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back to index backAMERItalk April,  2017


The Next Generation of Automotive Sales: 2025 and Beyond

By 2025, 35 Million New Vehicles Will Be Purchased Online.

Automotive sales are poised to undergo some significant changes. A.T. Kearney's latest study, "The Next Generation of Automotive Sales: 2025 and Beyond," finds that as consumers become increasingly comfortable with all things digital, almost half of car buyers will eventually make this major purchase online. By 2025, nearly 35 million vehicles will be ordered online, and 30 to 40 percent of today's retailer network will be replaced by new sales formats and direct sales.

Attitudes toward automobile ownership are also changing, as consumers begin to focus more on use versus possession. This opens up opportunities for both traditional and new players to move into mobility and value-add services. In fact, these emerging areas offer an additional revenue potential of some $105 billion.

The coming transformation of automotive sales

A.T. Kearney's study illustrates how this transformation in automotive sales may unfold. Based on expert interviews with top managers in automotive sales and the latest industry research, the report lays out a scenario for the future"specifically how, within the next decade, the automotive ecosystem will fully transform into a mobility ecosystem.

To take advantage of the coming upheaval in automotive sales, companies must take decisive action. They will need to create an integrated online platform that allows customers to buy their cars directly. They will also need to expand their classic business model"production, sales, and service"and develop new channels and sales formats and the competencies to support them.

Such a platform is fully integrated into a multi-channel solution that would include apps, physical retail, and third-party sales. The operating model is characterized by control over customer interfaces, price setting, and price transparency. This can be optimally accomplished with a direct-sales model. In that context, the sales models of premium, volume, and "low-budget" manufacturers will differ with regard to the degree of control. Sales partners can be part of the system as agents whose revenue and incentive model will be aligned with the channel strength.

Changed responsibilities, channels, and formats"as well as a consolidation of the physical network"will significantly reduce cost of retail. By adapting the margin system to the new functions of retail and by reducing tactical measures, the cost of retail will decrease by up to 5 percentage points despite increasing wholesale expenses"with direct profit impact.

Only those companies that are willing to make aggressive changes to their sales models will be able to capitalize on potential market opportunities and compete with new suppliers.


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Source: AT Kearney - GAI


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AMERItalk

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