Over the past five years, the automotive press has probably produced hundreds if not thousands of pieces about how the auto industry is being disrupted by everything from new technological developments in car design to the changing nature of car sales and the strange behaviour of Millennial shoppers. As the second decade of the 21st century comes to a close, everyone from manufacturers to dealerships to used car lots are asking serious questions about the future of their businesses. And while North Americans aren’t going to stop buying cars anytime soon, just about every other aspect of the industry has been drawn into question.
Many of these changes are simply due to an overwhelming revolution in technology – automotive technology, yes, but also communications and retail technology. There is a very real possibility that the fully electric car will dominate the domestic market within the next twenty years, but the potentially more far-reaching changes have less to do with the cars themselves and more to do with how people purchase them. North Americans can now order everything from books and televisions to groceries and cleaning supplies online; how much longer before the automotive industry goes in the same direction?
The revolution in retail that has been driven by Silicon Valley disruptors has so far been kept from reaching the automotive industry by the simple fact that a car is one of the biggest purchases most people will ever make. Because consumers tend to be more cautious with purchases of this size, it has been harder for new retail models to overturn the status quo. But that doesn’t mean new marketplaces aren’t having an effect. Shoppers looking for a 2012 Nissan Altima for sale they are far more likely to turn to online search tools and digital marketplaces rather than check out their local Nissan dealership. And in cases where shoppers do decide to buy from a dealership, they have usually done all their research online beforehand.
Another important way communications technology is changing the car market is through social media. Sites like Facebook and Twitter have become major information gathering tools for people who want to draw on their social networks for help in deciding what their next car should be. A greater reliance on social networks not only makes it easier for shoppers to get recommendations, it may also increase their scepticism toward advertising, as it allows critically minded shoppers an opportunity to penetrate the exaggerations of automotive marketing.
For established businesses, inertia poses a serious but underappreciated threat. In the case of the automotive industry, this danger is especially acute: for decades, the model for car production and sales has been essentially static, and this has lured many businesses into a false sense that this is simply how things will always be. But as new technology disrupts old retail pathways, established players in the automotive industry will need to become more agile and responsive to customer needs if they want to survive the widespread changes that a more digital, networked shopping culture has created.
