How digital technologies can elevate
the car-buying experience
Digital technologies are starting to fundamentally change the way people buy
cars, but manufacturers and dealers should think carefully about where to
invest in order to elevate the customer experience.
By Dan Bolger, Christopher De Santis, Ethan Forchette, Srinivasa Reddy Tummalapalli,
and Ryan Robinson
Some of the best experiences people have in their customer engagement on the showroom floor. The
lives are those that are customized and connected intent is to update and improve a sales process that
to them on a personal level. These days, people in- has not changed for the better part of a century. But
creasingly expect to have such experiences across all which digital investments will yield the most signifi-
of their brand interactions, whether it’s paying for cant returns?
coffee, ordering groceries online, booking travel, or This question is the more difficult because
buying a car. manufacturers and dealers differ in the outcomes
One way that companies are meeting this they need from digital transformation at the retail
challenge is by integrating advanced digital tech- level. Generally, manufacturers are looking to large
nologies into the buying process—and automotive digital investments to drive overall mobility strate-
companies are no exception. Many automotive gies aimed at reshaping the way consumers engage
manufacturers and dealers in the United States with their brand. On the other hand, dealers are
are making significant investments in a variety of typically pursuing much more immediate digital
consumer-focused digital technologies, ranging solutions to drive operational efficiencies, reduce
from tablet-based product guides to virtual reality overhead, empower sales staff, and increase trans-
(VR)-enabled applications with an eye to increasing parency while reducing friction in the sales process.
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Whereas manufacturers are investing to create om- fact that half of US auto buyers do not engage in any
nichannel customer experiences, dealers are more dealer cross-shopping after they first visit a show-
focused on tactical solutions that integrate dispa- room. Indeed, 30 percent buy a vehicle the very
rate data systems to ease information flow across same day they step onto a dealer’s lot. Being top of
the dealership. mind when people first head out to kick some tires
This lack of common ground often leads to can thus significantly increase the odds of a sale.
disagreement between manufacturers and dealers But creating a truly engaging online experience
on the best approach to digital implementation. that compels people to visit a physical retail location
However, our experience suggests that both parties can be harder than it looks. Many dealers complain
could benefit from thinking more collectively that manufacturers exert too much control over
about digital transformation, particularly in the their online presence by using standard website
“upper-to-mid funnel” where consumers are still re- templates, while manufacturers are frustrated by
searching a potential purchase online. Results from the wide variety of dealer management systems
the 2018 Deloitte Global Automotive Consumer (DMS) applications among dealers that ultimately
Study indicate that, out of all sources of information, waters down their vision for a seamless, integrated
brand and dealer websites have the greatest impact Web experience. Perhaps as a result, study results
on new car-buying decisions (tied with input from show that more than half of all auto shoppers find
family, friends, and coworkers; see figure 1). The manufacturer and dealer websites to be merely
importance of identifying, intercepting, and influ- meeting expectations.
encing potential buyers online is underscored by the
FIGURE 1
Top information sources in order of significance: Buyers across generations are
influenced the most by dealer websites
Percent of buyers that rated each information source as a 4 or 5 on a 5-point impact scale.
Buyers could select more than one information source.
36% Dealer
websites 36% Family, friends,
coworkers 34% Safety-related
websites
32% Manufacturer
websites 29% Salespeople
the dealership 26% websites
at Third-party
21% Retail
Websites
Financial Other (media
17% provider
websites
15% reviews,
magazines)
14% Social
media
Source: Deloitte Global Automotive Consumer Study, 2018.
Deloitte Insights | deloitte.com/insights
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The good news is that ample opportunity exists experiences these technologies can create. This sug-
for brands and dealers to create a differentiated gests that good customer handling fundamentals
digital experience via their websites, potentially are still the foundation of a truly exceptional cus-
adapting useful ideas from sectors such as consumer tomer experience, which can then be enhanced by
electronics and online retailing. Building a strong the judicious use of digital sales aids that increase
bridge that facilitates a seamless move from online convenience, transparency, and flexibility.
research to a physical shopping experience can be That’s not to say that no one is interested in
an especially important goal. For example, making digital enhancements to the showroom experience.
sure any information and preferences people input Millennials and younger buyers, according to our
online follow them into the dealership can sig- study, are open to such experiences—but they ul-
nificantly streamline the salesperson’s discovery timately favor their own mobile devices to access
process. Also, keeping critical information, such as the information they need. Premium car brand
vehicle pricing, consistent between the Web and the owners, too, show higher-than-average interest in
dealer’s showroom could enhance the buyer’s expe- digital showrooms: Nearly one-third (31 percent)
rience by improving his or her perception of dealer find tablet devices to be helpful while shopping at a
transparency and integrity. vehicle dealer, compared to only 21 percent of non-
A compelling argument also exists for digital premium car owners.
investments that directly address customer pain Notably, our study found that 60 percent of US
points in the vehicle-buying process. Study results consumers are at least “interested” in the overall
confirm the long-standing notion that people dislike concept of buying their next vehicle online directly
excessive paperwork and the overall length of time from a manufacturer. This should be a wake-up call
it takes to buy a car. Digital tools that streamline for auto dealers that the expectation of a completely
these processes, such as used vehicle valuation digital buying experience could be closer than they
algorithms and remote document “e-signing” capa- think. For their part, rather than trying to go around
bilities,1 can elevate the overall shopping experience. the dealer (which would likely involve a long and
They may even increase the likelihood of a sale by painful legal process), manufacturers could see
reducing the amount of time customers are exposed this as a golden opportunity to work with dealers
to anxiety-inducing aspects of the purchase process. to explore what a wholly virtual sales process could
And they can also provide the necessary conditions look like. For example, giving salespeople digital
for effectively transitioning the customer into a tools and moving them out of the dealership to
long-term service relationship. interact with customers where they live or work
Companies should also recognize that many could significantly improve the sales experience
people shopping for their next vehicle have yet by increasing the perception of convenience while
to fully embrace digital sales aids as the primary reducing anxiety.
means of researching a purchase. Study findings That said, it’s unlikely that in-person sales
show that vehicle shoppers across all generations will ever disappear entirely, as several important
prefer more “low-tech” information tools while they aspects of the showroom experience can be hard to
are in a dealer showroom. In fact, 80 percent of US “digitize.” For example, our survey shows that nearly
vehicle buyers rate conversations with salespeople nine out of 10 shoppers prefer the immediate, tactile
as the most useful information channel, followed by experience of physically interacting with a vehicle
printed brochures and spec sheets (figure 2). This before buying it, while 70 percent of buyers indicate
preference for “traditional” information tools could they prefer in-person interactions with dealership
be attributed to a number of factors, including a personnel. And nearly two-thirds of buyers say they
consumer base that does not yet fully understand or would rather conduct price negotiations in person
appreciate the types and benefits of enhanced user to secure the best deal. These preferences imply that
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FIGURE 2
Usefulness of information channels at a dealership: Auto buyers across
generations prefer traditional channels
Percent of people that rated each information source as somewhat/very useful.
Baby boomers and older Generation X Generations Y and Z
Traditional
Overall
Conversation with a salesperson 83%
74%
81% 80%
Printed brochures and specification sheets
61%
59% 61%
61%
Digital
Own mobile device
24%
54% 46%
67%
A tablet device provided by the dealership
7%
18% 22%
43%
Interactive computer kiosks
9%
23% 23%
39%
Augmented/virtual reality headset provided by the dealership
6%
16% 19%
36%
Source: Deloitte Global Automotive Consumer Study, 2018.
Deloitte Insights | deloitte.com/insights
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most auto buyers have yet to envision a fully digital application developers, location-based service
vehicle-purchasing experience—and may also help providers, and network services that are already
explain why the wave of online shopping that is seeking to position themselves as integration
taking over many retail subsectors has yet to fully hubs for an individual’s mobility profile.
disrupt the automotive retail industry. 4. Develop pricing strategies that engage the cus-
Manufacturers and dealers seeking to invest in tomer as a partner, with systems offering price
customer-focused digital capabilities may wish to match guarantees that encourage future loyalty
consider the following:2 to both the dealer and the brand.
5. Don’t let the dealership be defined by the walls
1. Engage potential buyers during the online re- that hold up the roof. Potential customers are
search phase with targeted, tailored messaging. everywhere. The flexibility to engage with cus-
Retain any data collected during the online re- tomers on their own terms in an office, home, or
search phase to help create a seamless, tailored coffee house with video chat or AR/VR can be
experience at the dealership. integral to auto retailing going forward.
2. Leverage related online capabilities, such as
financing preapprovals and finance protection In an industry where competition for consumer
product explanations, to increase transparency attention is likely to intensify in the face of soft-
and accelerate the car-buying transaction. Create ening overall demand,3 the need to embrace new
horizontal data aggregation capabilities that technologies to improve the car-buying experience
integrate information across dealer systems to seems critical. However, digital transformation can
reduce friction in the vehicle-purchasing process. mean a variety of things, and investments should
3. Expand the pool of available customer data be prioritized in the areas where customers see the
points by exploring strategic partnerships most value.
with mobile device providers, social networks,
Changing how people shop for cars
Shopping for a car isn’t something many consumers look forward to. Yet, according to Deloitte’s
Global Automotive Consumer Study, consumers view the customer experience and their
relationship with salespeople as integral to their final purchase decision. In fact, consumers around
the world rank family, friends, and salespeople as the top sources for information when shopping
for a vehicle.
So what do consumers dislike most about the process? Too much paperwork and an overall
purchasing experience that just takes too much of their time. In addition, our research shows
consumers are increasingly interested in buying a vehicle online without ever having to set foot
inside of a dealership.
Advancements in VR technologies are poised to help both automakers and automotive dealers
alleviate many of the pain points commonly associated with buying a vehicle. It also promises to
create opportunities to engage consumers in entirely new ways while improving operations and
the bottom line. Within the next three years, we anticipate significant growth in the use of VR
technologies that allow consumers to compare models, build a vehicle and choose its features, and
“test drive” it, then finance their purchase wherever and whenever they choose. That could include
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at shopping centers, airports, concerts, sporting events, and other attractions, as automakers and
dealers create “pop-up” dealerships—VR-enabled kiosks that go where consumers are rather than
requiring them to come to showrooms.
Creating a VR experience that sells cars requires mobile bandwidth intensity unmatched by today’s
typical consumer applications such as streaming video. VR typically requires download speeds of
at least 50 megabits per second, well beyond the capabilities of today’s wireless networks when
they are operating at capacity. Hence, 5G will be an essential enabler of VR experiences due to
its ability to support speeds 10 to 20 times greater than today’s LTE networks while allowing for
location flexibility.
Moreover, 5G capabilities such as network slicing enable communications service providers
to provide networks on an as-a-service basis and dynamically meet the demands of pop-
up dealerships. Network slicing allows multiple logical networks with different performance
characteristics to run on top a common physical network infrastructure. 5G with network
slicing will ensure that network performance meets the bandwidth-intensive needs of a VR
dealership experience.
New technologies like AR and VR will make the car-buying
process more personalized, convenient, and transparent.
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AUTHORS
Dan Bolger leads Deloitte’s Automotive Dealer Services group. He is based in Detroit.
Christopher De Santis is an accomplished automotive industry professional with more than two
decades of experience. He is based in Sacramento, Calif.
Ethan Forchette is a senior manager supporting Deloitte’s Dealer Services group. He is based in Atlanta.
Ryan Robinson is the automotive research leader supporting Deloitte’s global Automotive practice. He
is based in Toronto.
Srinivasa Reddy Tummalapalli is a senior consultant supporting Deloitte’s global Automotive practice.
He is based in Hyderabad, India.
ENDNOTES
1. Brad Rogers, “How dealership tools that ‘play nice’ together engage buyers,” Dealer Marketing Magazine, July 27,
2018.
2. Andrew Dinsdale, Philipp Willigmann, Scott Corwin, and Jeff Glueck, The future of auto retailing: Preparing for the
evolving mobility ecosystem, Deloitte, 2016.
3. Steven Hilfinger, “Forecasting the North American sales and production footprint in uncertain times,” Mondaq
Business Briefing, August 8, 2018.
4. Deloitte, 2018 Global automotive consumer study: Exploring consumer trends on the future of automotive retail, 2018.
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