Flagship stores, configurators and virtual showrooms: Car sales are changing

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Car buying has changed. For nearly every car sold, the buying process starts onlinei. Now manufacturers, dealers and media companies are looking for the next best thing to capture the sale.

In 2013, research firm Frost & Sullivan carried out a study projecting that by 2020 about 4 per cent of cars would be sold online . Not surprisingly, the report identified that the auto industry would continue to take multiple ways to reach customers, a long way from the primarily dealer-oriented strategy of past times.

Audi City Berlin is Audi's third flagship digital showroom store. Source: Audi.

Connected consumers are driving the change. Research is indicating that buyers are entering car showrooms later than ever, with nearly all car purchasers starting their buying journey onlineii.

Manufacturers have been increasing the direct to consumer interaction for some time, with investments in increasingly better websites and more sophisticated digital marketing. Car configurators and vehicle selectors have already moved to the fore on manufacturers' sites.

Frost & Sullivan predicts that car-makers will increasingly have a retail presence both online and in physical locations, although principally for brand development. Among the mix are flagship stores, digital showrooms, virtual technology, pop-up stores and simulators. It's a vision that the researcher claims fits with the increasingly urbanised world of the customer. The manufacturers are not alone in this technology-led sales journey. Dealers, they claim, will be devoting up to 20 per cent of floor space to digital technologyii.

BMW has expanded its UK online offer that includes a configurator and car-suggestion tool to allow customers to buy a car in just 10 minutesiii. The buying system includes online chat operators from 8am to 10pm, used car valuation and finance options. UK BMW’s 137 dealers are involved in the car-ordering initiative: buyers even have the option to negotiate prices.

Hyundai, Volvo and Daimler Benz are also working on sales websites in Europe, with Volvo selling all 1900 of the production run of a special SUV onlineiv,v.

Volvo is focussing on digital leadership. Source: Volvo.

Audi is investing in technology too: Audi City London, Audi City Beijing and Audi City Berlin are Audi's flagship digital showrooms. These showrooms take the concept of online shopping one step further. Digital walls controlled by touchscreens present full-sized versions of cars in any configuration, with customers able to work with staff to find the vehicle to meet their needs. Audi's next showroom is set to open in Moscow and there are plans for more locationsvivii.

Retail stores are also being used by manufacturers. Hyundai has partnered with a car entrepreneur to open Rockar, a UK shopping centre-based chain of stores focussed on the digital car buying experience. Currently with two stores, Apple Genius-bar-style assistants help customers learn about vehicles. Test drives can be arranged, cars can be purchased and vehicle services booked through the stores and onlineviii.

i Singh, S., 2013, 'Future of retailing in the car industry', Frost & Sullivan, viewed 10 March 2016, http://www.frost.com/sublib/display-market-insight.do?id=271824870

ii 'Future of car retailing, aftersales and service', Frost & Sullivan, viewed 10 March 2016, http://ww2.frost.com/research/industry/automotive-transportation/future-car-retailing-aftersales-service

iii McIlroy, J. 2015, 'BMW launches radical online ordering system', Autocar, 27 November, viewed 10 March 2016, http://www.autocar.co.uk/car-news/new-cars/bmw-launches-radical-online-ordering-system

iv 2015, 'Death of a car salesman', The Economist, 22 August, viewed 10 March 2016, http://www.economist.com/news/business/21661656-no-one-much-likes-car-dealers-changing-system-will-be-hard-death-car-salesman

v 2014, 'Volvo Cars announces new global marketing strategy', Volvo Car Group, viewed 10 March 2016, https://www.media.volvocars.com/global/en-gb/media/pressreleases/155208/volvo-cars-announces-new-global-marketing-strategy

vi 2014, 'Germany's first virtual showroom: Audi City Berlin opens its doors', Audi.com, viewed 10 March 2016, https://www.audi-mediacenter.com/en/press-releases/germanys-first-virtual-showroom-audi-city-berlin-opens-its-doors-662

vii 2013, 'Showroom of the future', Audi.com, viewed 10 March 2016, http://www.audi.com/com/brand/en/vorsprung_durch_technik/content/2013/08/showroom-of-the-future.html

viii Baker, E. 2015, 'The death of the slimy, sexist car salesmen', The Telegraph UK, 20 July, viewed 10 March 2016, http://www.telegraph.co.uk/motoring/11751502/The-death-of-the-slimy-sexist-car-salesmen.html