Technological disruptions and new client needs are causing the automotive industry to evolve toward a model based on mobility services. Mobility on demand will become its greatest component, which will require transitioning from a product model to a service model. Therefore, dealers will need to develop new competencies and capabilities aligned with:
- a service-centric model,
- smart fleet management,
- new sources of profitability and
- reinforcing customer relationship management and customer experience capabilities.
1. Radical changes ahead
The automotive industry is in a process of deep revolution, which will affect the dealer network and their current business models, among other things.
These changes are driven by technological disruptions and new client needs. In effect, both factors are moving the industry to a model of mobility services, for which mobility on demand (MoD) will become the greatest component.
Once autonomous and connected cars take off and electric vehicles become the main segment (mainly in urban areas, as mentioned in the “Future of automotive mobility1 ” Arthur D. Little study), MoD will become a reality.
The study expects “a share of up to more than 50 percent electrified vehicles (full battery electric or hybrid) by 2030 – depending on segment. It also predicts “the rise of mobility”
platforms offering mobility on demand through vehicles either produced specifically for this purpose or privately owned and temporarily put into the mobility system by the owner”. MoD involves transitioning from a product model to a service/client model, in which, based on the autonomous and connected car, dealers’ service offerings should be adapted to customer needs.
Therefore, dealers will need to evolve their strategies:
In short, dealers must develop new competencies and capabilities, giving rise to a new model of “mobility solutions hub”
I. From a product-centric model to a service-centric model
Dealers currently follow product-centric models, in which sales teams manage demand generated from marketing, and after-sales teams react to client needs. In other words, they have a long way to go to achieve true customer-centric models.
Today, the customer is losing interest in the idea of owning a vehicle, and looking for new ways to meet their transportation needs. This is opening their appetite for covering their mobility demands through a service model. However, it does not mean that they are not going to buy cars; it means that this will likely be a more pragmatic purchase.
New consumer demands are expected to evolve around certain product specifications (connected-autonomous car, security) and mobility services (pay-as-you-drive according to needs such as daily transportation, weekend traveling and urban mobility). The current sales model needs to evolve with consumer behavior. Dealers should adapt their strategies, offering mobility services aligned with consumer needs around services (transportation, pick-up, etc.) and products (renting, maintenance, insurance, financing, etc.).