How is the relationship between manufacturers/suppliers and consumers within the German automotive industry changing?
As more OEMs compete in a stagnating market, pressure will be created across the whole value chain. The purchasing functions of the OEMs will as in the past generate much of this pressure in expectation that the suppliers of all tiers will be able to reduce cost while maintaining or even improving quality by adoption of more efficient manufacturing procedures and logistics efficiency.
The traditional consumer base who has valued vehicles as a status symbol will gradually die out. An already apparent trend with urban millennial and post millennial generations is the negation of the motor vehicle as a status symbol. These customer sectors have a completely different approach to mobility, using an approach driven by the availability of networked offers, which include car sharing/ rental, public transport, bicycles etc. An increasing ecological awareness across all customer sectors will add to this. The trend of urbanization of populations will be a compounding factor.
The German market, home market to the majority of premium players in the global automotive sector, will become more competitive than it already is, forcing the OEMs to optimize marketing/ sales and after sales service offerings. The approach adopted by the OEMs towards e-mobility in the after sales and service sectors will be a critical success factor. The current network for charging EVs will not be sufficient taking extrapolated growth and improvement of battery performance into account.
Connective technology is starting to enter the automotive arena. What is the outlook for in-car connectivity in terms of consumer attitudes and satisfaction?
Connective technology is already more widespread than many buyers of 2015 model year vehicles realize. This trend will strengthen with the launching of the first vehicles with full automated driving capability for motorway driving in around 2020. This trend will be further strengthened in the following decade to 2030. The seamless functioning of handheld devices and motor vehicles will bring about the introduction of new generations of both hardware and software to answer an increasing demand for ease of handling, intuitive driving, reliability and above all safety. This combination of hand held devices and motor vehicles will have a reverse positive effect on the reliability of hand held devices as we currently experience them with often questionable functional stability.
A key success factor in customer experience in this new seamless world is reliability and intuitive operation. Customer attitude and satisfaction will be driven by a wider complex of factors, spread between instant satisfaction (click and immediate response), long term performance, reliability and safety.
The first show room experience when acquiring a new vehicle will remain highly important when making a purchase/ lease decision. The overall decision process itself will be based on a combination of online and showroom impacts. In the case of vehicles, the drive which TESLA is making to market EVs solely using the internet with a low number of ‘keynote’ stores in city centers is a questionable approach to this challenge.
“Customer loyalty to automotive brands reached a 10-year high during the first quarter of 2015, according to analysis from IHS Automotive, a global provider of critical information and insight to the automotive industry and part of IHS Inc. “Michelle Culver, Marketwatch, quoting IHS Automotive
In your opinion, what drives customer loyalty within the automotive industry?
One of the major factors to influence customer loyalty is often laid before the potential customer has reached the age to acquire a new car. Marketing targeted at a generation who learn to operate hand held devices in early infancy but who are not yet in a position to acquire a new vehicle will become more important. Once a customer buys/ leases a vehicle it will be the traditional factors of design, performance and reliability that will keep the customer tied to the brand. A further factor will be seamless compliance between vehicles, the environment and interfaced devices. Not only the millennials and post millennials will appreciate this; an increasing number of ‘digital immigrants’ or ‘silver surfers’ will be equally influenced by these factors.
With the increase of players in both premium and non-premium sectors, marketing and sales activities will need further refinement to reflect this expansion of complexity.
What challenges does the German automotive industry face in keeping the consumer of tomorrow satisfied?
The entry of new OEMs together with the introduction and acceptance of e-mobility will cause considerable changes and increase overall competition in the German market. The new OEMs in the German market will be focused mainly on e-mobility. The changes in attitude to ownership and use of motor vehicles will demand diverse paradigm shifts in marketing, sales and after sales. The prevalence of automated and networked vehicles will place strong demand on functionality, reliability and safety.
This trend is, in effect, an extension of a trend which began at the beginning of the millennium, when OEMs began to offer wide ranges of derivatives or niche models based on common and modular architecture. All these changes, above all the blending of functionality between handheld devices and vehicles, will expand and change factors on which satisfaction in the motor industry has depended on for decades. Functionality and reliability will be supplemented by the demand for immediate and flexible satisfaction of demands on functionality, much in the fashion that ‘apps’ are now changing the way we access information and functions. The more traditional OEMs will be forced by a pincer action of changing client base and new competition to ‘think outside the box’ to find new ways of satisfying the demand of both the urban millennial and the customers who live in more widespread rural areas.