Digital sales models: a way forward to effectively increase BEV sales
Blog: Capgemini CTO Blog
The COVID-19 pandemic is hitting the automotive industry especially at a time when OEMs already have enough challenges to deal with – including changing customer behavior, carbon emission targets, and upcoming market launches of battery electric vehicles.
Changing customer behavior in a time of crisis
Across industries, seamless omnichannel and consistent end-to-end experiences have become the new standard. Even before the pandemic, this was putting pressure on automotive OEMs as more and more consumers have been increasingly becoming accustomed to customer-centric business models, demanding a convenient sales journey, including higher service standards in the automotive industry. The COVID-19 pandemic even accelerated the significance of online channels as consumers are faced with shopping restrictions and quickly adopting newer ways to shop. European consumers are increasingly shopping online and their preference for digital engagement channels will continue even after the pandemic. Hence, the traditional sales process of buying a car seems outdated, provoking customer dissatisfaction. Instead multiple sales channels are required for OEMs to re-engage with customers to satisfy future demand and to cover market volume.
BEVs to meet challenging carbon emission targets
Pressure from governments and the public to decrease carbon emissions has led to major investments by OEMs in new technologies. In order to meet the European Union’s CO2 emissions targets and avoid significant fines, OEMs need to take action with a clear focus on battery electric vehicles (BEVs), reshaping their portfolios. For example, Volkswagen is planning to launch up to 75 new electrified models by 2029.
To achieve such an ambition and to ensure that already starting in 2020 and by 2021, all cars will emit less than 95 grams of CO2 per kilometer on average, OEMs would need to sell many more EVs [which include battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV)] than in 2019.
Looking back to the financial crisis in 2008, especially in Germany, demand was stimulated by government measures such as car scrappage schemes. Such governmental measures might help in the current crisis, if they are adapted to the specific conditions – as for example with a focus on BEVs. However, to reach CO2 targets governmental subsidies will not be enough. After all, OEMs need to be innovative and reimagine their sales models.
To push BEV sales, several automotive OEMs are using the agency sales model. This innovative sales model is a smart way for established OEMs to fight off new competitors while integrating existing dealer assets to provide a superior omni-channel customer experience. Further, data sovereignty ensures a 360-degree customer view, increasing up- and cross-selling potential for the OEM. By steering online as well as offline sales channels, OEMs have the chance to offer customers a seamless journey with a consistent end-to-end experience while gaining full transparency over market performance. In addition, effective steering of sales activities including full control about pricing enables OEMs to push new products and offerings into the market, such as BEVs. However, the adaption and integration of a new sales model aiming for an omnichannel offering is a large and highly complex endeavor. Taking over assets and risks, OEMs need to be fully committed to adopt sales responsibility and customer centricity.
Capgemini Invent is well-equipped with extensive know-how in new sales models such as agency sales, direct sales and subscription-based sales to support OEMs on their journey.
“To attract customers and convert future leads, OEMs cannot sell cars of tomorrow via the sales channel of yesterday.”
It is time to act especially in the midst of COVID-19, it is time to quickly adapt to the current situation. There is a real need for OEMs to consider new approaches and opportunities to mitigate negative effects. This means that only a bold transformation of the sales model towards true customer centricity will help OEMs thrive in the future and to stay competitive. Social distancing, restrictions, and shut-downs caused by COVID-19 are affecting the sales process and the way products and services are consumed. Customers are rethinking their investment decisions, future mobility, and purchasing behavior. Customers are now focusing on online sales more than ever, as a recent Capgemini survey shows:
“Direct sales can grant OEMs access to valuable customer data which helps to establish personalized communication and to offer customized products and services.”
Even though customers are increasingly demanding an online sales process to be end to end, the COVID-19 shutdowns around the globe have revealed a distinct gap: Tesla is the only OEM with its own full online retail availability for BEVs in Europe, offering an easy sales process with solely six clicks. With the digital sphere in mind, Tesla tightly controls the customer experience and creates high service standards. Consumers can access information and order products, with customization and financing options from Tesla’s website, without the need for human intervention. The other OEMs lack behind, not only in terms of superior experience but also in numbers of new BEV registrations.
Status quo
On the one side, several OEMs are planning new BEV product launches in the coming months and years, supported by sustainable incentive programs. But on the other side, especially during the pandemic shut-down, customers are not able to buy a new car directly from the OEM via an online channel due to missing online retail availability for BEVs.
To conclude, the ongoing COVID-19 crisis has impacted customers’ behavior in a way that they are urgently demanding the change, but will the OEMs be fast, innovative, and smart enough to seize the opportunity of digital sales?
It is time for automotive OEMs to adopt bold measures focusing on digital sales models and customer-centric touchpoints as it will help to ensure their position to accommodate future trends, regardless of how events play out. The raising demand for digital services and touchpoints implies a real need for new sales models where customers can be directly approached by the OEM. The stakes are high that the companies willing to seize the unexpected opportunities could see themselves emerging stronger than before the pandemic.
As a consequence of the above findings, it becomes apparent that online sales can be a key enabler to reopen sales channels and convert customers. Overcoming the lockdown and shaping the new normal with digital innovation and moving to new sales models offers a way forward.
Automotive Sales Recovery Offering
To make this happen, Capgemini Invent has developed a comprehensive Automotive Sales Recovery Offering, including concrete initiatives with a clear focus on top-line growth supporting automotive OEMs (including captives), markets and dealers to bring their sales performance back on track and to limit the impacts of the COVID-19 crisis.
Some of the recommended actions for automotive OEMs are:
- Embrace digitalization of sales, marketing, and aftersales to enable a contactless customer experience.
- Provide guidance and tools for dealers to ensure a consistent sales approach.
- Develop flexible and attractive offers to cope with high financial and hygienic uncertainty.
This blog has been co-authored by Sarah Schneider.
For further information and to discuss our recommended actions, please reach out to:
- Marc Matthies | Automotive Sales Recovery
- Dr. Philipp M. Haaf | e-Mobility Solutions
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