For several decades, aftersales revenue has been as profitable to manufacturers as any income derived from car sales. As the automotive industry has matured, the rise of vehicle finance offers have contributed towards a culture shift where people are no longer purchasing vehicles alone, but increasingly seeking out mobility packages that last throughout the vehicle’s lifecycle.
Take Care by Volvo as an example; having all the benefits of owning a Volvo without ever having to own one! For a fixed monthly fee, consumers benefit from a new Volvo, regular service and maintenance, comprehensive insurance and breakdown cover for a fixed period of two or three years. While Volvo benefits from greater customer loyalty and upsell through the aftersales programme, the customer has peace of mind that they are protected by the manufacturer in the event of unexpected vehicle maintenance costs.
The entire car-buying industry is fast transitioning from a transactional-based business model to one that is more customer-centric, with vehicle ownership increasingly being displaced by alternative purchasing models. The rise of new mobility concepts, car-sharing, electric and autonomous vehicles is forcing manufacturers to significantly transform their business models with significant implications for aftersales. As ownership habits change, how can aftersales remain profitable?
From driving experience to brand experience
Traditionally, aftersales marketing has been focused around managing trust and complexity throughout the customer lifecycle to maintain brand loyalty. While this focus will not change, the implementation will, as consumers continue to move away from brand preferences to select bespoke packages that support changing mobility requirements.
For manufacturers’ aftersales strategies to remain relevant, it will become critical to create value propositions that enable motorists to tailor their mobility packages even further. For example, rather than leasing one vehicle, mobility-as-a-service will evolve to the point where customers require different vehicles based on different journey requirements, on demand. An electric vehicle may suffice for small urban journeys, but motorists may want to trade this in for an SUV when they go on holiday, without having to change finance packages and incur additional costs. To survive, manufacturers will need to offer bespoke packages with access to multiple vehicles and modes of transport, shifting the focus from the driving experience to the brand experience. This means multi-vehicle options with servicing tailored around the needs of the driver, rather than the vehicle.
Delivering mobility wellness
As ownership preferences change, fuel economy and emissions will no longer be the first things on the car buyer’s checklist. Instead, motorists will be looking for vehicle attributes that suit their lifestyles and deliver ‘mobility wellness.’ Just as we don’t select mobile phones for their call quality but instead for the additional features they deliver, we will be making vehicle purchasing decisions based around infotainment features and added functionality.
The future vehicle could be a home office or even a livelihood, with consumers more interested in what is inside than what is on the outside. As a result, aftersales will transition from a mechanical service to a technical one. Just as important as MOTs and servicing will be software updates and technology upgrades. Manufacturers that offer a continuous technology journey with frequent upgrades will remain relevant over those focused on mechanical servicing alone.
From consumer marketing to geo-location marketing
As we head towards the days of autonomous vehicles, traditional manufacturers face a battle for survival as cars no longer have one dedicated owner and points of differentiation decrease. This makes aftersales the most integral source of income but traditional direct-to-consumer marketing will no longer be viable since no one person will be responsible for the upkeep of a vehicle, but the manufacturer themselves.
Instead of sending individuals MOT reminders and servicing schedules, these are likely to be sent to the vehicle itself, to be read by whoever happens to be the passenger at the time. Indeed, BMW and Volvo already offer customers the ability to opt in to a connected servicing scheme, which prompts a driver to notify their preferred dealer when work is required, just by pressing a touchscreen.
However, with a change in ownership and less motorist responsibility, the decision where to take a car for repair work is likely to be based on convenience and local proximity rather than loyalty or previous experience. This makes geo-location marketing an important skillset for dealerships and workshops to master.
MANOEUVRING around change
The automotive industry has not faced such unprecedented change for decades and as vehicle ownership models transform, manufacturer services must do the same. While aftersales will remain a lucrative source of income, the way that these services are marketed will need to change with more of a focus on consumer lifecycles than the specific vehicles being driven.
Palmer Hargreaves has been helping manufacturers transform their aftersales marketing strategies for more than 30 years. If you need help making the transition from traditional aftersales to mobility, give us a call today.