How Digital Transformation has changed the automotive industry

The automotive industry has invested heavily in Digital Transformation, and it has profoundly revolutionized its dynamics, from production, to the driving experience, to marketing, and to Customer Service. In this post, we’ll see how.

It was 1886, more than 130 years ago, when Karl Benz filed the patent for what would become the first car in history. It was something that, initially, only a select few could afford. Within a few decades, however, the automobile became almost a fundamental need for everyone, as well as a status symbol. It was an invention that ended up forever changing our society, our cities, our habits, and, as a result, the world economy and production system.

But what is the role of the automobile in the present day? In 2018 alone, around 78.6 million cars were sold worldwide (according to the latest available data). This is compared to 1990 we were below the 40 million mark.

These are the numbers of an immense industry, with a very important supply chain, which employs, worldwide, more than 15 million people. If this industry was a state with its own GDP, it would constitute the sixth economy in the world (source). In short: we are talking about an enormous sector of great strategic value and a high symbolic value (also for its history) that is central for the economy.

We are talking about an industry that is currently experiencing an unprecedented phase of transformation, the most important and decisive, perhaps, of its entire history. The first seeds of the future of this industry have been sown in recent years. So: what is driving these changes? Digital transformation, combined with a new focus on environmental sustainability and alternatives to fossil fuels.

 

The digital transformation in the Automotive Industry

We can place all of the changes that the advent of digital technologies has triggered in every area of society under the “digital transformation” label: production and market processes, public administrations, even social dynamics. To put it briefly: Digital Transformation is the basis of the world in which we live today. All of this has led to profound changes in the automotive sector.

We could go on and on, but what is important here is to identify the real breaking point to which, in one way or another, all aspects of digital transformation are connected. We are referring to the role of the consumer, the customer, the user. It is here that the real revolution has taken place.

Individuals, in fact, are no longer simple satellites that revolve around companies, they are no longer an indistinct target, or just one among many. Instead, they are increasingly becoming the center of business. They are no longer just consumers; more and more they are prosumers and are increasingly considered as “individuals” with their unique characteristics and needs. And all this is also true in the automotive universe.

Customers are used to a fully digital world, so they expect maximum connectivity, even in the car. They expect a smooth and simple dialog with brands. They also expect that Customer Service is also in step with the times, available 24/7, with an omnichannel view, and conducted in a way that is increasingly personalized. Ultimately, they expect an increasingly digital experience, starting from the search phase, but also in the purchase phases in retailers, in the driving experience, and finally, when it comes to service and maintenance. In short: a 360-degree digital experience.

At the same time, we are talking about the same people (all of us) who use social networks to find a job, or book a table in a restaurant, a flight, a hotel, with a few clicks, through their smartphone. This is the same smartphone they use to find the best route to their destination, considering the real time traffic, costs, and possible unforeseen events. The automotive sector is forced to deal with all of this, and it is well aware of the many great opportunities behind these challenges.

On closer inspection, the new central role of the user is having a number of knock-on effects on the entire supply chain. Production processes, the brand image, marketing dynamics, and customer service are all changing. Automotive brands realize that the real added value is the customer, and they are trying to increase their engagement and loyalty (turning them into real active agents).

Big Data (and Smart Data) and the advent of IoT (the Internet of Things) fit perfectly into this groove. The influence of digital in the automotive sector is vast. We’ll look at the five major themes for where the industry could be heading in the next section. 

1. The car: from good to service (a turning point?)

This first point intercepts a trend that could be truly revolutionary: The passage of the automobile from good to service. This is the paradigm of the so-called MaaS (Mobility as a Service).

Think of the changes that digital has brought, for example, in the music industry: from the purchase of CDs (and even before, vinyl) we have moved towards streaming and on-demand listening. The same is happening in the film industry and also for software or storage systems.

One of the next areas to be hit by this wave, according to analysts, could be the Automotive industry. Think of services like Uber or car-sharing services that are becoming popular in different cities. This future is already approaching and, of course, these dynamics are increasingly digital.

For example, Volkswagen is already working on its own car-sharing app, and we’re sure, it won’t be the only big brand to do so.

2. Increasingly connected cars

One of the biggest areas of investment for the Automotive Industry is here: increasing connectivity systems in cars. Here, this is digital applied to navigation, safety, emergency management, multimedia entertainment on board, and maintenance (also predictive). It will change the very way we “live” and interact with our vehicles.

Of course, this can have an enormous positive effect on the businesses of automotive brands: think of the various opportunities for personalization, and the purchase of combined and tailored packages. Digital solutions will be integrated that are tailored to the driver. We’ll return to personalization later in this post.

3. Digital marketing will increasingly shift from Customer Service

While there are many digital marketing trends impacting the sector, an increasingly central trend is Customer Service. This is where the real competition between automotive brands is moving. To understand this trend, let’s take a look at the data, which involves both brands and dealers (source):

  • 54% of customers say they would buy a car from a dealer who offers them the best experience, even if they don’t have the lowest prices.
  • 56% of dealers, in turn, would buy more vehicles from the carmaker if the process were quicker and easier.
  • In general, an improved, easier, and smarter retail experience could increase car sales by 25%.

We continue with other data provided by Capgemini:

  • Only 10% of customers who are dissatisfied with their dealer experience will return to the same place for their next purchase.
  • In contrast, 87% of “highly satisfied” customers will buy the same brand; 85% will buy them from the same dealer.

At this point the question arises: how can Customer Service be improved?

There are many answers, but they all point to digital. It’s about learning how to track and then interpret customers’ Customer Journey in the best possible way. Translated: analysis of Big Data. Here, it’s about segmenting the audience, dividing it into targets to be hit with specific, tailor-made communications, and finally to go as far as personalization.

4. Aiming at personalization

If the real objectives of the Automotive sector are engagement, loyalty, and the transformation of the consumer into a prosumer, the recipe for achieving them is personalization.

Here, it’s about addressing customers and drivers in an individual way through an authentic one-to-one dialog. It is one of the oldest secrets of trade and “advertising,” but today it is made possible by the most advanced technologies made available by Digital Transformation. There are companies that specialize in this field, such as Doxee, who makes data-driven and customer-oriented marketing and customer service the heart of their business.

In the automotive sector, a personalization strategy must be put on track in all areas, for both brands and dealers, and for technology and on-board connectivity (as we have seen above), marketing, Customer Service, and for possible up-selling and cross-selling actions. Underlying this is the need for extreme attention to security issues, and it is on this delicate aspect that we will close this post.

5. Cyber security

The Automotive Industry is the world’s second-largest industry in terms of data availability. New “smart” vehicles collect data on drivers, roads, traffic patterns, usage and wear of various components, service and maintenance. On the horizon, of course, are self-driving cars, which are already being tested today.

The safety and proper management of this enormous amount of data is both delicate and fundamental for those in the automotive industry. 

 

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