http://www.afr.com/p/world/digital_dealerships_transform_car_il72QPmCUBJ9WW3mSXoKfM Digital dealerships transform car buying 30 Dec 2013 by Henry Foy
[image http://www.afr.com/rf/image/2009-2014/AFR/2013/12/29/Photos/5e607d7c-70bf-11e3-a806-7218d29940f4_tesla--646x363.jpg US electric car manufacturer Tesla Motors, as well as setting benchmarks for emission-free engines and batteries, has been a trailblazer for online car sales, launching its retail operations through its website only. Photo: Jim Rice ] At first glance, Audi’s flagship car showroom on London’s Piccadilly could do with a few more cars. In the shadow of the Ritz Hotel, and across Green Park from the gates of Buckingham Palace, a single two-seater R8 Spyder sports car, the brand’s most exclusive model, sits alone in the shop’s window. But instead of half a dozen other cars wedged in around the store as would be typical in a dealership, there are giant television screens controlled by touchpads on the floor where the carmaker’s complete range of models can be customised, viewed, repainted and accessorised. Audi thinks this shop marks a new future for car retailing. There are no mechanics in overalls, just salespeople in suits. Miles from the nearest warehouse, on one of London’s most sought-after streets, customers can browse and interact with the premium brand’s range digitally, and buy the car without ever getting in it. Online sales direct from manufacturers, plus stores such as Audi’s and the entry of groups such as Google, are changing the way carmakers interact with customers and drivers choose their new cars. The changes come as margins and profits slump at the traditional dealership model and a new generation of buyers look to shop for vehicles in the same way they purchase music, clothes and gadgets. Global online car sales will increase eightfold between 2011 and 2025 to almost $US4.5 billion, according to research by consultants Frost & Sullivan, to account for just under one in every five new car purchases. In more advanced economies such as the UK and US, online sales will swallow a quarter of the market by 2025, according to the research. “Digital showrooms and online retailing is the big shift that is coming to the car industry, and it is coming fast,” says Sarwant Singh, a partner at Frost & Sullivan. “This is going to completely change the way people choose and buy their cars.” Brick and mortar dealerships are expensive. Margins for dealers on new car sales in Europe are typically less than 1 per cent of the price of the vehicle, as tough competition and heavy discounting drive down prices. And gone are the days where families would spend a weekend trekking between half a dozen showrooms on the outskirts of a city to choose their new car. A few clicks on the internet can show customers the products on offer. Traditional car buyers may lament the lack of bargaining with the dealer or the deployment of faux nonchalance in order to win a last-minute discount. The buyer is in control But websites packed full of details and with clear prices mean in the digital age, the buyer is in a better position, and the dealer has less opportunity to increase the price with added extras. And for manufacturers, direct online sales can cut out a large amount of overhead costs and boost their margins. European carmakers have seen profitability slump over the past decade amid the worst car market in the region for two decades. According to a study by market researchers GfK Automotive, roughly a third of British under-35 year-olds would buy a car online, while 80 per cent have researched the car model they want to buy before they even set foot in a dealership. “Buying cars directly from manufacturers via the web is only going to gather momentum,” says Damian Long, director at GfK Automotive. “The next place you buy a car may soon be Google.” The world’s largest search engine has quietly rolled out a price-comparison site that aggregates dealership prices for new cars for local areas in the US, a platform that could completely overhaul the way dealerships - which have previously been shielded from direct competition with each other - have to attract buyers. Meanwhile, social media websites such as Facebook have built dedicated motor teams to work with manufacturers to tailor their advertising to users, specifically targeting a generation of younger people that have become used to buying online expensive items such as laptops or televisions without having tested the product first. “It is clear that the old-style model of dealerships just is not sustainable any more,” says a senior executive at the UK sales unit of a global carmaker. “Everyone is finding there is no way to make money from it.” Manufacturers are taking the hint. Nissan, Jaguar Land-Rover, Mini and Mercedes-Benz have all opened digital stores similar to Audi’s across Europe, while Ford, Peugeot Citroën, Fiat and Renault have launched websites for customers to buy cars from them directly. US electric car manufacturer Tesla Motors, as well as setting benchmarks for emission-free engines and batteries, has been a trailblazer for online car sales, launching its retail operations through its website only. Renault’s entry-level Dacia brand has made online purchases a centrepiece of its budget, low-cost image. Renault itself closed down a third of its UK dealership network in 2012. Other mainstream brands such as Ford and Peugeot have cut the number of sales points. But the typical dealership model may well live on, in a smaller role, as a place to bring cars for repairs and regular services – typically higher-earning business operations than new sales. That allows for premises to be moved into less costly areas, while the single flagship digital store can be situated in more expensive city centres where footfall is higher. In Audi’s store on Piccadilly, customers are engaging with the new approach. In its first 10 months of operation as a digital-first store, Audi reported a 60 per cent increase in new car sales, and a higher average sales price than the company’s UK dealership average. “Fifty per cent of their customers are buying cars without a test drive,” says Frost & Sullivan’s Mr Singh. “You know what you want before you even get there.” [© afr.com] For all EVLN posts use: http://electric-vehicle-discussion-list.413529.n4.nabble.com/template/NamlServlet.jtp?macro=search_page&node=413529&query=evln&sort=date Here are today's archive-only EV posts: EVLN: driveelectricorlando.com lets you plugin through Orlando, FL EVLN: Number of US public charging stations climbed 30% in 2013 EVLN: Even Bhutan wants-in on a Leaf EV taxi fleet EVLN: EVs are beneficial to Singapore drivers + EVLN: Daimler’s “sonorous purring” to protect their EV investment {brucedp.150m.com} -- View this message in context: http://electric-vehicle-discussion-list.413529.n4.nabble.com/EVLN-Digital-dealerships-copy-Tesla-transform-car-buying-tp4667122.html Sent from the Electric Vehicle Discussion List mailing list archive at Nabble.com. _______________________________________________ UNSUBSCRIBE: http://www.evdl.org/help/index.html#usub http://lists.evdl.org/listinfo.cgi/ev-evdl.org For EV drag racing discussion, please use NEDRA (http://groups.yahoo.com/group/NEDRA)
