Expert Advice and Real-World Use Cases for Gaining a Competitive Edge in Automotive

From software-defined vehicles to connectivity and mobile commerce, we know there’s a lot of breakthrough innovation—but also market volatility—affecting the automotive landscape right now. 

What strategic pivots do you see as essential for companies looking to protect against these volatilities, gain a competitive edge, and accelerate out of the curve? 

In the automotive industry today, value is all about efficiency, especially in how you deliver your products. With increased competition, both from new and established players, so first and foremost it’s crucial to think strategically about your product portfolio—both for the short and long term. Currently, product management plays a key role in shaping these decisions. In my former times as an OEM executive, I pushed the team to think not only about the product itself. But more than a focus on Process Management and Customer Experience was my desire to push Digital Transformation at Group Volkswagen. And now I understand for “Digital Transformation” that all three business strategies—Process, Customer Experience, and Product—are huge success drivers, and with SDVs becoming more software-defined, the vehicle plays an important role in customer interactions.  

Another significant factor is how you treat your customers, which I still believe has the potential to be a game-changer. However, I recommend distinguishing between customer relationship management (CRM) and transactional business models. While they’re connected, they serve different purposes. CRM is focused on building strong, lasting relationships and driving customer loyalty and retention. On the other hand, the transactional side is more about driving conversions, realizing them, and making sales to impact top- and bottom-line impact.

As we think about the shift to direct-to-consumer and growth in after-sales, automotive businesses are looking for new ways to capture the ‘long tail’ of customer lifetime value. But this is a very different model and sales approach for automotive organizations. 

My first question along these lines is: ‘Is eCommerce still relevant and worth investing in?’

Yes – I think it’s totally relevant. First ask yourself, “What business am I in?”. It’s true, I’ve heard that some automotive companies are starting to question their e-commerce strategy or even going direct to the consumer (D2C – Agency Model). I’m also using different wording to distance myself from general e-commerce approaches, such as “simple” webshops for example. Digital Commerce would be a better wording fit, it should include more than just a check-out as transactions and should be broadly envisioned along the whole Value Chain of an OEM or even within their partner network. Nowadays, it is mostly about selling vehicles online without any return on investment. But companies are leaving money on the table if you integrate all transactional business and thus increase your opportunities. 

Digital Commerce is transactional and goes, for example, beyond simply supporting customer relationship management. A CRM tool alone will not support you if and when you want to fulfill customers’ transactional needs. I see these worlds colliding more and more. What I’d like to see is that they become more intentionally integrated so that you can deliver greater customer lifetime value and capture more margin. That would be the perfect match. 

So what are the possibilities? 

Think about the ecosystems you connect with from the customer view. For example, there’s insurance, financial services, consumer industries, and aftersales parts and services. There’s an opportunity to tap into these, bring them together into a single marketplace, and create a better experience for your customers. And on top of that, capture more margin throughout the customer lifetime. This could be a B2C, a B2B, or even a B2BC (unified commerce) approach.

Automotive manufacturers are uniquely positioned to become the centers of these ecosystems, creating seamless transactions. You’re enabling more intentional customer engagement and interactions, and facilitating transactions within each and, in doing so, you get to share in that profit.  

That makes a lot of sense. Now some companies are going ‘all in’ on digital, while others have embraced a hybrid approach. What innovation engagement models have you seen?

One example of innovation I’ve observed is conversational commerce. At each customer touchpoint, you’re actively engaging the customer by triggering an event that keeps them connected, ensuring you don’t lose their attention. That fuels a very efficient Digital Commerce approach.

This aligns well with the ‘physital‘ approach – also known as unified commerce – which blends online and offline activities because not everything can be digital. Take trade-ins, for instance – you still need to physically inspect what’s under the hood to properly assess a vehicle. That part is inherently physical and highly connected to retail interfacing. The automotive industry is re-thinking its approach to the agency model – a D2C approach. The business model B2B2C gets more and more relevant again and how you interact with the final customer, but also with your whole ecosystem, such as suppliers, retailers/dealers, further innovative partnerships.

Then there’s the experience of a test drive. No matter how advanced digital technologies get, you can’t fully replicate the feeling of sitting in a car, experiencing how it drives, how you feel in it, or even the smell. Maybe I’m a bit traditional in this, but whether you’re buying, leasing, or subscribing to a car in an all-inclusive monthly package, it’s still crucial that you’re comfortable with the vehicle. We still see a long time people driving vehicles, car sharing apps and carless mobility is still not for the whole society accessible or affordable. 

Finally, there’s the interaction within the car itself. Even if someone hasn’t purchased the vehicle yet, how do you keep them engaged with the brand while they’re inside the car? That’s another important aspect of fostering long-term brand advocacy, and capturing more share of wallet throughout the customer lifetime value chain. Digital product or service offerings had a tough start, but still are in my opinion a very huge revenue stream for OEMs or mobility providers.

As automotive companies start going more D2C and building these direct relationships, where does this leave the dealers? Many dealer networks and automotive companies fear losing the ecosystem that surrounds their brand.

What can dealers do to contribute to the examples you gave, and what else brings them into this relationship to remain relevant even as it and the transactional models change? 

That’s a great question, and I’ll be candid. About six years ago, when I was at Audi, I told the CEO that we didn’t need dealers anymore and should explore new business models. Since then, my perspective has evolved. If you’re aiming to create the best customer journey and leverage all the key customer touchpoints, you still need dealers—whether you call them dealers, hubs, garages, or storage spots. The name doesn’t matter, but the interaction does. OEMs won’t own all these locations, whether they’re service points or sales points, so third-party partnerships are essential for a physital (unified commerce) approach.

Looking at specific business cases, especially in After Sales, you see how important this is. After Sales is more than just a Spare Parts Business. Let’s have a short example: A service assistant can offer a unique level of support, and that impacts customer satisfaction and experience differently depending on the brand. For B2C, it is an important feature, and for B2B having these support systems is critical because businesses rely on mobility and fast responses. If their vehicles aren’t in operation, they’re losing money, so it’s essential to integrate them into a broader automotive network. What does this mean? Increasing transparency and fast and intelligent transaction possibilities increase not only the average order volume of the selling party but also create lower return rates and therefore the security for the customer to maintain or repair the vehicle on time to be back on the road.

Another important point is the verticalization of the automotive industry, a trend I often talk about. We’re seeing the rise of different business models due to the fact that OEMs and the automotive industry in general are or should transform faster. Coopetition and extending for example the OEMs ecosystem is crucial to stay relevant for B2C and especially for B2B customers. Again, that doesn’t rely solely on digital interactions. There are still physical touchpoints—like charging stations—that are indispensable. Whether it’s a truck, motorcycle, or passenger car, the vehicle is a significant asset, and I believe it’s one you can’t manage purely through digital means. Just think of the vast opportunities that this “new” electrification ecosystem can offer you as an OEM, supplier, or others to transact with each other. I will keep this question unanswered to brainstorm more in our next conversation. 

Find part two of the interview here.

10% market share growth is achieved by companies introducing digital sales tools and experiences. Therefore, it’s more important than ever for automotive companies to embrace digital transformation to accelerate out of the curve. Not only that but OEMs and suppliers see a 31% increase in operational efficiency and increased revenue when embracing digital transformation and automation. 

Looking for a blueprint for fundamentally improving your digital commerce by taking your existing capabilities to the next level? You can learn more about how to transform your automotive brand with Spryker’s commerce solutions that enable businesses to optimize efficiency, reduce costs, foster long-term customer relationships, capture new revenue opportunities, and operationalize cutting-edge tech.