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COVID-19 Pandemic and German Automotive Enterprises

The German automotive industry — which, as we all know, is still one of the world’s leading industries — is under pressure.

The restructuring of the automotive industry is already underway. Global market developments in electromobility (think: electric and hybrid cars, bikes, busses, and so on) are causing serious upheavals.

Let’s be honest — a lot is happening in the global market environment worth thinking about.

Electromobility is opening new doors! Many countries and regions are trying to be involved in new market opportunities, pushing for low-cost production of vehicles and batteries.

Those who can also try to secure a share of the crucial resources needed for battery production, such as lithium.

New players are entering the automotive market, such as Bolivia, an emerging country with one of the world’s highest natural lithium deposits.

Alarming developments, such as the cancellation of the joint venture for lithium extraction with Germany by the Bolivian government in late 2019, leave many questions unanswered.

The perfect opportunity to up-level digital transformation.

This upheaval is, I believe, the perfect opportunity for a digital transformation of the automotive industry. In this article, I would like to provide some food for thought about bringing auto sales up to speed with the times.

The digital transformation poses additional challenges to the large established and global organizational structures (think Volkswagen or Mercedes-Benz).

Of course, digital channels are already the basis for important analytics, data-driven sales, and product development strategies.

The industry is rich with experts who use digital means to gather, analyze, and actualize valuable information about competitors, customers, prospects, and business partners.

But, there’s still a wildly crucial aspect of the industry that remains offline.

How to stay successful and competitive in the global market.

If companies want to stay successful and competitive in the global market in the long-term, they absolutely must adapt and implement new online technologies for customer communication, customer service, and sales.

It’s not going to be easy. A trip to the stationary car dealership next door represents a traditional customer experience. When making a large financial investment, people want to know the vehicle’s model, see it, touch it, and test it.

They also want to personally meet representatives of the company as a business partner with whom they are concluding the purchase agreement. So, over-the-counter sales are still the most important channel for automotive companies.

How then does the automotive sector leap into the digital world? How can a car purchase be digitally designed as an experience to encourage customers to make their purchases online? Which business processes are affected, and how can they be implemented holistically and coherently?

Logging in during the lockdowns

Let’s face it, working from home, challenges with poor internet connectivity, retail closures, curfews — 2020 demanded a lot from all of us — but for the digital transformation sector, it provided a boost.

Since March 2020, online business has been flourishing.

The already fast-paced environment of digital transformation in companies accelerated at the start of the COVID-19 pandemic in early 2020.

Online retailers in particular pushed their digitalization programs forward by implementing new client-centric technologies rapidly — and rigid processes are slowly getting broken down.

Tesla as a Trendsetter — Daimler (Mercedes-Benz) Follows!

In 2019, Tesla announced that in the future, it would sell its vehicles online. But what does this mean for customers and the German automotive industry?

Tesla is pursuing a strategy that reduces the need for employees and car dealerships, launching a new sales and communication concept simultaneously — a novel form of digital customer service.

As a matter of fact — before buying a car — most customers research and inform themselves about their potential purchase on the internet. They read and compare offers, reports, and reviews.

During this initial selection phase, a variety of different online communication channels are used.

This includes instant messenger services, video ask, and instant online meetings with sales staff. Even online, when customers are allowed to contact the manufacturer directly, they do so. Why? Because that’s a channel preferred by customers.

Linking communication channels with service-oriented features that make the customer experience more convenient, fast, and comfortable is key to success. These channels have been lacking in traditional German car dealerships so far but are invaluable features for the future.

Customer-centered experience services

We are currently used to excellent customer-centered experience services with online retailers (think: Amazon, or perhaps your favorite fashion brand).

Imagine the features offered by those retailers in the automotive industry setting: real-time queries of car model availabilities, desired delivery dates, and live chats with service personnel, all online!

At most car dealerships, these types of online service offerings are still a long way from getting launched.

Would these features endanger the showrooms, storefronts, and car lots we know and love? There’s precedent in many other industries, after all. What would it mean if the intermediary were rationalized away in the automotive industry as well?

One potential answer for the stationary car dealership might be the rapid implementation of an omnichannel digital strategy.

The omnichannel approach is a streamlined customer communication system that increases the points of contact between (potential) customers and the company and offers unified on and offline engagement.

Omnichannel digital strategies increase the effectiveness, efficiency, and profitability of the company by collecting target-audience specific data, information, and inquiries, and storing it on a centralized platform.

Image Tesla - Article Automotive Industry Challenges

Omnichannel Customer Communication Management (CCM) platforms can be steered, controlled, and managed holistically. One strategic goal is to conserve resources, bundle all communication channels on one platform, generate leads, and improve customer experience.

The key challenge is managing corporate re-structuring processes. This is easier for those newer electromobility industry manufacturers, as these processes can be integrated directly into the sales and distribution from the start. Older companies, and especially industry giants, are weighted down by outdated processes, legacy IT landscapes, and data stored in different formats and across various platforms.

Struggle of Public Services & Traditional Companies with Outdated Customer Communication Channels

The COVID-19 pandemic really hammered home because there is a significant gap between customer demands and actual status in both public services and in traditional companies.

For example, in Germany, many health departments still use fax machines, an incredibly slow, cumbersome system when every second counts. Many of us are still shaking our heads in indignation.

But healthcare is far from alone in this problem.

According to a research study by Messenger People and YouGov, 41% of organizations use fax machines as a customer service channel. Only 2% of customers name fax as one of their five preferred service channels.

According to the study, the leading service channels in Germany to date are email (81%), telephone (76%), followed by postal contact (48%). Social media and messenger services are still underrepresented.

Based on customers’ experiences with online retail sites, digital channels will increase in demand and become indispensable shortly.

Automotive manufacturers will need to expand their digital channels — especially in customer service — and focus on their target audience’s digital demands. Embedding digital channels — especially social media in the short-term is key in today’s fast-moving market environment.

Taking Advantage of the Upheaval: Electromobility and Digital Customer Service

The transition from fossil fuel to e-vehicles taking place is providing an incredible opportunity for other transformations to be implemented in the industry. Specifically — the application of centralized of data collection for the integration of a sustainable, unified digital customer service.

Just consider the charging infrastructure needed for electromobility (essential, but also needed to combat challenges like range anxiety) as well as the progress of autonomous mobility by itself.

Image E-Vehicles - Article Automotive Industry Challenges

Anyone who buys an electric vehicle today has to consider more than just the purchase of a vehicle. The Wallbox charger, which can be used at home to charge more efficiently; where the nearby charging stations are; electricity tariffs; and so many other topics.

Image Electric Drive - Article Automotive Industry Challenges

The energy utility sector recognized the digital customer service trend early on and started focusing on product packages offered specifically for customers in the field of electromobility.

Due to the fact that consumers have to consider many different things when deciding to buy an electric vehicle, these offers are a helpful support for customers in their transition phase.

Energy utility suppliers offer service packages for consumers like the Wallbox rental, vehicle rental (for special models of electric cars), and tracking and electric consumption are included in the electricity tariffs.

This is a smart strategy for expanding the new market segment, which will only be established when it comes to strategic cooperation’s with car manufacturers in order to strengthen customer trust and loyalty in the long-term.

Will E-Commerce for Electric Vehicles be Available Soon?

No — the majority of our population is still anchored in traditional, stationary car sales. Furthermore, the communication channels have not yet converged.

Nevertheless, the stage is set for sustainable, holistic digital customer service to be implemented soon.

No matter if customers purchase their vehicles online, directly from the manufacturer, or via car dealerships, improved customer experience throughout the buying process is in the industry’s near future.

I want to reiterate the importance of older and traditional companies modernizing quickly and radically to keep pace with young modern competitors, climate change, and consumer demands.

What do you think about the developments described in this article – and what are your experiences with digital customer service with the automotive representants?

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Resources

  • Images by Canva
  • Audio sound by Artlist
  • Audio vocals by Aylin Ihnen