• Car buyers are increasingly making key purchase decisions online
• Dealers remain pivotal, but their role is changing
• More than 25% of customers could become potential online buyers over the next years
• The future of car sales will depend on the seamless interaction between online and offline channels

Digitalization is also having radical consequences for car sales. Nearly half of all car buyers globally start the search for their next new car online. And even nearly two thirds decide on brand, model and price before visiting a dealer for the first time. The dealer only becomes important again in the end phase for test drives, final configuration and orders. All in all, customers typically shift between different online and offline channels at least four times during the purchase episode. This is revealed in the latest brief “The Future of Car Sales Is Omnichannel” of the international management consulting firm Bain & Company which surveyed more than 5,000 car buyers in Germany, the UK, India, China and the USA.

“Automakers and dealers must attune themselves to the altered expectations and needs of the digital natives as their importance for the broad automobile market grows”, explains Bain partner Dr. Klaus Stricker, co-author of the brief and head of the Global Automotive Practice Group. "To allow customers to seamlessly interact between the digital and the traditional channels, enormous investments are needed in omnichannel concepts." Automakers that adapt well may also reduce their sales and marketing costs. Bain estimates that up to a fifth of these costs can be cut with an integrated, seamless model.

Major significance of personal recommendations

The dealers will continue to play an important role for most car sales. Car buyers visit physical car dealers an average of 2.4 times throughout the buying experience. Most buyers still prefer to complete complex tasks, such as the final configuration, in person at the dealership. The Bain study also shows that the dealers generally score higher ratings for configuration process than the websites or apps of the carmakers. Test drives also remain an important benefit of dealerships: Most buyers said they would not buy a car without driving it.

But when it comes to gathering information, the situation is quite different. Of the respondents, 44% follow recommendations of friends, family and colleagues for their purchase decisions. Another 30% of car buyers rely on online product reviews. And nearly two thirds of all buyers have already decided on brand, model and price before visiting a dealership. Dealers placed third, with only 26% of buyers calling them their most trusted channel for their purchase decisions.

“The enormous significance of personal recommendations for purchase decisions shows how essential it is for car brands to instill enthusiasm into their buyers and thereby gain and retain genuine promoters”, says Dr. Eric Zayer, Bain Partner and co-author of the study. “A digital ecosystem of product information and offers creates regular points of contact for building up brand promoters over the long term.”

Networking brand, dealer and customer

At the moment, only 2% of all car purchases are completely handled online. This means that the buyers signed their contracts and paid without visiting a dealer. According to Bain forecasts, we expect more than 25% of car buyers could become potential online buyers over the next years.

To attune their distribution activities to the future, carmakers and dealers need to become active in five areas:

1. Find new ways to appeal to buyers. Gaining a deeper understanding of customer preferences will make it possible to develop personalized and innovative features for the customer journey, such as virtual test drives.
2. Manage channel boundaries effectively. Seamless interaction between app, website, social media and car dealer will ensure maximum brand experience, but only if the IT systems are connected.
3. Build analytic capabilities. Evaluating dealer and vehicle data delivers valuable insight into customer trends and car usage.
4. Bring buyers into the ecosystem. The omnichannel experience enables carmakers and dealers to remain in contact with customers for longer, and to more effectively embed them into their service networks via apps.
5. Adapt the dealer network. As more customer episodes move online, dealer networks will see less use. New outlets such as showrooms in selected downtown locations will gain in significance.

“Car sales of the future will link brand, dealer and customer in an omnichannel experience and aim for greater brand loyalty while at the same time reducing costs”, stresses Bain expert Stricker. “This is both a challenge and an opportunity. The other alternative is to lose ground in the face of competition for new customers.”