the barriers to entry for non-traditional competitors to find success in the market.

Cyber security and data protection. Connected cars may become targets for cyber criminals, and OEMs must ensure they have appropriate safeguards in place.

Open vs closed car ecosystem. OEMs need to determine whether they will opt for a closed or open ecosystem for their connected cars. In open ecosystems, third party applications (e.g. Apple CarPlay) are relied upon to share ownership of the customer experience whereas OEMs have more control in closed ecosystems.

Dealers

Opportunities:

Selling more new units. The average lifespan of an electric vehicle may decline due to battery longevity issues and higher ‘total write-offs’ from accidents where batteries are damaged. The industry will likely sell a higher proportion of new units over used units.

Car complexity. Connected cars require additional parts, including sensors and actuators, and rely significantly more on software. The increasing complexity of vehicles may lead to greater product recalls and warranty claims. Dealers will be instrumental in supporting positive customer experiences for recalls and warranties.

Growth in fleet buyers. While the uptake of shared mobility has yet to translate into a significant reduction in car ownership, mobility fleets will become large fleet buyers for dealerships.

Threats:

Used marketplace alternatives. Unknown battery longevity and higher utilisation from shared mobility may result in an aged vehicle not being sold as a ‘used car’. Aged vehicles may instead be sold for scrap to recover materials and components for new vehicles.

Headwinds for servicing. Electric vehicles do not require annual maintenance or regular fluid changes therefore servicing will be more infrequent. However, electrification re-training and certification may impose greater costs on dealers for servicing. In addition, the frequency of touchpoints between dealers and electric vehicle owners will decline, which could reduce sales opportunities for dealers.

Expanding capabilities of OEMs. With increased understanding of car health, and connectivity to the customer, OEMs will have more touchpoints with the customer, which increases the complexity and coordination required between dealers and OEMs. The dealer network will continue to play an important role in the ecosystem, however the role of dealers may be refined and more coordinated with the role of OEMs.

Conclusion:

While the future is full of possibilities, it is evident that the three shifts are inevitable. There will be a rebalancing of customer touchpoints to be more equal between dealers and OEMs. Taking these opportunities to drive customer loyalty and lifetime value will be key to the success of the Australian automotive industry.

In the future, OEMs will still need dealers. Deloitte’s 2023 Global Automotive Consumer Survey found that dealers engender the most trust among consumers and it is this trust that will continue to create positive customer experiences.

It is more important than ever that dealers and OEMs work together to understand how roles and responsibilities may need to change and how business models are reconfigured and created to achieve this.

This is a positive disruptive period for the industry as new revenue opportunities emerge and the automotive ‘economy’ as a whole will become more prosperous. Dealers and OEMs need to work closer together than ever before, focus more deeply on the customer to share in a brighter, brilliant future.