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Cars Online 2011/2012 by Cap Gemini

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Changing Dynamics Drive New Developments in Technology and Business Models (December 2011) by Cap Gemini. …

Changing Dynamics Drive New Developments in Technology and Business Models (December 2011) by Cap Gemini.

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  • 1. Automotive the way we see itCars Online 11/12Changing Dynamics Drive New Developments inTechnology and Business Models
  • 2. ContentsIntroduction 3Executive Summary 4Developing Markets: Localization Remains Key to Growth 6Shopping Behavior: ‘No More Tire Kickers’ 9The Role of the Web: Internet Usage Expands Into New Areas 14Online Buying: Latent Demand Strengthens 17Green Vehicles: Spotlight Shines on Electric Cars 21Customer Interaction: There’s an App for That 24Aftersales: Servicing Grows as a Factor in Vehicle Decisions 29Conclusion and Recommendations 32© 2011 Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.
  • 3. Automotive the way we see it Introduction “ The sellers should notfocus only on the technical aspects of the car and Uncertainty and change are among the dominant sentiments characterizing the automotive industry today. Vehicle sales in many markets have maintain their loyalty through the vehicle lifecycle. As the vehicle buying process evolves, the engines; instead they fluctuated up and down over the past it is important to recognize that year, reflecting the unstable economic selling vehicles is as much about should also be interested environment, volatile fuel prices and the car buyers as it is about the cars in the drivers and their the residual impact of the earthquake themselves. Noted one consumer hopes and needs that in Japan. from France: “The sellers should not focus only on the technical aspects of the aren’t just about the Similar uncertainty is evident in this car and the engines; instead they should mechanical aspects year’s Cars Online study. Positive signs also be interested in the drivers and their ” of the car. include an increase in the number hopes and needs that aren’t just about the of new – compared with used – car mechanical aspects of the car.” French consumer buyers in mature markets and an increase in overall satisfaction with Vehicle buyers lie at the heart of our the vehicle buying process. On the Cars Online research. This year’s report downside, however, brand and is based on research conducted with dealer loyalty declined slightly and more than 8,000 in-market consumers many consumers indicated they were in the mature markets of France, postponing buying a car until the Germany, United Kingdom and the economy shows more signs of stability. United States, and the developing Those consumers who are in the markets of Brazil, China, India and market are interested in innovative Russia. The study includes both technology and ownership models, quantitative and qualitative consumer including online buying, alternative- views on topics ranging from the fuel vehicles, smartphone applications shrinking vehicle buying cycle and and mobility solutions like vehicle electric vehicles; to mobility programs sharing. and expanded use of the web. Understanding these rapidly We are confident that the findings evolving dynamics is essential to of Cars Online 11/12 will provide success for automotive companies. automotive companies with insights Cars Online 11/12 – Capgemini’s 13th into the changing dynamics of vehicle annual global automotive study – buying behavior. And we believe those provides an in-depth look at these insights can be particularly valuable in trends. The study offers insight into helping to guide business decisions in how consumers in both mature a time of uncertainty and change. and developing markets shop for vehicles, factors that influence their buying decisions, the growing role of aftersales/servicing and how toCars Online 11/12 3
  • 4. Executive SummaryCapgemini’s Cars Online research 71% said they would be likely to important factor in selecting a vehicleexamines key topics impacting purchase a vehicle from a particular this year (tied with interior/exteriorthe industry, including trends in car manufacturer or dealer if they styling and fuel economy), up fromdeveloping markets, consumer found positive comments posted seventh position the prior year.shopping behavior, the role of the web on social media sites; and 51% said In addition, servicing dealers canand social media, online buying, green they would be less likely to buy a influence future buying decisions.vehicles, customer interaction and vehicle from a particular manufacturer More than half of respondents saidaftersales servicing. Understanding the or dealer if they found negative they were likely to buy their nextshifting dynamics in these areas can comments. Both findings point to the vehicle from the same dealer theyhelp automotive companies respond increasing importance of managing, currently use for servicing.faster and more effectively to changing monitoring and analyzing social mediaconsumer needs and demands. content. The growing emphasis on servicing is also reflected in the fact thatA number of key findings emergedfrom this year’s study: 3 Smartphone applications represent an emerging channel for customer interaction. Consumers service reminders are cited as the most useful/valuable form of post-sale communication and are1 The use of the Internet during the vehicle buying processand ownership lifecycle continues indicated strong interest in mobile/ smartphone applications for their vehicle, particularly post-sale. Apps among the most useful mobile apps listed by respondents. In fact, the Internet is becoming a moreto expand into new areas. Web considered most useful by consumers common tool for service support,usage for researching vehicles edged include remote support features including appointment scheduling,upwards this year, reaching 94% such as remote locking/unlocking car replacement booking, work orderoverall, driven in part by increased of vehicle doors (named by 68% approval, work order confirmation,use in developing markets. More of respondents) and a parked car post-service surveys and access to aimportantly, use of the Internet locator using GPS (64%); vehicle vehicle’s history. These developmentshas expanded into areas such as: information such as a vehicle make it clear that aftersales serviceonline buying of vehicles, parts and owner’s manual with easy navigation needs to be a key part of anaccessories; growing reliance on social (63%); driving support features automotive company’s sales plan.media and user-generated content like vehicle health information/as a source for vehicle and dealerinformation; and mobile web growthduring the buying cycle and post-sale status of vehicle operations (64%) and diagnostic trouble codes (63%); care information like service 5 Increasing consumer demand for alternative buying models reflects a growing shiftas consumers look for vehicle-related reminders (67%) and manufacturer from products to services; fromsmartphone applications. vehicle notifications (63%); and traditional vehicle ownership to communications such as roadside “power by the hour.” Nearly 40%2 Social media becomes more influential in vehicle buyingdecisions. Consumers, particularly in assistance with an easy-to-navigate single click (67%). Consumers are also interested in using smartphone of respondents would consider a vehicle-sharing or ride-share program as an alternative to traditional buying/developing markets, are increasingly apps during the buying cycle for leasing of a vehicle, and almost halfrelying on social media during the scheduling a test drive and vehicle would look at a mobility packageresearch process. Among the tools they configuration. (which offers access to a variety ofturn to are dealer and manufacturer vehicles, services and accessoriessocial media sites, automotive blogsand discussion groups, personal socialnetworking sites, social messaging/ 4 Aftersales servicing is a growing factor in consumers’ choice of vehicle and can be a key to vehicle that can be used as needed by the consumer for a fixed price and a specified time frame, such as “Mumicro-blogging sites, and video- and sales. Servicing is taking on a bigger by Peugeot”). The interest wasphoto-sharing sites. The content that role for many consumers, particularly particularly pronounced amongconsumers find on these sites can be in developing markets. Aftersales younger consumers and in developinginfluential in their buying decisions: servicing ranked as the fourth most markets. If this trend continues it4
  • 5. Automotive the way we see itcould represent a significant shiftin the way consumers think aboutcar buying and ownership and lead 7 Consumers in developing markets have become more demanding about both the quality means that those customers who visit the showroom are serious, not just curious. Dealers must capitalize onthe industry to consider alternative and quantity of car dealerships. these visits since one chance may bebusiness models. Recognizing the As the number of vehicle owners and all they get.potential impact of this change, some dealerships increases in markets suchcar rental companies and vehicle as India, China and Brazil, consumersmanufacturers are testing models such are growing more particular aboutas mobility packages. what they expect from a dealer. They want proximity to their home as they6 The demand for new – rather than used – vehicles has edgedupward in mature markets. In a are unwilling to travel very far to buy a car. In China, for example, only 23% of respondents will travel farther than 10positive sign for the industry, a higher miles to buy a vehicle, compared with “number of respondents from the 53% of all consumers. In addition, theymature countries were in the market demand faster, higher-quality responses The way of sellingfor new vehicles this year, especially from dealers and will walk away if theirsmaller, more fuel-efficient cars. In only one brand in needs are not met.all four mature markets (France, one shop will be brokenGermany, U.S. and U.K.) the numberof intended new car buyers increasedby several percentage points, while 8 The vehicle buying cycle continues to shrink, especially when it comes to showroom visits. soon and car supermarkets will appear. This way wethe number of intended used car Increasingly, consumers are waiting can compare more vehicles ”buyers declined. This may reflect until the final weeks before purchase on the spot.a return on the investments made to visit dealerships. Forty-three Chinese consumerby manufacturers in new product percent of respondents won’t visitdevelopment, especially around a showroom until a month priorsmaller vehicles, alternative fuels, to their purchase, compared withinfotainment and communication 39% the previous year. While thistechnology, navigation systems, and reduces the opportunities to interactsafety and quality features. with customers face to face, it also About Capgemini’s Cars Online Study Capgemini worked with SmartRevenue, a Ridgefield, Connecticut-based research firm, to conduct the survey for Cars Online 11/12. All analysis and interpretation of the data was made by Capgemini in collaboration with the Car Internet Research Program (CIRP) of the University of Ottawa, Canada. In total, more than 8,000 consumers were surveyed in eight countries: Brazil, China, France, Germany, India, Russia, United Kingdom and the United States. Fieldwork was conducted in June and July 2011. All consumers surveyed were in the market for a vehicle (25% plan to buy or lease a vehicle within two months; 36% in two to six months; and 39% in seven to 12 months). The composition of the consumer sample in each country was based on projectable national samples representative of the in-market vehicle-buying population in terms of region, age and gender.Cars Online 11/12 5
  • 6. Developing Markets: LocalizationRemains Key to Growth “Looking ahead five years, all vehicle transactions can be made Much attention has been placed on developing markets because they represent a key to current and future growth for the automotive industry. Understanding the dynamics of these markets is essential to success. The Cars Online research demonstrates that consumers in developing markets with the help of mobile or However, significant risk/reward behave quite differently from those in challenges exist in these markets. mature markets. smartphones compared On the reward side, sales potential is ” with today. high. On the risk side are logistics, Demanding Consumers Indian consumer infrastructure and bureaucratic Characterize Developing challenges, as well as cultural Markets differences, complex tax structures, Car buyers in developing markets and political and regulatory obstacles. continue to be more demanding in a number of respects than their While automotive companies are counterparts in the mature markets. focused on building their business in For example, they are less willing to the developing markets, consumers travel to purchase a vehicle. Only point to a potential downside of the 44% of respondents in developing rapid growth. Noted a respondent markets will travel more than 10 from China: “Soon it may be more miles, compared with 64% of those in difficult to buy a car because there will be mature markets. The difference is even more cars on the road to create heavier more pronounced in China, where just traffic problems, so there could be more 23% of consumers will travel more restrictive policies for purchasing a car.” than 10 miles to buy a car. Consumers in the developing marketsWillingness to Travel to a Dealership (% saying) also expect especially fast response 100% times to e-mail and website inquiries. Sixty-seven percent of respondents 16 22 from China expect a response within 30 29 four hours and 43% would like a 80% More than 20 miles response within one hour, compared 11-20 miles 28 22 with the all-market average of 51% 5-10 miles and 28%, respectively. Similarly, 61% 60% Less than 5 miles of consumers in Russia and Brazil 35 35 expect a response within four hours and about one-third would like a 40% response within one hour. 42 44 Said a consumer from India: “I would 20% 29 28 like to be able to get an immediate response from a dealer when I make a 14 12 request for information and other details 6 8 about vehicles.” 0% Mature Mature Developing Developing Markets Markets Markets Markets 2010 2011 2010 2011 Consumers in developing markets differ from those in mature markets inSource: Capgemini a number of additional respects.6
  • 7. Automotive the way we see it Required Speed of Response from Manufacturer/Dealer to Consumer Query – Less than 4 Hours (% saying) 80% 71 67 67 62 61 61 61 61 60% 57 56 55 52 2008 51 51 50 49 48 2009 47 46 45 44 43 43 43 43 43 2010 40% 40 41 39 37 2011 34 34 33 31 28 29 20% 0% All Markets U.S. U.K. France Germany Russia Brazil India China Source: CapgeminiType of vehicles: New cars remain However, this is trending downward of respondents said they wouldthe dominant choice in most of the and is likely the residual effect of consider a vehicle-sharing program;developing markets, where the used the tax incentives previously given in Brazil the number was 65%; andcar business exists only on a small to Brazilian consumers for buying in India, 52%. In comparison, 37%scale (with the exception of Russia). cars online. In India, consumers can of consumers overall were interestedIn addition, the distribution of vehicle now buy vehicles from the website of in vehicle sharing. As with onlinetypes spans a narrower spectrum their financial services provider. With buying, the traditional approach toin the developing markets, where this model, they may get preferential buying a car is not entrenched in thefewer classes of vehicles are available. rates as well as a less cumbersome developing markets as it is in matureHowever, this is gradually changing as loan application process as the bank regions and so consumers are morenew models are being introduced in already has the necessary data to willing to consider alternatives.markets such as China and India. process the loan. Technical features of vehicles:Online buying: Most of the New buying approaches: Consumers in developing marketsdeveloping markets are particularly Respondents in the developing are more interested in the technicalinterested in purchasing vehicles, markets show greater interest aspects of the vehicle such asparts and accessories online. Brazil in alternatives to the traditional horsepower, performance and in-in particular stands out, with 67% of buying model, including mobility car systems. For example, 90% ofrespondents saying they would like packages, vehicle-sharing and ride- respondents from Russia and Chinato buy a vehicle over the Internet. share programs. In China 72% and 83% of those from India citedCars Online 11/12 7
  • 8. this as an important factor in their key driver for vehicle sales, with choice of specific vehicle, compared China having a more developed road with 68% in the U.K. and France. network than India. On the other Said a respondent from India: “The hand, India’s political environment “ biggest things I look for in a car more and its positive view of foreign I want to buy more and more are new technology features investment are factors that bode well environmentally friendly, like GPS navigation systems, rear images for the country’s future automotive for backing up and automatic sensing of markets. new energy vehicles, potential accident situations.” such as electric vehicles Differences are also apparent in or other clean energy Income spent on vehicles: consumer behavior. Indian consumers Consumers in developing markets are are more likely than those in China vehicles. But I hope to be likely to spend a higher percentage to purchase a smaller, lower-cost able to learn and know of their income on vehicles than their car, while Chinese consumers are more so I have all the counterparts in the mature regions. more interested than their Indian For example, in China only 22% counterparts in alternative buying relevant information for a of respondents will spend less than approaches like vehicle sharing. ” purchase. one-quarter of their annual income Chinese consumer to purchase a car; by comparison, In many respects, Russia continues 41% of U.S. consumers will spend to resemble the mature markets more that amount. This is perhaps not than the other developing countries. surprising as cars are relatively more For example, Russian consumers are expensive and incomes are typically more likely to buy a used car than lower in the developing markets. those in other developing markets and are somewhat less interested in Localization Is Key to Success online buying of vehicles, parts and While certain trends are common accessories. across the developing markets, variances exist among the different countries. Local insight is particularly important in the developing markets as conditions often evolve rapidly. Take China and India, where a number of factors differentiate the two markets. For example, while vehicle sales in China have exploded in recent years, the growth in India has been steadier with many industry observers waiting for the market to take off. And China’s vehicle market is still much larger overall than India’s although the population of the two countries is similar in size. Some point to the differences in infrastructure as a8
  • 9. Automotive the way we see itShopping Behavior: ‘No More TireKickers’One of the positive signs from this Intention to Acquire New vs. Used Vehicle (% saying)year’s study is an increase in the 100%number of consumers planning to buy 8 2 2 2 2 10 10 9a new – rather than used – vehicle, 12 12 14 10especially in the mature markets.In all four mature markets (France, 80% 26 30Germany, U.S. and U.K.) the number 33 31 Undecidedof intended new car buyers increased Usedby several percentage points, while 60% Newthe number of intended used carbuyers declined. This may represent 86 86 84 88a response to the many new vehicle 40% 66models and quality improvements 57 59 61made by manufacturers. 20%Not surprisingly, the overall numberof new car buyers remains higher inthe developing markets due to the fact 0%that the used car market is relatively Mature Markets Mature Markets Mature Markets Mature Markets Developing Markets Developing Markets Developing Markets Developing Marketsundeveloped in these regions where 2008 2009 2010 2011 2008 2009 2010 2011many consumers are first-time buyers. Source: CapgeminiThis year’s findings indicate a movetoward smaller cars, with consumersciting cost, fuel efficiency and Likelihood to Purchase Smaller/Lower-Cost Car (% saying likely/very likely)environmental concerns as the key 100%factors. In fact, consumers acrossmost of the markets reported a greaterlikelihood to buy smaller cars this 13year, perhaps reflecting the uncertain 80% 2010 2011economic situation and volatile fuelprices, as well as the introduction ofnew models. In the U.S., for example, 60% 7759% of respondents said they were 69 67likely or very likely to buy/lease a 62 59smaller car, up from 40% the prior 56 56 56year. Similarly, 52% of consumers in 40% 52 50 47the U.K. said they were likely to buy 46 45 40a smaller vehicle, compared with 35% 35 37 33 32the previous year. Overall, consumers 20%in Brazil and India were the mostlikely to buy smaller cars. In India thederegulation of fuel prices and thesubsequent sharp rise in the price of 0%gasoline in the past year are driving All Markets U.S. U.K. France Germany Russia Brazil India Chinaconsumers to smaller vehicles. Source: CapgeminiCars Online 11/12 9
  • 10. Vehicle Buying Cycle Continues to Shrink (% saying) How long before your planned vehicle purchase/lease How long before your planned vehicle purchase/lease did/will you begin to research vehicles? did/will you visit a dealership showroom? 40% 40% <2 weeks 2 weeks-1 month 30% 30% 1-2 months 30 30 31 2-4 months 20% 24 20% 4-6 months 17 6-12 months 19 10% 13 10% 13 7 7 6 3 0% 0% All Markets All MarketsSource: Capgemini Buying Cycle: ‘Tire Kicking Is respondents had decided on one “ Being Done Online’ vehicle make, compared with about There is a trend Regardless of their intentions to buy 10% in the earlier stages of the buying new or used cars, consumers spend cycle. towards minimization of less time shopping for vehicles today. personal interactions with In particular, consumers are waiting Evidence of the shrinking buyingdealers during the process until the final weeks before purchase cycle can also be found in the results to visit dealerships. Forty-three focused around the type of channel/ of buying cars. I think this device that consumers use at different percent of respondents won’t visit trend will become more a showroom until a month prior to points in the research process. Dealer ” prominent. purchase, compared with 39% the visits to the showroom are low until previous year. The bad news is that the final weeks before purchase. For Russian consumer this reduces the opportunities to example, at six to 12 months from interact with customers face to face. purchase, only 15% of consumers The good news is that those who said the dealership is their preferred visit the showroom are serious, not channel for gathering information. just curious. “I expect to have my mind Within two weeks of purchase, that pretty much made up by the time I go number grows to 58% of consumers. to a dealership for a test drive,” said a consumer from the U.S. Consumers Use Wide Range of Devices for Research As the buying cycle continues to The rise of tablets and smartphones shrink, dealers must take advantage for information gathering was evident of every face-to-face interaction since this year in both the quantitative and one chance may be all they get. As qualitative data. “I’d like to buy a car one industry observer noted, “Today using my tablet and be able to see models there are no more tire kickers. All the tire with all the specifications I want,” said a kicking is being done online, not in the Brazilian respondent. dealer lot.” Use of tablets and smartphones The research makes it clear that two was highest between one and four weeks from purchase is a critical months before purchase: About 20% tipping point, as this is when many of respondents said their mobile/ buyers narrow down their search to smartphone was their preferred one final make and model. Within channel for gathering information two weeks of purchase, 32% of during this period; 15% of consumers10
  • 11. Automotive the way we see itpreferred their tablet computer during ■ In the U.S. consumers arethis phase of the buying process. particularly likely to prefer theWhen researching, consumers were dealership for gathering informationinterested in smartphone applications in the last two weeks.such as scheduling a test drive, ■ Brazilian respondents indicate moreconfiguring a vehicle and visiting a even distribution across the differentvirtual vehicle showroom. research channels, compared with other markets.“I think in a few years most things will be ■ In Russia consumers report higher-done using smartphones and buying a car than-average use of desktops andwill probably be as simple as looking for laptops all the way through thea car on your mobile phone, then going research, shopping and buyingto the dealer to look at it and completing process.the transaction (paying for it) using your ■ In France, consumers werephone,” said a U.K. consumer. somewhat more likely than theirAs with many of the research findings, counterparts to visit the dealer earlierthe devil is in the details, with in the buying cycle.noticeable variances by market thatneed to be considered. For example: Once consumers enter the showroom,■ Preference for mobile or smartphone they are interested in finding a variety is higher than average in China and of additional services, especially India during the full buying cycle. vehicle accessories for sale (cited by 51% of respondents), car care tips Preferred Research Device/Method (% saying) 6-12 months before purchase 4-6 months before purchase 2-4 months before purchase 70% 70% 70% 60% 60% 60% 50% 50% 50% 51 48 50 40% 40% 40% 30% 32 30% 30% 20% 20% 24 20% 21 18 17 15 14 15 10% 10% 14 13 10% 11 10 10 9 7 0% 0% 0% All Markets All Markets All Markets Desktop or laptop computer Tablet computer 1-2 months before purchase 2-4 weeks before purchase Up to 2 weeks before purchase Mobile or smartphone 70% 70% 70% Landline phone Dealer visit 60% 60% 60% Not applicable 58 50% 50% 50% 50 47 40% 40% 43 40% 30% 33 30% 30% 34 20% 20% 20% 20 20 16 18 16 17 10% 14 12 10% 10% 13 11 11 10 0% 0% 0% All Markets All Markets All Markets Source: CapgeminiCars Online 11/12 11
  • 12. Use of Information Sources to Research Vehicles (% saying) Information Source All Markets U.S. U.K. France Germany Russia Brazil India China Car dealer (both new and used cars) 49 52 58 56 58 52 25 51 33 Vehicle manufacturer websites 44 51 48 37 47 55 26 44 41 Search engine 43 42 49 36 40 59 20 45 43 Dealer websites 42 49 53 36 44 53 24 38 37 Family and friends 40 30 40 28 36 51 27 50 46 Information websites/independent car 30 40 31 23 36 40 19 33 34 valuation services Specialist motoring/automotive press 30 17 28 31 34 50 17 22 43 Top information Auto shows 27 14 13 22 22 39 24 38 46 sources TV advertising 27 24 21 20 16 28 27 44 30 Internet news sites 26 19 21 21 15 33 25 40 32 Web forums, blogs, Internet discussion groups 25 18 17 18 20 47 16 22 43 Independent e-tailer sites 25 16 17 21 43 40 16 13 33 Car dealer (used cars only) 22 22 29 22 28 22 14 22 13 Print advertising 20 23 17 14 13 30 18 27 15 Manufacturer/dealer social media site 19 14 16 16 7 26 15 28 32 Multiple responses allowed Source: Capgemini(50%), newspapers/magazines (37%) sophistication and increasing options consumers in the mature markets useand an Internet café or wireless access available on dealer sites. In addition, TV advertising when they research(36%). Of less interest are: having dealer social media sites often drive vehicles.a children’s play area, TV/movies traffic to their corresponding websites.available for viewing, food for sale or The use of search engines, and web Interest Grows in Alternativemusic listening stations. The pattern forums, blogs and discussion groups Buying Modelswas quite similar across all markets. also rose this year. In a continuation of a trend identified last year, consumers express a growingWeb is Key Source for Vehicle Among non-web-based sources, willingness to consider new, non-Information TV advertising posted gains in the traditional approaches to vehicleDuring the research process developing markets, particularly buying and ownership. Almost half ofconsumers turn to a wide array of India (cited by 44% of consumers, respondents would look at a mobilityinformation sources, but increasingly compared with the average of 27%) package as an alternative to traditionalweb-based sources dominate. This and China (30%). This finding buying/leasing of a vehicle and nearlyyear saw a rise in the number of indicates that building brand 40% would consider a vehicle-sharingrespondents saying they use dealer awareness via TV remains vitally or ride-share program. A mobilitywebsites during the buying process, important in newer automotive package typically provides accessperhaps reflecting the growing markets. In contrast, only 21% of to a wide range of vehicles, services12
  • 13. Automotive the way we see itand accessories that can be used as Likelihood to Consider Alternative Buying Approaches (% saying likely/very likely)needed by the consumer for a fixed Vehicle-Sharing Program Mobilty Package Ride-Share Serviceprice and a specified time frame. This 100% 100% 100%developing trend may reflect a gradualshift from products to services; fromtraditional vehicle ownership to 2010 2011 2010 2011 2010 2011“power by the hour.” 80% 80% 80%“I think that the future will be short-term 64hire of a vehicle,” said a U.K. consumer. 60% 60% 60%“It is simply going to become far too 56 53impractical to own a vehicle.” 49 52 49 40% 40% 40%A respondent from Germany agreed,expressing a growing sentiment 28among consumers: “I would like to pay 23 20% 20% 24 20%a certain amount to a manufacturer, and 21 17 15use a car from them for a certain periodof time and then return it to any of theirdealers – car-sharing, so to speak.” 0% Mature Developing 0% Mature Developing 0% Mature Developing Markets Markets Markets Markets Markets MarketsThe interest in new buying modelswas particularly pronounced in Source: Capgeminideveloping markets (excluding Russia)and among younger consumers.Half of respondents age 18 to 34 and depending on their needs at that safety, reliability, price and interior/would consider a mobility package, time. Participants open an account exterior styling. This year was nocompared with 34% of consumers 50 online and get credits that are debited exception. As in the past, all theor older; 42% of younger consumers from the account when they rent a elements tend to matter somewhatwere interested in vehicle sharing, vehicle. more in the developing markets thancompared with 26% of those 50 or in the mature regions, no doubt dueover; and 44% of younger consumers In addition, vehicle manufacturers to the inexperience of buyers in thosewould consider ride-share programs, including Ford, Daimler, VW and developing regions.as compared to 27% of older BMW are involved in vehicle-sharingrespondents. services. And the Hertz On Demand Aftersales servicing has gained ground program enables consumers to rent in the past year. Aftersales was rankedIf this trend continues it could lead a vehicle when they need it, without the fourth most important factorthe industry to consider alternative membership fees. in selecting a vehicle this year (tiedbusiness models. Recognizing the with interior/exterior styling and fuelpotential impact of this change, some Vehicle Choices: What Matters economy), up from seventh positioncar rental companies and vehicle Most the prior year.manufacturers are testing models like When consumers finish theirmobility solutions and vehicle sharing. shopping and decide to buy, thePeugeot, for instance, launched key factors that influence their finalits “Mu by Peugeot,” which allows decision come down to the intrinsicconsumers to rent a vehicle, scooter, elements of the vehicle and whichbike or accessory whenever they want have been consistent for many years:Cars Online 11/12 13
  • 14. The Role of the Web: Internet UsageExpands Into New AreasInternet is Dominant Research Tool (% of consumers saying they use the Internet as an information; and mobile web growthinformation source during the vehicle buying process) during the buying cycle and post-sale as consumers look for vehicle-related 100% smartphone applications. 80% What Consumers Want From the Web Price and product information 60% continue to be the primary web features consumers look for when they research vehicles. Additional 40% options high on the list include the ability to compare vehicles and the 20% ability to get guidance and advice over the web. 0% Some consumers said they would like 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 to get further price-related information such as usage costs during ownership.Source: Capgemini Noted a French respondent: “You are given lots of information on the web about the car and the purchase price when you Just when we thought the use of the buy it, but what about the real costs to web during the vehicle buying process drive the car over a year according to had hit a saturation point, it grows a various usage models?” bit more. One of the most pronounced trends in car buying behavior over the Influence of Social Media Grows past decade has been the increased dependency on the Internet during Consumers are increasingly expanding the research process. This year the their web usage during the research number of consumers using the web process to include social media, edged upwards to 94% overall. particularly in developing markets. Among the tools consumers turn to The increased role of the web are dealer and manufacturer social was driven in part by gains in media sites, automotive blogs and the developing markets. More discussion groups, informational/ importantly, the use of the encyclopedia sites, personal and Internet has expanded professional social networking sites, into areas such as: video- and photo-sharing sites and online buying of social messaging/micro-blogging sites. vehicles, parts and accessories; China reports especially high use growing reliance across most types of social media sites. on social media This likely reflects overall gains in and user-generated Internet penetration in the country, content as a source as well as growing interest in sites for vehicle and dealer such as Weibo, a China-based micro-14
  • 15. Automotive the way we see itblogging site that claims to have Use of Social Media and Other Online Tools (% saying)140 million users. Dealer or manufacturer social media sites 31 43 28Consumers are turning to social Third-party automotive discussion group/forum 42 24media for opinions and reviews about None of these 2 23specific car brands/makes and dealers, Third-party automotive weblog 33 19discussions with other consumers, Informational/encyclopedia site with user-generated content 31 16special deals or offers, discussions Personal social networking sites 28 13with automotive experts, helpful hints Online video site/video-sharing service 31about vehicles and news about new Professional social networking sites 12 24vehicles. The content that consumers Photo-sharing sites 9 26find on these sites can be influential in Mobile phone applications/advertisements 9 18their buying decisions: 71% said they Social messaging/micro-blogging services 8 23would likely purchase a vehicle from a Social bookmarking sites 8 16 Mature Marketsparticular car manufacturer or dealer RSS feeds 7 12 Developing Marketsif they found positive comments Other 1posted about that vehicle make/brand, 0% 10% 20% 30% 40% 50%manufacturer or dealer; and 51% saidthey would be less likely to buy a Multiple responses allowed Source: Capgeminivehicle from a particular manufactureror dealer if they found negative Influence of Positive and Negative Comments on Buying Decisionscomments posted on social media (% saying likely/very likely)sites. Both findings highlight the 100%increasing importance of managing,monitoring (by vehicle brands/ Positive Comments Negative Commentsmodels, themes, positive/negativesentiment, purchase intent, consumer 80% 81 13 83 78 78demographics, etc.) and analyzingsocial media content. 71 71 68 67 60%Said a Russian respondent: “I will not 59buy a car that is not liked by my friends 51 54 52 54 50 50and relatives and doesn’t have the largest 45 44number of positive comments on the 40% 42Internet.”Growing Focus on User- 20%Generated ContentIncreasing usage of social mediaisn’t surprising given the importance 0%consumers place on user-generated All Markets U.S. U.K. France Germany Russia Brazil India Chinacontent during the vehicle buyingprocess. Nearly three-quarters of Positive comments: “For those online social media tools that you expect to use when researching your vehicle purchase, howrespondents say it is important to find much more likely would you be to purchase a vehicle from a particular car manufacturer or dealer if you found positive comments posted about that vehicle make/brand, manufacturer or dealer?”user-generated content on dealer and Negative comments: “For those online social media tools that you expect to use when researching your vehicle purchase, how much less likely would you be to purchase a vehicle from a particular car manufacturer or dealer if you found negative commentsmanufacturer websites, up from 65% posted about that vehicle make/brand, manufacturer or dealer?” Source: Capgeminithe prior year. The results were highestCars Online 11/12 15
  • 16. in the developing markets. This to find owners who would be experiencing seems to point to the importance the same driving conditions as you.” of including both subjective (consumer reviews and In the U.S., many automotive-related opinions) and objective websites, such as Edmunds.com information (price and and AutoTrader.com, include user- product specifications) generated content and reviews to help on websites. their online customers with vehicle buying decisions. On AutoTrader’s site This sentiment was evident consumers can read a consumer or in the qualitative data, such as this expert review, write a review or watch comment from a consumer from the a video review. U.S.: “The input from average users/ owners posting on social websites and manufacturer websites and the ability to ask questions and obtain answers, interact with those individuals on those sites is a bigger factor in my decision than previously. One feature that would be helpful would be a way to sort owners’ posts by general location or state in order Importance of User-Generated Content on Dealer and Brand Sites Grows (% saying important/very important) 100% “ 2010 2011 I will continue to get 83 83 83 information over the 80% 79 78 80 81Internet, especially through 73 69 forums and also opinions 65 65 67 60% 62 61 of other web users who 60 57 54 own the car in which I am ” interested. 40% 39 French consumer 20% 0% All Markets U.S. U.K. France Germany Russia Brazil India China Source: Capgemini16
  • 17. Automotive the way we see itOnline Buying: Latent DemandStrengthensConsumer interest in buying vehicles,parts and accessories over the Internet(the complete transaction, exceptdelivery of the vehicle) continuesto grow despite the fact that thecapability remains scarce in mostmarkets. In this year’s study, 42% ofconsumers said they were likely orvery likely to purchase a vehicle overthe Internet, up from 37% two yearsago. That translates into millions ofpotential transactions. Consumers indeveloping markets are particularlyinterested in online buying and arequite willing to consider this new typeof purchase model. Likelihood to Purchase Vehicle Over the Internet (% saying likely/very likely)100% 2009 2010 2011 84 80% 75 67 60% 63 57 53 52 49 42 40% 41 37 35 34 33 32 29 30 30 28 28 29 23 23 21 22 20% 21 19 0% All Markets U.S. U.K. France Germany Russia Brazil India China Source: CapgeminiCars Online 11/12 17
  • 18. Primary Reason to Purchase Vehicle Over the Internet (% saying) Expect price discount Do not want to interact in person with dealer Do not want to negotiate price in person with dealer Ease and speed of transaction Ability to purchase vehicle that is not available locally Do not want to be talked into buying something I do not want Nearest dealership is too far away Other 50% 46 43 40% 38 36 35 30% 35 35 35 35 29 28 28 23 20% 18 13 15 10% 11 11 11 12 11 9 8 9 10 7 8 5 2 0 4 1 1 5 5 1 0 6 4 2 0 2 0 3 0% All Markets U.S. U.K. France Germany 50% 44 40% 39 35 33 34 30% 25 26 25 20% 15 14 12 13 10% 12 12 9 10 9 4 1 0 5 1 0 4 5 4 0 3 1 0 2 3 0% Russia Brazil India ChinaSource: Capgemini New car buyers and younger This has remained consistent over consumers are also especially the past few years, although price interested in online vehicle buying. is a somewhat stronger factor in Almost half of intended new car the mature markets. Germany is buyers said they would consider particularly focused on price, with buying a vehicle online, compared 46% of consumers identifying it as the with 27% of used car buyers. Among primary reason to buy a car online. the 18-34 age group, 43% would like to buy a car online, as compared to “I’ve bought my last two new vehicles 36% of those 50 or older. over the Internet and expect to do the same in the future. The big thing I’d like Price Drives Online Buying to see is having one price, doing away Price discount along with ease and with negotiation and haggling, which I speed of transaction are cited by find to be both distasteful and unpleasant. consumers as the main reasons to I don’t mind if I never have to talk with a purchase a vehicle over the Internet. car salesman again,” said a respondent from the U.S.18
  • 19. Automotive the way we see itIn contrast, respondents from markets vehicles for sale. Said a respondentsuch as Russia and India identify from the U.K.: “I would hope there willease and speed of transaction as the be a central website into which I can plugprimary factor, which is not surprising my basic requirements and a selection ofgiven the comparative complexity of cars that meet my criteria will then bebuying a car in those countries. identified. I would like to then be able to insert the price I am prepared to pay andDealer Role Evolves in an Online what I expect the price to cover and theModel system would identify the dealer able toAs consumers consider an online supply my chosen vehicle.”buying model they are rethinking therole of the dealer. About one-quarter Perceived Barriers to Buyingof respondents would still expect the Onlinedealer to be involved in vehicle test Consumers who are not interested indrives, price negotiation and delivery buying a car over the Internet identify “of a service package. However, they a few key reasons: the inability to The way vehicles areanticipate that home delivery of test drive the vehicle, to receive fullvehicles would grow in an online product and price information, and to sold could completelymodel, reducing the need to pick up see photos/video of the vehicle. These change with the continuedat the dealership. perceived barriers have remained evolution of information consistent over the past few years, yet ”There are, of course, variances by they are clearly addressable by dealers technology.market. Russian respondents are more and manufacturers. Brazilian consumerinterested than others in still beingable to view the vehicle in person Again, market differences arebefore buying it online. Consumers apparent. Consumers in Russia andin China are particularly interested in China are more likely than theirreceiving a service package from the counterparts to consider the inabilitydealer rather than online. to see photos/videos of the vehicle as a barrier to online buying. Russia, IndiaMany consumers anticipate and China are more concerned aboutmore direct contact with vehicle not being able to get full product/pricemanufacturers in an online model. information when buying online,“Manufacturers will give us all the which may reflect the state of websitesfunctions that we want right on their in those countries. Consumers inown website,” said a consumer from the U.S., U.K. and France cite theBrazil. “Price negotiations will also be inability to negotiate trade-in of theirdone on their website. Then, in the end, old vehicle as a barrier. Andthe manufacturer will tell the client where German respondents namedthey can finalize their purchase. You will the inability to conductfinalize and not renegotiate or restart the final negotiation online as awhole purchase process at the store.” blocker.A number of respondents also Some consumers also worryexpressed interest in seeing some sort about the possible lack of supportof central online database or portal services in an online buying model.that aggregates information about “In a few years the Internet will lead theCars Online 11/12 19
  • 20. Parts and Accessories Likely to Purchase Over the Internet (% saying likely/very likely) accessories online. As with vehicles, the interest in online buying of both 61 58 parts and accessories was higher in the Battery 54 Floor mats 49 developing markets. 31 45 61 56 Also mirroring the behavior regarding Tires 60 Seat covers 50 online vehicle buying, respondents 42 46 identified price discount and ease and 58 2011 42 2011 speed of transaction as the primary Steering wheelSpark plugs 49 2010 covers 41 2010 reasons to buy parts and accessories 31 2009 36 2009 over the Internet. This was consistent 50 In-car 41 across all markets, but again priceFan belts &timing belts 42 entertainment 38 was especially high in Germany. 27 device 34 Consumers in Russia and China also 0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100% pointed to wider selection/availability of parts and accessories as anotherMultiple responses allowedSource: Capgemini reason for online buying. Batteries and tires were identified as the parts most likely to be bought way we buy vehicles. The biggest concern online. Regarding accessories, is how good the technical and post-sale consumers were more interested in support will be,” said a respondent from items that wear out quickly or are easy Brazil. to install or have installed, including floor mats, seat covers, steering wheel Other respondents like the face-to- covers and in-car entertainment face interaction at the dealership devices. They were less likely to and are less interested in buying cars purchase specialty lights, mirrors, online. Said a consumer from the alarms/security devices, custom U.K.: “A good salesman to me is worth wheels or spoilers over the Internet. “ more than anything I will find on the I could imagine that Internet. A personal car purchase is one To reduce the sales seepage of parts of the areas where the personal touch is and accessories to the online channel, there is a single online dealers should consider promoting still important in my view. For business platform where all your vehicle purchases I would take a different lower-priced, quick services for needs can be handled view and would be happy to source and changing tires, oil and batteries, or to purchase directly online.” increase their own presence online for without much effort and these items. ” any risk. Demand Grows for Parts and German consumer Accessories Online This year’s research shows an increasing demand among consumers for online buying of parts and accessories. Fifty-six percent of consumers said they were likely or very likely to buy parts over the Internet and 62% were likely to buy20
  • 21. Automotive the way we see itGreen Vehicles: Spotlight Shines onElectric CarsThis year marked a watershed as Electric Vehicles Take Centerelectric vehicles began to make it to Stage “the mass market. Sales remain low, As electric vehicles break into thebut cars such as the Chevrolet Volt, market, consumers are beginning to We should seePeugeot Ion and Nissan Leaf signify view them as a realistic option. Inthat the process of building a real important breakthroughs this year’s study 42% of respondentsmarket has started. expect full-electric vehicles to be a in car performance and viable sales option (in terms of pricing energy efficiency in the ”Consumer interest in green vehicles and availability) within two years, upcontinues to gradually increase. In this next five years. from 36% the prior year. One-thirdyear’s study, 44% of consumers said of consumers believe it will be two to Chinese consumerthey currently own a fuel-efficient or five years and 25% expect it will bealternative-fuel vehicle and 39% are more than five years before electricplanning to buy a green vehicle. These vehicles are a real option.numbers have been rising slowly overthe past few years. Ownership tends to Charging locations and battery rangebe somewhat higher in markets such are among the issues consumers areas Brazil and India, but a growing considering when it comes to electricnumber of consumers in mature vehicles. “Perhaps in a few yearsmarkets say they are planning to buy alternative types of fuel like electric willeither a fuel-efficient or alternative- become more accessible, in which case Ifuel car. will buy a more economical car running on alternative fuel, but only if there is aGrowth is expected to continue as sufficiently large number of rechargingfuel prices fluctuate, environmental stations,” said a Russian consumer,awareness rises and governments echoing a common sentiment.provide tax credits and otherincentives. More than half of consumers said they would prefer toHybrids are still the dominant type of charge an electric vehiclealternative-fuel vehicle in all countries at home (plug-in), whileexcept Brazil where ethanol-based 39% would considercars are popular due to the wide another location suchavailability of E100 fuel. One-third as work or a chargingof all consumers who own or plan to station. Consumers inbuy a green vehicle cite hybrid electric China are more willingvehicles, 15% are interested in an to consider a wider arrayethanol or gasoline-ethanol flex-fuel of charging options.car, 10% cite plug-in hybrids and Overall, consumers are9% would buy an all-electric vehicle. somewhat less interestedAdditional vehicle types named in changing out batteries,by respondents include biodiesel, despite the publicityhydrogen fuel cell, natural gas or surrounding ventures suchnatural-gas hybrid and propane/liquid as Better Place, whichpetroleum gas. offers automated battery switching stations amongCars Online 11/12 21
  • 22. its services. Interest in changing out Some consumers expressed strong plus there could be an ecological impactbatteries was highest in Russia, Brazil opinions on the subject of green in accidents. The government forcingand Germany. vehicles. Said one U.S. respondent: “I vehicles on us makes me resist. I do not will not buy alternative-fuel vehicles. I buy ‘tax bonus’ vehicles and will vote outBarriers to Buying Green drive long distances so batteries are out, representatives who give them.”Vehicles Include Price andReliabilityPrice remains the biggest obstacle Interest in Green Vehicles Continues to Rise (% saying)to sales of alternative-fuel vehicles,particularly in mature markets, while 44consumers in developing markets Own a fuel-efficient/alternative-fuel vehicle 43are also concerned about reliability. 41 2011Two-thirds of all respondents saidthat cost/price would be the primary 39 2010factor stopping them from buying Plan to buy a fuel-efficient/alternative-fuel vehicle 37 2009or planning to buy a fuel-efficient or 30alternative-fuel vehicle, followed by 17range (for example, number of miles Do not own a fuel-efficient/alternative-fuel vehicle 20per charge for electric vehicles), which 29was named by 45% of consumers.Additional barriers include reliability/ 0% 10% 20% 30% 40% 50%quality, safety and interior/exteriorstyling. Source: Capgemini Primary Charging Location Expected to be Used for Electric Vehicles (% saying) 100% 1 1 1 1 1 3 3 6 2 5 8 9 4 13 Other 15 21 33 18 24 25 19 Change out new battery 80% 7 32 8 Charging station at location 12 other than work and home 18 45 18 14 Work 60% 27 13 Home (plug-in) 75 40% 7 67 58 60 54 55 46 20% 35 36 0% All Markets U.S. U.K. France Germany Russia Brazil India China Source: Capgemini22
  • 23. Automotive the way we see it“ I would like more of a selection of vehicles that usealternative energies; they’re too rare and it’s up to thecustomer to make a demand for them. There are too few ”LPG (liquid propane gas) or serious hybrid cars.French consumer Barriers to Buying Green Vehicles (% saying) Interior and/or exterior styling Cost/price Range (e.g., number of miles per charge for electric vehicles) Reliability/quality Safety Other 100% 80% 73 75 70 60% 65 64 53 40% 45 46 44 40 40 40 36 35 35 25 23 24 20% 22 17 16 19 19 14 12 7 0 4 8 1 0% All Markets U.S. U.K. France Germany 100% 80% 60% 60 59 57 52 51 48 50 47 40% 38 36 34 35 31 34 20% 21 23 23 13 16 3 13 2 0 2 0% Russia Brazil India China Multiple responses allowed Source: Capgemini Focus on e-Mobility Plug-in hybrid, semi-hybrid, battery technologies and mobility concepts are only a few of many developments the automotive industry will face resulting from the emergence of the electric engine. These developments are driving the move toward e-Mobility, which focuses more on services rather than products. e-Mobility refers to a network of new and well-established players from different industries designed to facilitate mobility from place A to place B either for an individual or goods. The automotive segment is a key contributor to the e-Mobility movement, as well as utilities, grid operators, battery producers and mobility service providers, among others. The shift to e-Mobility will likely impact the automotive industry in a wide range of areas, including competition, innovation, partnerships and technology systems and processes. Companies will need to consider how to address these potential changes.Cars Online 11/12 23
  • 24. Customer Interaction: There’s an App forThat An encouraging sign in this year’s industry. And Germany and France study is the fact that satisfaction with remained stable. the vehicle buying process continues to gradually improve. Seventy-two Of course, there’s always room for percent of respondents said they were improvement. The key factors that satisfied or very satisfied with the would make consumers more satisfied buying process, an increase from 70% with the buying process tend to last year. fall into two categories: price and the selling process. Price remains The upward trend suggests that the the primary factor and includes the automotive industry is doing a good ability to negotiate a discount as job in meeting the demands of car well as a single sales price/no price buyers. The satisfaction levels remain negotiation. In terms of the selling higher in the developing markets process, consumers, particularly those where consumers have had less in developing markets, would like a experience buying vehicles. Eight of shorter waiting time to receive their 10 respondents in the developing vehicle, less administrative effort regions were satisfied with the buying during the buying process and a more process, compared with 64% in the knowledgeable sales staff. mature markets. However, mature markets like the U.S. and U.K. showed Market variances are apparent. noticeable gains in the satisfaction ■ In the U.S., the price factors levels, which is good news for the dominate, with above-average focusSatisfaction with the Vehicle Buying Process (% saying satisfied/very satisfied)100% 91 92 87 88 84 84 8380% 81 80 80 74 75 77 72 69 70 67 2008 67 66 66 66 63 6560% 61 61 60 57 58 58 59 55 2009 53 53 49 5240% 2010 40 201120% 0% All Markets U.S. U.K. France Germany Russia Brazil India ChinaSource: Capgemini24
  • 25. Automotive the way we see it on a single sales price/no price The Importance of Post-Sale negotiation. Interaction■ Consumers in the U.K. are Post-sale communication can be a particularly focused on the ability to key to maintaining satisfaction and negotiate a discount. loyalty. Service reminders lead the list■ In France and Germany, of preferred types of communication. respondents want a shorter waiting They are viewed by 40% of time to receive their vehicle. respondents as important and are influential in future buying decisions.■ Consumers in India and Russia are looking for more knowledgeable Post-test drive surveys are also salespeople. important to car buyers, particularly■ In Brazil, consumers were focused in developing markets, where it is the on a simpler, more streamlined leading type of communication valued financing process. by consumers, named by 41% of■ Respondents from China want a respondents. This data highlights the more streamlined warranty and importance of following through after service contract process. the test drive to increase conversion rates. This is particularly critical inCustomer Loyalty Edges light of the shrinking buying cycleDownward where dealer visits are increasingly rare and occur later in the process.While satisfaction levels grew, brandand dealer loyalty again declined this E-mail remains consumers’year. Sixty-one percent of consumers preferred channel for most formssaid they were likely to purchase/ of communication with dealerslease the same make or brand as their and manufacturers. About 60%current vehicle, down from 65% in of consumers prefer to receive2010 and 68% in 2009. Similarly, communications such as post-testdealer loyalty edged down to 55%, drive surveys, customer satisfactioncompared with 56% in 2010 and 63% surveys, sales offers and newslettersin 2009. via e-mail. Mobile phones are a growing channel for communicatingCustomer loyalty remains strongest with consumers. Aboutin the developing markets, but is 20% of consumers saiddeclining somewhat from the very they would prefer tohigh levels seen a few years ago. receive personalizedThis is not surprising as the number communicationsof brands and dealers grows in the after a complaintdeveloping markets, providing carbuyers with more choices. This isalso the case for loyalty to servicingdealers, which is declining in thedeveloping regions as competitionincreases.Cars Online 11/12 25
  • 26. Channel Preference for Post-Sale Communications - All Markets (% saying) Valuable/ Mobile Phone Mobile Phone Type of Communication Regular Mail E-Mail Useful - Call – Text/SMSService reminders 40 18 43 20 20Information about the vehicle that you bought/leased 37 51 42 5 3Post-test drive survey 34 16 63 16 5Alerts about special sales, offers, promotions 33 18 58 13 11Customer satisfaction survey after purchase 32 17 63 14 6Welcome pack after purchase/lease 31 45 38 12 5 Highest rankedDetailed post-service report and follow-up by dealer 30 26 55 13 6 communication for each channelAlerts and information about vehicle or accessory recalls 29 21 49 16 13Customer satisfaction survey after service 26 16 62 16 7 Lowest ranked communication forPersonalized communication/gift after a complaint 23 40 30 22 8 each channelPersonalized repurchase offer/promotion matched to your needs 20 31 47 14 8two years after purchase (or near end of warranty or lease period)Brand magazine 20 43 40 11 6Newsletters 18 25 60 10 5Invitations to special events, clubs, open house days 18 24 45 18 13Other sales offers 4 24 60 5 10Source: Capgemini and service reminders via a mobile half of all respondents want to receive phone call; another 20% would prefer a response to an inquiry within four “ to receive service reminders via mobile hours, a slight increase from the prior I think that the phone text or SMS. year. The number jumps to about 60% in the developing markets. dealers need to change Vehicle manufacturers and dealers their promptness and are experimenting with a variety of Quality of response counts as well. correctness when communication options. Hyundai, And if the speed and quality are not for example, is delivering the owner’s up to consumers’ expectations they they respond to the manual for its Equus luxury vehicle on will seek alternatives. More than ” customer. an Apple iPad®. two-thirds of respondents said they Indian consumer would look for another dealer, look Speed and Quality of Response for another manufacturer or both if a Drive Satisfaction manufacturer or dealer took too long Another key driver of customer loyalty to respond to an inquiry, and 76% and satisfaction is the speed and quality would look for an alternative if the of the interactions consumers have with dealer or manufacturer gave them a dealers and manufacturers. More than poor quality response.26
  • 27. Automotive the way we see it Consumer Behavior if Dissatisfied with Quality of Response (% saying) 4 6 5 4 3 4 1100% 4 5 4 2 3 6 4 4 7 13 5 Dont know/other 7 8 10 1 8 12 3 3 17 2 7 Contact the manufacturer 80% 4 26 4 19 22 Contact the dealer 18 18 23 9 31 46 Look for neither 5 60% 7 5 7 17 15 Look for both 10 18 Look for another manufacturer 10 8 40% 14 Look for another dealer 13 56 57 52 37 39 20% 43 40 36 29 0% All Markets U.S. U.K. France Germany Russia Brazil India China Source: Capgemini Most Useful Mobile/Smartphone Applications (% saying)Mobile Apps Represent New Remotely lock andCommunication Channel unlock vehicle doors 68 Service reminders whenMobile/smartphone applications are maintenance is due 67poised to become a key channel for Call roadside assistance 67 (easy-to-navigate single click)vehicle ownership communicationbetween consumers and Parked car locator (using GPS) 64manufacturers, consumers and dealers, Vehicle health information 64and consumers and their vehicles.This will enable manufacturers to Manufacturer vehicle notifications 63have a direct link to consumers duringthe vehicle ownership lifecycle in Diagnostic trouble code 63order to continue to develop brand Vehicle owner’s manual 63 with easy navigationloyalty, strengthen dealer relationships Remotely sound horn andand increase repurchase loyalty. turn on lights to find car 62Respondents in the U.S. and the Service schedule support 62developing markets, in particular,indicated strong interest in mobile/ 0% 20% 40% 60% 80%smartphone applications for their Source: CapgeminiCars Online 11/12 27
  • 28. vehicle. Apps considered most usefulby respondents include: Channel Strategy: Framework for Success■ Remote support features such The number and type of channels that consumers use during the vehicle buying process as remote locking and unlocking and ownership lifecycle have rapidly grown to include the Internet, smartphones and a of vehicle doors (named by 68% host of social media options. The result is an increase in possible customer touchpoints of respondents) and a parked car presenting more and different opportunities for automotive companies to interact with locator using GPS (64%). consumers. This development, along with the increasing sophistication and empowerment■ Vehicle information such as a of customers, is driving a need for businesses to use new channels and use them vehicle owner’s manual with easy differently. They can no longer rely only on the face-to-face interaction that occurs during navigation (63%). the showroom visit.■ Driving support features like vehicle To ensure channel success an automotive company must put into place a channel health information/status of vehicle strategy designed for their customers’ needs. Understanding a consumer’s channel operations (64%) and diagnostic requirements for their different possible interactions with the organization is a crucial trouble codes (63%). strategy input. The customer may use multiple channel touchpoints during the course of■ Care information like service their vehicle research and ultimate purchase, and organizations need to be cognizant of reminders when maintenance is due this in their channel strategy. Customer centricity has become a strategic imperative, and (67%) and manufacturer vehicle organizations need to create an integrated channel mix capable of delivering a valued and notifications (63%). differentiated experience at each key consumer interaction.■ Communication features such as As one consumer from China noted: “Greater integration of the Internet with dealerships roadside assistance with an easy-to- can simplify the research process, and can make it easier for consumers to clearly navigate single click (67%). understand all of the information from the different channels.”The interest in smartphone apps To develop an effective channel strategy, companies should consider using a frameworkwas also apparent in the qualitative that addresses several key considerations:comments, with many consumers 1. Channel Introduction: Which channels should be present?referring to them for the first time this 2. Channel Optimization: How are these channels performing?year. “I think that car keys will disappear 3. Channel Migration: Which customers should be using which channel for what?and be replaced by smartphones,” said aU.S. consumer. 4. Channel Rationalization: Which channels do we not need to meet our business goals? 5. Channel Integration: How should the channels become integrated? “ I think smartphones and digital technologies will play a big part in the way we shop, research and purchase cars ” in the future. U.K. consumer28
  • 29. Automotive the way we see itAftersales: Servicing Grows as a Factor inVehicle DecisionsServicing is taking on a bigger role special service shops such as quick oilfor many consumers, particularly in change and tire stores.developing markets, with aftersalesservice climbing up the list of Dealers must focus on keeping itemsimportant factors in choosing a such as tire changes, battery charges “vehicle. In addition, servicing can and oil changes competitive with theinfluence future buying decisions. specialty shops in order to improve I believe the mostMore than half of respondents service retention. This may include significant change in thesaid they were likely to buy their establishing a menu-pricing approach next few years will benext vehicle from the same dealer and faster turnaround times.they currently use for servicing. servicing via smartphoneConsumers’ growing emphasis on Extending the Service or tablet. Seeingservicing is also reflected in the fact Experience what needs servicing,that service reminders are cited as the Increasingly dealerships are lookingmost useful/valuable form of post- scheduling service ” for ways to improve the aftersalessale communication and are among experience by offering a variety of appointments, etc.the most useful mobile apps listed by services for consumers while they wait U.S. consumerrespondents. for their vehicle. Topping the list of services consumers find most usefulQuality Is Key to Aftersales are car care tips (cited by 43% ofServicing respondents), vehicle accessories forQuality of service is the leading factor sale (41%) and Internet café/wirelessin aftersales decisions, with 38% access (40%).of respondents naming this as theprimary reason for selecting their A closer look at the individual marketsservicing location. Other factors such uncovers some differences. Foras price, proximity and additional example, consumers in the U.S. andservices like wireless Internet access China indicate above-also play a role in the selection averageprocess.The most common location forservicing continues to be franchised/branded car dealers whereconsumers bought their vehicle,named by 37% of respondents.Franchised dealers are more popularin developing countries like India(named by 49% of respondents) andChina (46%) due to the scarcity ofother options. Additional servicinglocations used by consumers includeindependent full-service stations/auto repair shops, independentcar dealers where the vehicle waspurchased, franchised dealers wherethe vehicle wasn’t purchased, andCars Online 11/12 29
  • 30. Preferred Services While Waiting for Vehicle Servicing (% saying) interest in wireless access; U.K., French and German consumers Car care tips 43 are more interested in newspapers/ 46 magazines and food for sale; and 41 Vehicles accessories for sale 41 respondents from Brazil, Russia and Internet café/wireless access 40 India want to see vehicle accessories 47 for sale. 36 Newspapers/magazines Food for sale/cafeteria 32 Service Contracts Can be Key to 39 Future Purchases 27 TV/movies available for viewing 33 As aftersales servicing grows as an Music listen stations 19 important factor in vehicle buying 19 decisions, consumers put increasing 19 2011 Children’s play area/babysitting 19 emphasis on the types of service 2010 Other 3 contracts they want. Significantly, 5 getting the right service contracts can 0% 10% 20% 30% 40% 50% 60% influence future vehicle purchases. Nearly eight out of 10 respondentsMultiple responses allowedSource: Capgemini said that having the key service contracts available would make them more likely to buy a carThe Influence of Service Contracts on Future Purchases (% saying) For those service contracts that are important to you, would having them available to you make you more likely to purchase a vehicle from that car manufacturer/dealer? 100% 4 5 5 13 11 20 8 4 5 20 19 19 2 Not sure 8 80% No 10 9 12 15 Yes 60% 87 91 79 72 88 70 40% 68 90 66 20% 0% All Markets U.S. U.K. France Germany Russia Brazil India ChinaSource: Capgemini30
  • 31. Automotive the way we see it What Consumers Want In A Vehicle Service Contract (% saying) Service Contract Item All Markets U.S. U.K. France Germany Russia Brazil India China Extended warranty 45 48 50 29 41 54 36 57 49 Replacement vehicle when own car is being 43 48 52 39 45 50 25 31 51 serviced Inspection included 39 39 36 28 47 52 30 36 46 Wear parts included 35 29 33 22 27 57 24 35 50 Vehicle insurance 35 21 27 20 21 52 38 53 48 Towing/roadside assistance included 35 40 33 32 27 44 23 30 48 Top three vehicle service contracts Tire replacement included 32 31 28 23 24 48 24 36 45 Repair labor included 32 38 38 28 26 23 21 35 44 Customer care 27 28 25 17 17 21 24 43 44 Other repairs included 26 23 23 15 25 37 17 31 40 Leasing/financing of vehicle 23 30 21 17 18 21 20 26 30 Other 1 3 2 2 2 0 0 0 0 Multiple responses allowed Source: Capgeminifrom a particular manufacturer or ■ In the U.K., extended warranty and ■ Chinese consumers put nearly equaldealer. That’s particularly true in the replacement vehicles also top the emphasis on most of the features,developing markets. list but are followed by repair labor with replacement vehicles and wear included. parts leading the list.Overall, the most important service ■ In France, like the U.S., extendedcontracts are extended warranty and warranty and replacement vehiclesa replacement vehicle when their own dominate the list, followed bycar is being serviced. However, there towing/roadside assistance.are differences between the developing ■ In Germany, the top two featuresand mature markets. Replacement mirror the other mature markets butvehicles are more important to “ are followed by inspection included.consumers in mature countries,while developing regions put greater ■ Respondents in Russia are interested I would like to seeemphasis on vehicle insurance and in having wear parts and vehicle aftersales services bewear parts included in a service insurance included. more comprehensive and ”contract. The picture changes even ■ Brazilian consumers put vehiclefurther when individual markets are insurance at the top of the list. quicker.examined. Chinese consumer ■ In India, respondents focus on■ In the U.S., extended warranty and extended warranty and vehicle replacement vehicles dominate the insurance, followed by customer list, followed by towing/roadside care. assistance.Cars Online 11/12 31
  • 32. Conclusion and Recommendations This year’s Cars Online report makes“ it clear that the automotive industry If we consider how faces critical changes and challenges in the marketplace. Automotivefast the technology and companies must understand howequipment evolve, in consumer dynamics are evolving andfive years we’ll have to consider the impact these changes may have on their business in the comingbe ready for a complete years. Following are recommendationsbreakthrough – a complete to help automotive companies applychange of what we think the report’s findings to their own business.about vehicles and the ”auto business now.Russian consumer 1 Develop a formal social media management strategy. Consumers increasingly rely on and are influenced by social media during the vehicle buying process as well as the ownership lifecycle. The automotive industry has the opportunity to leverage social media to build brands, generate leads, drive sales, manage customer relationships and retain customers. To capitalize on this opportunity companies should develop a formal social media management strategy that includes real-time web listening, analysis and customer outreach. Social media conversations should be acted on in real time and the feedback used to modify processes, optimize marketing campaigns and improve the overall customer experience. With the right approach, insights from social media monitoring can be turned into actions that include operational improvement, process redesign, customer segmentation strategy, social CRM strategy and multi-channel strategy. 2 Maximize the consumer interactions with integrated end-to-end campaigns. As the buying cycle shrinks, dealers have fewer opportunities to interact face- to-face with customers. Yet overall,32
  • 33. Automotive the way we see itthe possible customer touchpoints become more demanding. This own organization. For additionalhave increased due to the growing requires investments in training, information about our Cars Onlinenumber of channels and devices systems and processes, and a strong research or how we can help yourused by consumers during the aftersales/servicing program. company better understand thebuying process, presenting new changing dynamics and the impactand different opportunities forinteraction. This development, alongwith the increasing sophistication 5 Seize the online buying opportunity. Despite growing consumer demand for online buying on vehicle buying behavior, please contact the Capgemini representative in your region.and empowerment of customers, is of vehicles, parts and accessories,driving a need for businesses to fully the capability remains scarce in Global/United Kingdomintegrate marketing campaigns in most markets. When launching an Nick Gillorder to take advantage of all possible online buying model, automotive nick.gill@capgemini.comtouchpoints: showroom, website, companies should consider the keysocial media sites, e-mail and mobile/ factors consumers are looking for:smartphone applications. Recognize, price discount, ease and speed of Brazil/Latin America transaction, full price and product Edgard Teruyahowever, that one size does not fit edgard.teruya@capgemini.comall and localization will be critical to details, and the ability to solve the testsuccessful campaigns. drive issue. Solutions include virtual test drive capabilities (like Mitsubishi’s China3 Experiment with alternative buying and ownership models.As consumers show budding interest online Live Drive for its Outlander Sport), 3D imagery and, for those consumers who want the real thing, Michael Wang michael.wang@capgemini.comin new approaches such as mobility delivery of the vehicle to their home Francepackages and vehicle sharing, or work for a test drive. Eric d’Archeautomotive companies should test the eric.d-arche@capgemini.comwaters. If these new models take holdthey could have a significant impacton billing systems, cash flow and 6 Keep “green” on your radar. The emergence of electric vehicles and e-Mobility may drive a Germany Björn Harmsfinancial services. Many companies wide range of fundamental changes bjoern.harms@capgemini.comin manufacturing industries are now in the automotive industry, andmaking significant investments in companies will need to develop Katharina Hayenusage-based services, and automotive effective solutions to manage them. katharina.hayen@capgemini.comcompanies need to follow this The changes are likely to impact areasexample. such as competition, innovation, India partnerships, and technology systems Floyd D’Costa4 Focus on a holistic dealer strategy in developing markets.Dealer network development in and processes. In addition, consumers are still trying to sort through and understand the different green floyd.dcosta@capgemini.com Russiacountries such as China and India vehicle options, highlighting the Lyudmila Mashkovaneeds to focus on a number of importance of education by dealers lyudmila.mashkova@asteros.ruelements. Proximity is critical as and manufacturers.consumers are unwilling to travel far United Statesto buy or service their vehicles. But it’s Capgemini’s Cars Online 11/12 study Michael Boruszoknot enough just to saturate a market; presents the headline findings of michael.boruszok@capgemini.comdealer quality is becoming increasingly our annual automotive consumerimportant in the developing regions research. Yet there is much more that Joe Oddoas competition grows and consumers can be explored and applied to your joseph.oddo@capgemini.comCars Online 11/12 33
  • 34. About Capgemini ® With around 115,000 A deeply multicultural organization, people in 40 countries, Capgemini has developed its own way of Capgemini is one of the world’s foremost working, the Collaborative Business providers of consulting, technology and Experience™, and draws on outsourcing services. The Group Rightshore®, its worldwide delivery reported 2010 global revenues of model. EUR 8.7 billion. More information about our services, Together with its clients, Capgemini offices and research is available at creates and delivers business and www.capgemini.com technology solutions that fit their needs and drive the results they want. About Capgemini’s Automotive Practice Capgemini’s automotive practice serves 14 of the world’s 15 largest vehicle manufacturers and 13 of the 17 largest automotive suppliers. More than 3,000 automotive specialists generate value for companies through global delivery capabilities and industry-specific service offerings such as Integrated Lead Management, B2C Web Strategy, Service and Parts Management, Supplier Transformation, Optimization of Dealer-Focused Operations, Electric Vehicles and e-Mobility Services, Application Outsourcing for Automotive OEMs and Global Emerging-Market Sourcing. For more information: www.capgemini.com/automotive. Rightshore® is a trademark belonging to Capgemini. The information contained in this document is proprietary. Copyright © 2011 Capgemini. All rights reserved.34
  • 35. www.capgemini.com/carsonlineArgentina IndiaColectora Panamericana Este 1925 SEP2-B3, Godrej Industries ComplexB1609ECM - San Isidro, Buenos Aires Eastern Express HighwayArgentina Vikhroli (E)+54 1147358000 Mumbai 400079 IndiaBenelux +91 22 6755 7000Papendorpseweg 1003528 BJ Utrecht ItalyThe Netherlands via Gioberti, 18+31 30 689 00 00 10128 Torino ItalyBrazil +39 011 509431Av. Francisco Matarazzo1500, Torre Nova York Russia05001-100 - Sao Paulo Asteros Consulting/CapgeminiBrazil Novokhlovskaya St 23+55 1135250100 Moscow 109052 RussiaChina +7 495 662 8066Capgemini CenterNo. 11 Boxia Rd. SwedenZhangjiang High-Tech Park Mölndalsvägen 36-38Shanghai, PRC 201203 412 63 Göteborg+86 21 6182 2688 Sweden +46 (8) 5368 5000FranceCoeur Défense Tour A 110 United Kingdomesplanade du Général de Gaulle 1 Forge End92931 Paris La Défense Cedex Woking, SurreyFrance GU21 6DB+33 (0) 1 49 67 30 00 United Kingdom +44 (0) 1483 764 764GermanyNeues Kranzler Eck United StatesKurfürstendamm 21 25925 Telegraph RoadD-10719 Berlin Suite 350Germany Southfield, MI 48034+49 (0) 30 88703 0 United States +1 248 233 3101IberiaC/ Anabel Segura14 Edificio Cedro28108 (Alcobendas) MadridSpain+34 91 657 70 00© Istockphoto.com/ 3D alex-mit (pages 5, 34 & 35), Mikhail (MISHA) (page 10), Julos (page 14), Frank Ramspott (FR73)(page 19), peter howell digital design (page 22), Sjoerd van der Wal Fotografie (SJO) (page 29).© Shutterstock.com/ Alex Mit (cover & page 26), 3DProfi (pages 2, 12,15, 19, 23 & 28), Mariusz Majchrzak (Visaro) (page 3), ST 09 2011ArchMan (pages 6 & 31), Fedor Selivanov (page 7), Patrick Breig (page 8), 3DDock (pages 9, 11, 16, 20 & 27), sviridov(page 13), AlexRoz (page 16), Cannaregio (page 17), zhu difeng (page 21), Gustavo Fadel (page 25), Maksim Toome (page 28),Costazzurra (page 30), egd (page 32), PhotoStocker (page 33).