The Future of Automotive Retail: How Technology is Changing the Game

The Future of Automotive Retail: How Technology is Changing the Game
Photo by Arvid Skywalker / Unsplash

The automotive industry has been evolving at an unprecedented pace in the last 10 years, and technology is playing a more significant role in shaping its current state. From autonomous vehicles to electric cars, the industry is witnessing a transformation that is changing the way cars are designed, manufactured, and sold. The integration of technology in automotive retail has brought about a revolution in the way consumers interact with dealerships, and how they purchase cars. This shift towards digitalization has opened new opportunities for the industry, but it also presents unique challenges. In this article, we will explore how technology is changing the game for automotive retail and what the future holds for this dynamic industry.

According to Statista data, the automobile and auto parts category demonstrated the highest YTY growth in 2022 – over 30% compared to the previous year. Customers now are more aware of their buying options, have access to a wide list of informational sources, as the current customer is more informed about models, configurations and trends and requires a more personalized approach.

Dealerships are adapting to new customer expectations by leveraging technology to enhance the car-buying experience.  To achieve this, they must invest in CRM software, inventory management systems, and online payment and financing tools. By leveraging these digital instruments, modern dealerships can gain a competitive edge and drive business growth.

The role of online marketplaces in the future of car sales

The COVID-19 pandemic has accelerated the shift towards digitalization in many industries, including automotive. According to a report by McKinsey, online marketplaces are expected to account for 30% of all new car sales by 2030.

The share of online marketplaces for car sales is growing due to several factors, including the convenience and transparency they offer to customers:

  1. Online marketplaces allow customers to browse and compare a wide range of vehicles from the comfort of their own homes, without the need to visit multiple dealerships. This saves time and reduces the hassle of negotiating with salespeople.
  2. Customers also have full access to actual pricing and vehicle information, which can help to make more informed purchasing decisions.
  3. Online marketplaces often have customer reviews and ratings, which can help to build trust and credibility with potential buyers. This can be especially important for smaller dealerships that may not have a well-established reputation.

One example of an online marketplace in the automotive industry is CarGurus, which allows consumers to search for new and used cars from dealerships and private sellers. In a recent survey conducted by CarGurus, 61% of respondents said they would be more likely to buy a car from a dealership that offers online purchasing options.

How virtual reality and augmented reality can enhance the car buying experience

As the automotive industry continues to shift towards digital sales, the next frontier is the use of virtual and augmented reality technologies to enhance the buying experience. Online marketplaces have already made it easier for customers to browse and compare vehicles from the comfort of their own homes, but VR and AR take it a step further by allowing customers to virtually "test drive" cars and customize features in real-time.

Virtual reality (VR) and augmented reality (AR) are emerging technologies that can revolutionize the car buying experience by allowing customers to explore vehicles in a more immersive and interactive way. Here are some examples of how VR and AR can enhance the car buying experience:

  1. Virtual Showrooms: VR technology can create a virtual showroom where customers can explore cars in 3D without leaving their homes. According to a survey by Autotrader, 60% of consumers said they would more likely buy from a dealership that offered a VR experience.
  2. Test Drives: AR technology can provide customers with a virtual test drive experience, allowing them to see how a car would look and feel in different driving scenarios. According to a survey by Accenture, 74% of consumers said they would be more likely to consider a dealership that offered an AR test drive.
  3. Training: AR technology can provide salespeople with virtual training on how to showcase features and benefits of different cars, improving their sales pitch. According to a study by Deloitte, 88% of companies that have adopted AR technology reported improved employee productivity and efficiency.

Overall, VR and AR technologies offer exciting opportunities for dealerships to improve the car buying experience and increase sales. As these technologies become more accessible and affordable, we can expect to see more widespread adoption in the automotive industry.

The automotive industry is undergoing a digital transformation that is changing the way cars are sold. Online marketplaces, virtual and augmented reality technologies, and software as a service solutions are all playing a significant role in enhancing the buying experience for customers. As dealerships embrace these technologies and use them to complement their traditional offerings, they will be able to differentiate themselves from competitors and provide a more engaging and personalized experience for customers. The future of car sales is undoubtedly digital, and those who adapt to this new reality will be well-positioned to succeed in the years to come.