Can you share some insights on how customer behavior and expectations are changing in terms of how they engage with brands? How is this affecting the retail sales environment?

The decline in brand loyalty, increasing online product comparison, and the shift towards online purchase initiation are reshaping customer engagement. This necessitates a focus on seamless online-offline transitions and optimizing the online customer journey. OEMs must invest in online touchpoints and cost reduction measures to remain competitive. Embracing digitalization as an opportunity enables OEMs to innovate and meet evolving customer expectations. A digital-first approach, coupled with seamless transitions between online and offline channels, can enhance efficiency, broaden market reach, and foster stronger customer loyalty.

What is your opinion of electric vehicle (EV) pure players’ digital retail strategy in comparison with traditional OEMs’ retail strategy and how do you see digitalization evolving in the coming years for both EV and ICE OEMs?

We’re witnessing a valuable exchange of strategies between electric vehicle (EV) pure players and traditional OEMs. While newcomers excel in network formats and online journeys, they sometimes overlook key factors like network partnerships and customer loyalty. Achieving balance is crucial, considering local ecosystems and customer mindsets. Digitalization is now a necessity, offering significant productivity gains and cost reductions. EVs face educational and emotional barriers in some regions, but leveraging AI can boost sales. However, this advantage may diminish as EV acceptance grows and offerings evolve in the coming years.

Apart from an emerging preference for direct sales models among OEMs and eliminating the need for legacy retail networks, especially in Europe, what are the other industry movements that will impact stakeholders involved in the retail value chain?

In addition to the rise of direct sales models and the phasing out of legacy retail networks, other industry movements are reshaping the retail value chain. Diverse retail formats, such as service factories and pop-up stores, offer OEMs opportunities to reduce costs and increase flexibility. Changing customer behaviors, new market entries, and evolving legislation, like the European Green Deal, also impact the retail landscape. Integration of new technologies like AI is essential for maintaining competitiveness. Overall, adapting to the complexities of the industry requires understanding and adjusting various parameters, including skill sets, lead management, data utilization, organizational structure, and governance. Effective management of these interconnected functions is crucial for driving the organization in the right direction.

What are new business models that can be expected alongside the growth of digitalization in automotive retailing?

The future of automotive retailing will see diverse business models tailored to specific regions, brands, and customer segments. These models will be more flexible, data-driven, and adaptable to individual preferences, whether it’s for fleet or private customers, financing options, or product types. Simplified offers, agile organizational structures, and effective digitalization will be key in managing the added complexity and meeting diverse customer expectations. Survival in this evolving landscape hinges on controlling costs while satisfying varied customer needs.

Countries like the US have favorable dealership regulations that demand dealers’ involvement in every retail process. In this scenario, how are OEMs positioned to digitalize various steps in the marketing and sales process?

In the US, digitalization of marketing and sales processes is ahead of Europe, but favorable dealership regulations pose challenges for OEMs. These regulations make it difficult to streamline processes and achieve cost reductions. Centralizing digital steps often requires managing them independently or compensating dealers without data guarantees, similar to Europe. This complexity underscores the need for alternative models like agency arrangements.

Personalization and as-a-service models have become focus areas in automotive retail. What are your thoughts on this?

They will work if they are embedded in a holistic Brand ecosystem, because they must be credible, easy to understand and feasible. If they are not structured well, it is only a trend, not a sustainable or profitable solution for the OEM. The market has proven that personalization and “as-a-service” models have not generated the expected volume and/or were not profitable. The success stories were well embedded in the overall Brand Retail strategy and the “as-a-service” offer limited to a minimum to stay profitable.

Is there such a thing as a robust, future-proof retail model? If so, what do you see as being its key attributes? Will there still be room for traditional retail models in this new environment?

There isn’t a one-size-fits-all, future-proof retail model. The future lies in flexibility, agility, and cost efficiency. Embracing controlled experimentation will be crucial, with predefined structures in place. As the industry evolves, new players like leasing companies and tech giants will emerge, increasing complexity. Success will hinge on mastering data control and efficiently meeting customer expectations. Traditional models will coexist, but adaptation will be key in this dynamic environment.

What do you see as being 4-5 critical factors for a successful sales performance and for an enhanced customer experience (CX)?

  1. Stay close to your customers
  2. Control the data
  3. Reduce complexity
  4. Control the costs
  5. Remain flexible and adjust to client needs

Sustainability has emerged as a big theme, including for the mobility industry. How will decarbonization imperatives impact the industry and, more specifically, automotive retail?

At MSX, we’re fully committed to integrating sustainability across all aspects of automotive retail. Our Green Deal Consultancy is leading the charge by guiding businesses through the complexities of the European Green Deal (EGD). Our tailored services help OEMs, NSCs, and dealers not only comply with the EGD but become sustainability leaders through innovation and efficiency improvements. From operational adjustments to adopting sustainable technologies, we ensure our clients thrive in a greener future.

Decarbonization imperatives are rapidly transforming the mobility industry. For automotive retail, this means a shift towards sustainable practices is not just wise, but necessary. Expectations now include integrating green technologies into showrooms and service centers and embracing circular economy principles. This evolution is driven by consumer demand, regulatory pressures, and a shared ethical responsibility towards our planet.

The European Green Deal (EGD) will require companies to embrace sustainable practices and work towards regulatory compliance with EGD goals. Can you tell us a little about MSX’s approach and the company’s Green Deal Consultancy?

The European Green Deal (EGD) necessitates embracing sustainable practices and compliance with regulatory goals. MSX offers a comprehensive Green Deal Consultancy to guide businesses through this transformative landscape. Our services include:

Energy Assessment & Consulting: We analyze your business, recommend energy-efficient improvements, and help you prepare for upcoming changes. Our detailed analysis identifies savings opportunities and grant eligibility, supported by in-person and virtual coaching.

Grants & Improved Financing Assistance: MSX assists in grant applications and funding utilization to enhance dealership efficiency. Green credits and financing options are available for sustainability-focused initiatives.

Program Management: We ensure successful Green Deal adaptation by tracking, measuring, and reporting investments, savings, and carbon footprint reduction initiatives. Our experts help implement and manage low carbon operations, providing comprehensive documentation of progress.

With MSX’s support, businesses can navigate the EGD landscape effectively, maximizing positive outcomes and achieving sustainability targets.

What would be your vision of how the automotive industry and automotive retail can enhance their sustainability initiatives? And what kind of challenges are likely to emerge as the industry looks to a green future?

In envisioning the automotive industry’s sustainability future, I see full integration across products and processes to minimize environmental impact. This entails making electric vehicles, renewable energy, and sustainable materials the standard. Automotive retail can spearhead this change by not only selling sustainable products but also embodying sustainability in every customer interaction. Imagine showrooms powered by renewable energy and virtual reality test drives reducing the need for physical prototypes, all while educating consumers about sustainability.

However, transitioning to a green future comes with challenges. It requires significant investment in new technologies, mindset shifts, and training. Regulatory compliance, changing consumer perceptions, and behaviors towards sustainability are also hurdles. Yet, these challenges bring opportunities. Retailers innovating in sustainability can set industry standards, attract environmentally conscious consumers, and benefit from operational efficiencies. It’s not just about compliance; it’s about genuine commitment to our planet’s future.

Amrita Shetty

Amrita Shetty is Communications & Content Senior Manager within Frost & Sullivan's Mobility practice.

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