Tuesday, October 7, 2008

The automotive industry & Internet: trends & challenges

Toyota iQ in sexy company at Paris MotorshowLast week has been a very busy week at work because of Paris Motorshow where Toyota unveiled three new models: the 3rd generation Avensis, the Toyota iQ – a new city ultra-compact car (you will notice how clever were marketers – naming the Smart challenger," iQ" ;-)) and the Urban Cruiser, a small compact SUV. As Internet is now an important platform, it gave us plenty of work. I thought it would be also a good opportunity to write about the industry where I am working as a Web Analytics specialist and how Internet has become a strategic channel.

Automotive industry in Europe
These launches are really important, especially in a difficult context for the automotive industry that is facing though times: financial crisis, increase of oil & steal prices, the “green” revolution... All led to static or decreasing sales throughout Western Europe. In some countries sales dropped down of more than 30%(!) compared to last year. Only Eastern Europe is saving the day.

European market is a saturated market i.e. for every new sale a manufacturer wins, another loses one. Add to that the increasing pressure from Asian brands and you will get a pretty good idea of the fierce battle that is taking place.

Competitive pressures and increasing complexity of the market have led automotive manufacturers to look for an edge wherever they can find it. Internet is definitely one of these places where one can make a difference. 

Towards the best online experience
Of course it is not the manufacturer website alone that will make a customer to choose a specific brand. But it can play a significant role. An automotive website is not just about generating leads or providing information. Its main purpose is to support customers during the purchase process also known as purchase funnel (as illustrated in the diagram here after)The automotive purchase funnel – mainly during the awareness & consideration phases. Not only a website contributes to the brand image but it is an important support to increase customer knowledge about its model range and other services. It needs to provide “engaged” customers with tools & services (e.g. car configurator, online brochures, testdrive booking…) to help them refining their choices and making their decision.

From a customer point of view, an automotive website must be practical to use, deliver clear, in-depth product information and media (images, video, 360° spin…). It must integrate seamlessly with the retail network. Finally it must keep the promises by replying to customers within the shortest time. All in all, it must deliver the best online customer experience.
Automotive websites – influencing purchase intent
How can online experience influence customer final decision to purchase? Is the Web a key factor in the vehicle choice? Well it is certainly not the primary factor – decision is still based on aspects like design (especially true in Europe where a car has to be “emotional”), prices (getting even more important in this troubled economic times), fuel economy, safety, brand image & reliability... However, as said, the Web can make a difference when the customer’s heart is balancing between different choices.
Toyota European website

Back in 2003, several studies covering the US market showed that online experience was already very important. For example JD Power and Associates(1) found that “49% of all new car buyers who used the web as part of their shopping process stated that the Internet experience had a big impact on their make/model decision”

Time has past since then and recent studies confirmed this trend and not just in the US but also on the European Market. Capgemini’s Cars Online 07/08 survey indicated that "two-thirds of respondents said that having web features they consider important (like compare tool, vehicle & costs configurator…) would make them more likely to purchase a vehicle from that manufacturer". Not having key online features that customers expect is even worse. The survey pointed out also that younger respondents were more likely to rate the ability to research information on the Internet as an important factor in their decision among traditional factors.

Automotives & online customer trends
The survey highlights several important trends. Car buyers are no strangers to the Web as more than 80% use the Internet during their research process. Not only manufacturer websites are by far primary sources of information but their importance keeps growing over the last years. Without any surprise, traditional offline sources like TV & print advertising are on the decline.
Lexus UK website

What is interesting is the significant increase of new online tools like automotive blogs, web forums and other consumer generated media (CGM). In the 2005 study, it was not listed at all. Today this category is in 7th position with 29% of consumers saying they use dedicated blogs & forums as a source of information. 

Finally almost 78% of online consumers rely on search engines when researching car purchases, showing the importance of search engine marketing for the automotive industry.

Would you buy your car on the Web?
Are you ready to buy your car on the web?This sounds like a crazy question, no? Well, believe it or not but according the Capgemini survey, 25% of European respondants said they were likely or very likely to buy a car over the Internet. Surprisingly, European consumers are more likely to do this than US ones.

Of course, we are not there yet, there are still many "cultural", technical and organizational challenges to tackle before this becomes reality. But it may not be that far away. Not so long ago, automotive websites changed from an information research library to an experiential, multimedia-selling environment. They are now evolving toward an online relationship & collaboration platform that will support consumers through all steps of the purchase funnel – from awareness to purchase and after.

Peugeot Webstore - one step closer to car online shoppingRecently, one manufacturer on the European landscape got closer to this “vision”. Peugeot launched in France the Peugeot Webstore where prospects can search the model of their choice and get a list of all available cars (and similar configurations), the prices & special offers but most important when and where (at which retailer) these will be available. The only things missing are the “Add to basket” & “Check out” buttons. One day...

With the rise of the online channel in the automotive industry, improved customer insights is what can provide that little valuable advantage. You will understand the strategic importance of Web Analytics in this context and all the challenges that lie ahead. And why I am so passionate about my job.

And you, will you be ready to buy your next car on the Web? Did you enjoy the read? Let me know.

Related sources:
(1) JD Power and Associates, New Autoshopper.com Study, September 2003
(2) Capgemini Cars Online 07/08 “Responding to Changing Consumer trends & buying behaviour”. Survey covers following markets: US, Germany, France, United Kingdom & China. It can be downloaded on Capgemini website (registration required)

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4 comments:

  1. Michael, great summary of past, present and the near future. Looking forward entering the e-commerce phase in the vehicle industry!
    Jukka from Finland

    ReplyDelete
  2. Hi Jukka,

    Thanks for the comment. Always appreciated. Wherever is going our industry, one thing is sure: challenging times await us. :-)

    ReplyDelete
  3. Hi Michael,

    Very interesting article, interesting from it's content and views, but also that I work with Lexus in Australia on many of their online strategies.

    I'd be really interested in your thoughts on automotive web analytics for customers beyond the web browser. I've been looking for information on analytics and modelling for current and future owners, seeing what sort of online indicators can be used to track customers through the steps of awareness, consideration, purchase, retention, etc.

    ReplyDelete
  4. Hi Joel,

    Thanks for the comment. I would be glad to share experience - especially if it is to help Lexus in Australia.

    Can you send me an email at michaelnotte at yahoo.fr or via linkedIn (see link in right sidebar)?

    I will get back to you.

    Cheers.

    Michael

    ReplyDelete

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