Analysis: What does the digital future of car sales look like?

It’s about time it changed, argues Steve Young, managing director of automotive retail analyst firm ICDP. “This industry is the only one that starts the conversation with the customer with a lie,” he says. “We start off by saying the car is £39,000, or whatever, and we both know that’s not the end game.”

Mercedes-Benz already uses direct sales in Sweden and Austria and already it’s having an impact on the atmosphere in showrooms. “You now find a different sort of person in a dealership there,” says Young. “The hard-driving sales guys have tended to move away from Mercedes because they’re not able to do the deals.” Instead, Mercedes dealers are attracting those with more of a hospitality industry outlook.

To properly say goodbye to the hard sell and haggling, you need a change of name. “Even the word ‘dealership’ tells you a deal is going to take place,” says Matthew Warrener, founder of automotive retail consultancy Auto Atai. “It tells you how to behave.”

Instead, dealerships are being rebranded as stores, but to earn that name change they’ll need to think like stores too, argues Warrener. He paints a fairly grim picture of the average showroom with its hard tile floors, understaffed parts desk, sad little ‘shop’ with branded mugs, and eager sales staff at a customers’ side within the mandated 63-second timeframe lest they escape.

Instead, car showrooms should behave more like shops, and Apple stores in particular. “They need that department store model, where customers can just walk in and browse,” Warrener says. “Service departments need to be seen like Apple Genius Bars. They solve problems, they’re knowledgeable, they create superfans.” You go for software updates that improve your car, but you’ll be told about chargeable upgrades if you ask.

Rather than the dealer ensnaring you at the end of a sales funnel, the store becomes “just another touchpoint”, says Francois de Bodinat, chief product officer for ZeroLight, a UK software firm that’s overhauling car maker websites and configurators to make them more user-friendly. “The idea is to say the customer is free to decide. They have the freedom to start at the dealer or online or Facebook or wherever,” he adds.

ZeroLight’s mission is to blur the line between real and virtual by using video games graphics technology to bring the car to life on screen, to the point that configuration is complete by the time the customer visits the showroom, if indeed they want to.

De Bodinat highlights the work his company has done with US electric start-up Lucid, which will be relying on a slick online configurator to sell its premium message until it builds up a retail network. Its few stores will feature VR goggles to allow customers to visualise sitting in the car and make spec changes, doing away with the need for a physical car in, for example, a cramped shopping centre location.

The whole point of the retail transformation is to save money, ICDP’s Young says: “Retail is broadly one third of the price of a car and has been for a long time. It’s a big supertanker to shift.” The sheer cost of electrification is forcing car makers to address this retail expense, with many reducing their networks and increasing the distance customers will have to travel from the industry standard of a maximum of 30 minutes.

Automakers are putting their retail network to work in different ways, for example by turning them into hubs for subscription models, whereby customers pay a higher fixed fee to change cars more often. Volkswagen, for example, will begin piloting subscriptions for the ID 3 and ID 4 electric cars this summer in Germany alongside the roll-out of online sales for both models.