A new way to test drive cars with virtual reality
Virtual reality will help you test your car, just as the internet made vehicle shopping easier. Customer loyalty will be a key
We’ve all read about the development of driverless cars. Now top-end motor companies are leading the quest for the exact opposite: carless drivers.
Digitisation is transforming the way humans experience the world around them. In one of the latest developments, car buyers can select, experience and personalise their new set of wheels without ever sitting in the driver’s seat.
For older generations, buying a car meant tramping around countless dealerships, kicking tyres, driving cars around the block and comparing price, styling and comfort. Then came the internet, allowing people to compare vehicles online before visiting a smaller number of dealers. The kicking and personal "feel" were still obligatory.
Now, thanks to virtual reality (VR), it’s possible to experience several cars without actually seeing any of them. VR is becoming a popular car-buying tool in Europe but German carmaker Audi claims to be the first to introduce it to SA.
At its Centurion dealership, customers use a VR headset and 75-inch screen to experience the entire Audi model range, including equipment options, colour combinations, packages and specifications. Customers "live" the cars in 3D, in different environments, times of day and light conditions.
"We tell them we’ll help them put their car together," says Audi SA head Trevor Hill. "Do they want this styling? Do they want to add this? Too expensive? Then let’s go for that. They design their own car."
Other luxury carmakers plan to introduce the VR buying experience eventually. Hill says Audi hopes to offer it in at least a dozen dealerships within two years.
VR is not the only technology changing the customer experience. Overseas some companies, including Porsche, offer Skype tours of vehicles on dealer floors, while the customer watches from home or the office.
In some ways, VR is a natural progression. Some of the more advanced online car-marketing tools allow customers to create virtual versions of their cars on their home computers and hand-held screens, and see how every option or change will affect the price. Volkswagen, Ford and Volvo are among manufacturers planning to place more emphasis on online marketing in Europe.
Naturally, there are sound economic reasons behind VR car buying. Dealers no longer need to stock so many cars, when a single VR headset shows them all. "It will bring down dealer costs significantly," says Hill.
"In the past two years alone, the cost of building an Audi dealership has declined by 20%."
Experience shows that what starts as a premium option eventually works its way down to the rest of the market. Things we take for granted in almost all cars today, like airbags, anti-skid braking and power steering, all started life in luxury brands.
Mark Dommisse, chair of the National Automobile Dealers Association, has no doubt that VR will make its way down the chain — though slowly in SA.
This country was initially reluctant to embrace online car shopping. Some manufacturers invested heavily in the technology in the 1990s but it took a long time for the idea to catch on.
Internationally, millennials — people born after 1980 — are wedded to technology. International research by the Auto Trader group shows that the average millennial spends more than 17 hours, mostly online, researching their vehicle choices before purchase. Latest onboard technological features are a must. Brand image is particularly important.
Auto Trader says: "When this generation fully enters into the car-buying market, its expectations of the experience will be quite different from those of previous generations." VR will be one of those expectations.
This technology shift is not unique to millennials. A report by consultancy McKinsey says 80% of car buyers research online when looking for a new car, spending an average 14 hours browsing. More than two-thirds of customers make their purchasing decisions online. "By the time they arrive at the dealership, they already have the information they need and are ready to make a transaction."
Well, almost ready. Dommisse insists that VR and online will never take over the entire car-purchase chain. Buyers will always want to see, touch and sit in the actual vehicle before they hand over their money. Hill agrees, pointing to a recent report by the Bain research company showing that even the most dedicated, online-dependent customers make an average of 2.4 dealer visits before making the purchase decision.
For some brands, the personal interaction is briefer. Ford research in Europe shows its customers visit a dealership 1.2 times.
"Nothing beats the real thing but online and VR will make the process more efficient," says Dommisse.
Hill observes: "The challenge for automotive brands is to deliver a personalised, digital service in an industry once solely reliant on bricks-and-mortar dealerships and a hard-sell sales approach."
In the premium segment, particularly, brands must "meet the demands of personalisation and technology while still delivering on fundamentals".
A 2019 McKinsey report — "How to Win tomorrow’s Car Buyers: Artificial Intelligence in Marketing and Sales" — says customer experience is forecast to overtake brand loyalty soon as the driver of consumer purchasing decisions.
Faced with disruptive new competitors like Amazon Vehicles, which sold over $5bn of automotive spare parts in 2017, and companies selling cars through vending machines in the US and China, the need for dealers to address that loyalty is urgent.