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Digitization Poised to Upend Traditional Auto Retail Models

Joshua Hoffman
July 27, 2015

Digitization is having a disruptive impact in many industries, but the changes coming in the automotive retail sector are especially staggering. Automotive sales processes have followed fairly conservative, longstanding traditions for years. People come into the dealership, walk around with a sales representative, test drive vehicles, sit down and talk over some details while the sales worker takes notes and wait to see what managers think.

"Car buyers increasingly expect a more intuitive, streamlined sales experience."

If managers are behind the deal that the sales representative is offered, the visitors wait until a financing executive is available, and then sit back while the individual communicates with banks, prints out complex contracts and asks everybody to sign on many dotted lines. Car buyers increasingly expect a more intuitive, streamlined sales experience, and a recent Frost & Sullivan study explained that digitization is the vehicle bringing the auto retail sector up to speed.

Looking at digitization's impact on auto retail

Going digital in auto retail is about more than just giving your sales associates tablets and letting them handle some financing responsibilities. The study found that consumers are going to heighten their interest in purchasing cars through entirely digital means, making tools like digital showrooms, online service booking and digital experience centers essential. As auto retailers embrace digitization, the news source predicted that lead conversion ratios will improve by approximately 80 percent in the years following 2020.

This move toward digitization is fostering clear silos within the auto retail segment. Moving forward, the study explained that retail models will shift to focus on three distinct customer engagement touch points - test-drive centers, service centers and delivery centers. These three distinct models will work from a hub-and-spoke model to give consumers an end-to-end experience that supports digital purchasing methods. This methodology could be in place as early as 2016.

Purchasing cars is quickly turning into a digital experience. Purchasing cars is quickly turning into a digital experience.

Responding to the need for digitization

If you're going to go digital, you need application platforms, process management software and collaboration tools that allow your organization to operate as a single entity even if the customer experience is siloed into distinct digital and brick-and-mortar storefronts.

Business process management tools are emerging as a prime option for businesses trying to adapt to this new digital landscape. They can serve as an application development hub, giving users the ability to customize apps and services to meet their specific demands. When it comes to auto retail, BPM solutions can also be used to automate communication processes between stakeholders in different components of the organization, ensuring customers get a cohesive, streamlined experience in every phase of the sales process.