When was the last time you purchased a new or used car? Today’s car buying journey is anything but “old school” with digital purchasing marketplaces, and mobile connectivity and driver interface usability showing up high on the car buyer’s criteria list. In case you haven’t heard, innovative technology companies like Shift and Carvana are shaking up the automotive buying experience and putting pressure on the traditional dealership business model with online purchasing. Even industry behemoth GM has enabled online car purchases through participating dealers. In parallel, tech giants Apple and Google are working to establish anchor points in the automotive infotainment space around their OS platforms while Tesla already touts over-the-air feature updates for its Model S via Software v6.0. Software has officially come out from under the hood and is directly transforming the car buying and driving user experience, and perhaps even has eyes on the upending the entire automotive manufacturing, delivery, and maintenance processes.
Click from the Couch Car Buying
In a market where McKinsey reports that 80% of new car buyers and 100% of used car buyers do their research online before setting foot in a dealership, it’s no surprise that consumers are moving beyond just information gathering and are embracing the “click to car” commitment.
Self-described as the first complete online national auto retailer, Carvana’s recent Super Bowl ad highlights that the market is one step closer to experiencing couch potato car buying nirvana. Offering used mid-market and luxury autos from 2009 and newer, Carvana pitches a delivery guarantee of 48 hours and at least a $1500 savings by cutting out dealership overhead. They offer a seven day, “try and buy” test drive enabling a “no risk” click-to-garage purchasing process.
For the online speed junkie where 48 hours delivery is not quite fast or mobile enough, try Shift if you are in the San Francisco or Los Angeles areas. This start-up is bringing a concierge-like service to the used car buying process that allows customers to buy or sell used cars from their smartphones.
GM launched its Shop-Click-Drive online purchasing tool over a year ago after a 3 year revamp of its in-house software development unit. The Shop-Click-Drive platform opens up the new car market to the e-commerce arena by providing the platform bridge between online buyer and GM dealership via a front end portal, and by doing the heavy lifting on the back office systems integration that would be too complex and expensive for a dealership to tackle independently.
Software enables each of these companies to meet online customers via their preferred digital marketplace using the mobile device of their choice, and in a manner that streamlines the car buying process. The business models enabled by their innovate use of software allows them to deliver much more than the tried-and-true but now too familiar online used car sales format that eBay Motors pioneered years ago. eBay Motor’s approach was definitely disruptive when they hit the market in April 2000 and sold their millionth car by June 2004, but their movement toward more standard used car dealership listings versus their original individual driven sales does not really strike me as using software uniquely in today’s online automotive sales marketplace.
Battle for the Dashboard Platform and Beyond
Software has not just changed the car buying process – it is dramatically changing the experience behind the wheel as well. The automotive infotainment race is heating up with Apple and Google investing in the space to create a connected car user entertainment experience that looks and feels like the addictive smartphone experience. Google’s Projected Mode and Apple’s Car Play both seek to capitalize on their mobile OS platform ecosystems and stake out a claim within the dashboard by moving beyond traditional automotive manufacturer’s closed infotainment systems. With an Accenture survey reporting “that drivers are twice as likely to choose a car based on in-vehicle technology options than performance,” the connected car is becoming a key purchasing requirement with almost 40% of surveyed drivers indicating it was their primary consideration when buying a new car.
Not to be limited to merely the dashboard entertainment interface, Tesla’s over-the-air (OTA) software upgrade capability recently increased the Model S’s speed by one-tenth of a second when it tweaked a powertrain inverter algorithm. With the same ease of updating to the latest software version for your smartphone, Tesla owners actually impacted performance under the hood without ever leaving their garages.
The automobile appears to be moving toward simply being the next consumer electric mobile device with relatively standard models available that are fully customizable via online builds and upgradable with regular software updates and occasional hardware retrofits for increased functionality, design modifications, and safety features. That trajectory certainly explains Apple’s move into the automotive industry with its recently disclosed Project Titan. Google may already have a leg up in the automotive software race with their Self-Driving Car Project.
While more questions certainly abound than answers today, the possibilities are intriguing and almost boundless due to software’s relentless integration into all aspects of our lives via the digitally connected modern world.
Dealers and automotive manufacturers beware. As car buying technology advances, dealers and manufacturers must be prepared to not only meet the connected customer online but to be comfortable with orchestrating the entire interest to delivery to service process online. They must also think about the changing business models that software is driving across their industry. Given the increasing encroachment of software in all aspects of the automobile manufacturing process, Silicon Valley is going to be at the forefront of disrupting the automotive industry. Jump onboard the wave or risk a wipe out.
