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The COVID-19 pandemic has brought a host of challenges to every industry - and the automotive industry is no exception. Adverity’s Marija Traut covers 5 key lessons that automotive marketers can take from the past 12 months.

The automotive industry was hard hit by COVID. Manufacturers had to close factory plants, dealerships were closed too, sales declined as customers began avoiding large investments, and in general, the industry experienced a sharp sales drop of 12 million units in the first half of 2020, about 26% less in comparison to the previous year.

This also led to a 21% reduction in media spend by automotive companies, considerably more than the average 9% drop across all industries. Although automotive advertising is expected to recover in 2021 and 2022, vehicle sales are not expected to reach pre-pandemic levels before 2023.

Consequently, the industry has learned some very hard lessons over the past 12 months, which has brought some unexpected innovation in this rather traditional sector. Here are the 5 key lessons that automotive marketers can take from the effects caused by COVID-19, and what challenges they need to address in order to stay competitive in the difficult times that lie ahead.

Accelerate Digital Transformation

With a large portion of staff and partners working from home, digital transformation has been crucial for basic day-to-day operational management, and the need for communication and collaboration tools has never been so important. Particularly component manufacturers that deliver parts or services to vehicle manufacturers have stressed the importance of new technologies that allow them to connect and work with internal and external team members.

With many companies still used to having data sit in offline silos, the pandemic has also highlighted the need for technologies such as cloud databases and customer data platforms. These advantageous instruments give all employees access to important data no matter where they’re situated around the globe, thus enabling new opportunities for cross- and upselling. Those players that adapt quickly to these new circumstances are the most likely to survive and thrive despite the ongoing impacts of COVID-19.

The slow, but steady shift to eCommerce will be essential for the post-pandemic ‘survival of the fittest’. With dealerships closed around the world, car sellers need to find new distribution channels, and what is more convenient than moving things online?

Learn to Embrace eCommerce

Admittedly, closing car deals online is a lot more challenging than selling books, clothes, or food. Consumers generally prefer to use online for researching cars and dealerships before going to a physical store. Nonetheless, lockdown has considerably impacted consumer behavior. According to the Boston Consulting Group, Europeans are now 8% more likely to buy a car online due to the pandemic. In the US that figure stands at 16% while in China a whopping 60% of the buyers are willing to procure their vehicles online.

However, implementing an online shop is just the beginning, and the automotive customer journey now includes several more steps. Due to ongoing lockdown restrictions across the world, car producers and dealers need to adopt contactless options for test drives alongside digital payments and contract processing. Customers will need chatbots and human support throughout the buying process, while businesses need to consider how to best manage trade-ins, financing and insurance, and home deliveries. Only then can customers purchase a car online.

Car producers and dealers need to collaborate intensively to make this happen for the customer. Mercedes-Benz, for example, has already made accelerating digitalization in sales and after-sales a key part of its post-pandemic global strategy. Those companies that are able to implement and deliver a seamless digital sales journey for consumers will also benefit from the vast amount of data that comes with it. This will present a lot of new opportunities for better targeting and a more accurate forecast of demand and customer preferences.

Many companies have already embraced marketing data as the primary source of valuable information on how to adjust their offerings. Read how Cars.com used data-driven insights to improve ROAS and deliver more value to their partners.

Amplify Customer Interactions

It costs 6 to 7 times more to gain a new customer than to retain an existing one, so taking customer support to the next level is a crucial way to mitigate the negative effects of COVID-19. According to McKinsey, 45% of the prospective customers for automotive products in 2025 will be Millenials. This generation, used to services provided by companies like Amazon, Airbnb, and Uber, expects a fast, seamless, and simple customer experience, tailored to their individual needs. This survey highlights how the service experience is becoming more relevant than the purchase experience when buying a new car. It is now an essential part of the new digital sales journey and can be divided into three different stages: research, in-store, and after-sales.

The research phase starts online when the prospective customer begins researching vehicles, comparing prices, and examining different dealerships. According to a 2018 survey by Deloitte, embedded tools like vehicle configurators, trade-in evaluators, and appointment tools were only just meeting customer expectations three years ago. Fast forward to 2021, and car manufacturers and dealers need to invest in the latest technologies to deliver a consistent digital customer experience, such as Augmented Reality, AI-based chatbots, and video communications tools.

At the same time, the demand for full car connectivity is growing and this brings new opportunities to add value in the after-sales period. According to management consultancy Counterpoint the number of connected cars will rise to 125 million by 2022, with modern cars able to connect directly to the service provider for a host of services such as convenient appointment scheduling, breakdown assistance, anti-theft protection, and emergency calls.

This raises the very serious question of data security and privacy for the automotive industry and, consequently, the choice of the mobility service provider who supplies, administers, and delivers the service to the customer, will be absolutely crucial.

Maximize Video and Virtual Interactions

The various lockdowns around the globe have also highlighted the need for businesses to maximize virtual interactions with prospective and existing customers. With 65% of automotive shoppers narrowing down their choices after watching a video, it’s no surprise that YouTube is one of the most important social platforms for automotive marketers. Similarly, with so many famous auto shows and conferences unable to take place over the past 12 months, car producers have been shifting their vehicle launches to virtual events.

As such, brands that want to drive customer engagement should focus on more specialized video content such as interior overview, walkaround, test drive, and review videos. In combination with AR and VR, manufacturers can create a more realistic model of how their car looks and feels. This will not only influence the buying decisions but also create strong brand loyalty, and there are plenty of amazing marketing opportunities that can be generated through the application of these advanced technologies.

Benefit from Data

All the above points illustrate the need for a holistic digital transformation in the automotive industry. Through the use of advanced technologies, companies can not only benefit from an improved customer experience, but also the endless amounts of data coming from multiple digital touchpoints. Big data exists in most business areas and companies need to capitalize on the untapped potential lying there.

There are plenty of use cases where big data can generate added value to the customer and the seller. Sensors in connected vehicles can provide data on speed, emissions, and fuel consumption and this information can be used to improve the driving experience as well as the safety of the driver.

Likewise, automotive marketers can profit from a vast amount of data for marketing and sales. By collecting and analyzing the different touchpoints of a prospect, sellers are able to build a much more accurate customer profile and use that to target specific customer segments with tailored content and a highly personalized experience.

According to Deloitte’s UK Automotive Report, “a solid analytics platform is a must if automakers want to build a leaner, more profitable, data-driven business environment that is able to produce actionable insights.” By applying data analytics, automotive marketers can run more effective campaigns and provide targeted one-to-one offers. Furthermore, they can also better understand their costs, by channels and segments, and are thus able to make informed decisions. In the after-sales phase, businesses should also consider how analytics can be used to better understand customer behavior - especially when it comes to customer churn.

Embrace the Challenge

2020 was a difficult year for automotive companies, with some of them already struggling financially even before the unforeseen impacts of the global pandemic. Digital transformation has long been demanded by the market and with COVID-19 providing the final push, automotive companies can no longer afford to ignore it. 

Those companies who embrace a new business practice quicker and go digital faster are those that are likely to succeed and thrive in the future. Meanwhile, automotive marketers should clearly understand the value of the vast amounts of data they already possess. While shifting to becoming a data-driven organization can require a major change in mindset, the benefits that come with that transformation are enormous. And some of these benefits are already there, you just need to grab them.

If your company needs assistance in collecting, processing, and utilizing data, contact our Sales Advisors to consult on the opportunities of a data-driven approach in automotive marketing. Schedule an appointment now!

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Written by Marija Traut

Marija is a Sales Representative at Adverity, responsible for business development within the Technology Sector. Throughout the 10 years in the industry, she was able to acquire extensive knowledge about it. She is a lover of disruptive technologies and strongly believes that they can improve our lives. In her free time, Marija enjoys spending time with her family or trying out all kinds of sports.

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