Retail auto industry looks to the future
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During the past decade, the automobile industry has accelerated at a rapid pace in terms of new designs and technologies, safety features, motive power systems and marketing.
Since COVID-19, those changes have been even more accelerated, as new car dealers and manufacturers continue to evolve to become more efficient to meet ever-changing consumer expectations.
It’s impossible to know exactly where the auto industry will be in five or 10 years. Based on my observations, here are some trends that will define our industry in the short and long term, in no particular order.
Electrified Vehicles. According to Statistics Canada, sales of vehicles powered by hybrid, plug-in, battery, electric and fuel cell technologies rose nine per cent in Ontario in the second quarter of 2021. This is an improvement on the four per cent increase seen during the same period the year before. The electrification market is expected to continue to gain momentum, especially with lower battery costs, more charging stations (alleviating range anxiety) and government-mandated sales quotas and incentives.
Car Dealerships. Customers have demonstrated tremendous loyalty to dealerships throughout the pandemic, which is supported by a 2021 Deloitte Study. The study says that eight out of 10 car buyers still prefer to buy a vehicle at a dealership, as opposed to an online purchasing experience (this trend is unchanged from last year). Clearly, consumers continue to place a high value on visiting dealerships in person, talking to salespeople, viewing cars up close and taking them for test drives. As dealerships were quick to adopt new safety protocols and adapt to new business realities in light of the pandemic, so too will they continue to evolve and adapt to serve the transportation needs of their customers.
Artificial Intelligence. AI will continue to make significant inroads in the automobile industry, in design, development, testing, production, maintenance and marketing. As AI technologies become more embedded in vehicles, the information that is extracted and analyzed from that technology will lead to further improvements in performance and safety, and will inevitably lead to the development of fully autonomous vehicles. This brave new world of autonomous vehicles on the horizon is certainly exciting, but it is fraught with legal and ethical challenges as well.
Collaboration. The automobile industry has never been more competitive than it is today. In the next five to 10 years, automakers will form new partnerships and collaborations with tech companies to develop autonomous vehicles, GPS mapping systems, telematics, network security, and other functions. In recent years, automotive companies and tech firms have formed many strategic partnerships to develop new technologies for the next generation of automobiles. For instance, Microsoft and Honda Motor Co. have invested in General Motors’ Cruise to develop self-driving cars; Volkswagen and Ford have invested in Argo AI to develop an automated driving system; Microsoft and Toyota have formed a partnership to speed up the innovation process in the development of telematics, infotainment, safety and other systems; and Fiat Chrysler has invested millions to set up a global tech centre in Hyderabad, India. I expect new collaborations will be formed, as the cost of producing new technologies continues to rise.
Tomorrow’s Auto Buying Experience. The pandemic has escalated dealerships’ use of ecommerce as a platform for automotive sales and marketing. In the coming decade, customers will rely more and more on digital channels to research, buy, sell and service their vehicles. Enhanced dealer websites, social media, videos, live chat, consumer reviews and online booking systems are some of the areas that will continue to impact consumers when they are looking to buy and service their cars. Data-driven marketing will also become more sophisticated, as consumer behaviour will be tracked and analyzed in an effort to deliver the right information to the right buyer at the right time.
The Human Touch: The car industry has always been a people business, and in this increasingly digital age — with the advancement of technologies and new methods of doing business — human relationships are more important than ever. Relationships with dealers and their customers, dealers and manufacturers, dealers and their partners and suppliers, will drive our industry into the future.
On behalf of the Trillium Automobile Dealers Association, I’d like to wish everyone a safe and healthy new year. Please drive safely!
Michael Eatson is president of the Trillium Automobile Dealers Association and is president of Peterborough Volkswagen. This column represents the views and values of the TADA. Write to or go to tada.ca. For information about automotive trends and careers, visit carsandjobs.com.