Automotive disruption has been disrupted – but are marketers prepared for what’s ahead?

The Australian automotive industry has been one of the most disrupted by the pandemic. For manufacturers, it's generally been in a positive sense, with sales on the up. But can the momentum continue in a post-pandemic world? Mumbrella's Damian Francis asks the industry experts.

Prior to the pandemic, Australia’s automotive market was in a particularly interesting position. A major crossroad that was likely to send the industry in a completely different direction.

While Mumbrella was running the Automotive Marketing Summit in Sydney and Melbourne, we were able to document this crossroad in a bit more detail. There were a range of speakers involved, from major manufacturers, car share companies, mobility brands, various businesses in and around the growing EV trend and more who were jockeying for relevance and position in real life and on our conference programs.

The direction it was heading was not good for manufacturers. VFACTS reported in early 2020 that the previous year’s sales figures had seen a drop in new car purchases by 8%. That was the worst figure since 2011. In actual numbers, that meant almost 100,000 fewer new cars sold that year by comparison to 2018.

Manufacturers were bleeding out, disruptors were starting to take hold.

2020 was a tale of two uneven parts when it came to car sales

2020, however, was a tale of two parts. Part one included Q1-3 while part two was simply Q4. Overall, 2020 was down again, 13.7% on the previous poor year, but that wasn’t the whole story. In the final quarter of the year, new car sales surged as Australia became more comfortable with its pandemic position.

As consumers got used to being at home more or in more flexible situations, they not only realised that they could do with a few renovations (who didn’t renovate last year if they owned a home?), they also discovered that another car could fit in the driveway.

Consider that in April 2020, the sharpest new car sales decline in Australian history was recorded, at 48.5 % down on the month before, and that it was the 26th month in a row that declines had been recorded, and the Q4 recovery is even more interesting.

November 2020 saw a 12.8% increase in sales by comparison to November 2019 while December then recorded a 13.5% rise by comparison to December 2019. Remember that in 2019 COVID was not properly on Australia’s radar, so the increase in sales is even more impressive.

What’s more, the previously strong alternatives to purchasing cars had their own interesting narratives.

Alternative mobility solutions looked shaky as the pandemic took hold

Ride sharing, unsurprisingly, looked shaky. IBISWorld reported that industry revenue was expected to fall by 6.6% in 2020 due to the deterioration in demand conditions caused by the global pandemic.

The same research firm also reported that the car share industry was suffering. Revenue for the Car Sharing Providers industry was expected to fall a significant 23.3% in 2020.

The result was an industry in complete flux. And industry that today is still in complete flux. Let’s be honest, the flux is generally not down to anything brands, industries or marketers have done. It’s down to circumstance. Circumstance that no one expected. Circumstance heavily favouring manufacturers at the moment.

But it’s a circumstance that may not last long. There is light at the end of the pandemic tunnel and the current trends may not last long. Former Holden marketing boss Mark Harland believes that the mobility trends we were seeing previously will bounce back.

“The automotive market was depressed, it’s all been going backwards for the last few years. But we will get back to those mobility trends – that’s the future still. They did go backwards – people didn’t want to hop on a train or in an Uber, so people went out and bought a car, the industry had a blip, it (car sales) took off. But long term it’s different. This was a little blip, a short term anomaly.”

If you follow that train of thought, it means that automotive marketers, specifically manufacturer marketers, need to make moves now if they are to try to maintain the momentum of the ‘blip’.

Mumbrella’s Automotive Marketing Summit in 2018

A conversation I had at the last Automotive Marketing Summit we ran stuck with me, and is in part, why I am writing this. A rather senior industry figure who will remain unnamed (we were discussing a lot on deep background) casually asked: “I know you’re a car nut, but how do you motivate yourself to do this summit? There’s so few interesting strategies and creative executions coming out of this sector.”

Perhaps that’s too big a blanket statement, although the amount of times manufacturers have been caught out by Ad Standards for the typical stuff, usually portraying cars going too fast or participating in dangerous maneuvers, might suggest repetition in the work, at least the video component. See Kia recently for a case in point.

I feel there is more than a small truth in this though, to be fair. Quite a bit of truth, in fact. And that’s not the campaign work that will allow manufacturer marketers to make moves and capitalise on this turn of events.

It’s hard to argue that automotive marketing is creatively unique or differentiates brands in the industry enough.

On the record, well respected marketer Kevin Goult, the marketing director at Hyundai Australia, said at the Mumbrella Automotive Marketing Virtual Summit late last year, “we have to adapt to our environment. We’ve got to adapt. We’ve been restrained by this metaphorical straight jacket”.

He went further by saying: “We’ve been doing the same things over and over again. That’s just inherent by the design of the automotive industry. It’s what we do. We sell cars, it’s very traditional. We are at a pivotal moment now where the cars themselves have outpaced the way that we market them.”

Harland suggests the same as Goult. “They’ve got to differentiate themselves quite frankly. Australia was coming to this anyway, but I think the days of just saying ‘we’re on sale, it’s the end of financial year, end of calendar year,’ the same old, same old, were done. I don’t think it gets it done anymore. It’s just noise.

“The challenge for a marketer is, assuming you have supply of a vehicle, how do you differentiate yourself? I think just screaming at people that you’re on sale is not going to do it. You have to start to pull out some messages that show how a particular vehicle resonates. How do I differentiate myself? How do I teach customers?”

Jeep has pushed the boundaries of automotive marketing recently

Recently there has been some fresh automotive creative. Judge it as you will, but it now must be with the lens of ‘is this the same old or really trying to capitalise on the current climate’. There is some interesting work around. Jeep’s WFH campaign, for example, although it is ironic that many of us are starting to head back to the office now. There is also some that still sits squarely within the boundaries of tradition. Arguably, it’s most of the work we are seeing.

Here are some words from a creative on the latest from Subaru. Richard Parker from Edge in a recent Campaign Review feature on Mumbrella said the work was “…unlikely to do a lot of harm to the brand, but it feels like a missed opportunity to really double-down on Subaru’s unique position in Aussie culture”.

This type of response to manufacturer creativity is not just associated with Subaru. So where does that leave the industry? How does it make sure it doesn’t miss the opportunity? The automotive disruption that was occurring in Australia is now itself being disrupted. It needs to be capitalised on before the reversal begins as Harland has suggested above. It may even be shiftable by brands themselves with the right marketing executions.

What do we know for sure about 2021 and the automotive industry? The biggest item is that the consumer has fundamentally changed. But don’t believe me, I’m just an industry hack. Sam McOrist, director of strategy at Destination Group is more eloquent in how he describes it.

“There’s the notion of the evolved consumer. Expectations continue to rise exponentially,” he says. “More customer experience touch points need to be understood. After-sales becomes a really key component of the business in terms of more opportunities to deliver value. We need to look at new ways of solving problems in this time where historic data may not be a good predictor of future behaviour and trends. We need to look for collaborative problem solving methods in human centred design and innovation mindsets.”

Hyundai’s Goult believes the product is years ahead of the marketing

Returning to Goult’s point earlier about being restrained by the metaphorical straight jacket, let’s look at one item that some may say is slightly alarming. In a day and age of EVs, self-driving cars, subscription automotive and more, the idea of being able to buy a car online from most brands is something we are lauding as a step forward for the automotive industry. Much like we are live stock locators. In 2021. Really?

Sure, there are significant complexities surrounding the manufacturer/dealer relationship, but these are things that should have been approached long ago, with a slow evolution taking place that would have gotten us to the online point of purchase quicker while slowly evolving the role of the dealer.

A consistent reality provider for automotive marketers is Diana Di Cecco, former marketing boss of GPC which includes brands like Repco. She is now the CMO of 8-Star Energy. For her, manufacturer marketers may have left it too late. She throws some sticks of dynamite into the current situation.

“I do wonder what some [automotive marketers] have been doing,” she says. “I know that sounds particularly awful, but you’ve got to think about it, what have they been doing, have they been sitting there twiddling their thumbs? If you’re not in the consideration set, you’re already 10 steps behind. I haven’t really seen manufacturers take a stand for who they are and what they are trying to be.

“If they are going to capitalise on COVID, they already should have started to do it. You can’t start at the end of COVID.”

So where does that leave the automotive industry in Australia? Arguably in one of the most pivotal and fascinating times we have ever witnessed.

What’s the answer? It’s simple to say, hard to do. Goult says. “You could argue that the car itself is probably 10 years ahead technologically in advancement terms but our marketing is still behind. What we have to do is fast-track the way we go about marketing, the way we communicate, the way we reach out to our customers and engage with them.”

Thankfully, while there are plenty of examples of the same old same old, there are also a few examples of manufacturers trying to be different. Here are two.

Lexus has recently begun to focus on after-sales experience as opposed to simply shifting a new model. It has taken the advice of Harland, Goult and McOrist and differentiated significantly. The latest campaigns have focused on Lexus Encore – perhaps best thought of as the Frequent Flyer scheme for the Japanese brand.

There are tiers, experiences, exclusive events, rewards and much more. When you buy a Lexus, you buy into the brand. It envelops you from a range of different angles – you can’t help but feel a little bit special. Sure, a bad experience with the car will wipe out all the good work, but assuming the vehicles do what they say, the owner isn’t just driving a Lexus, they are now living a Lexus lifestyle that makes them feel warm and fuzzy.

Volkswagen’s AR campaign

Volkswagen took a different approach. With new and used cars flying out the door, it focused on the used cars in part. To be fair, this plan was likely thought of long before the pandemic struck, but the timing couldn’t have been better.

It delivered care plans for used Volkswagens. You can already purchase certified, pre-owned vehicles, which most manufacturers do, but Volkswagen went one step further with the 4Plus Care Plan. If you have a Volkswagen between 4-15 years old, you may be eligible to purchase a two or four year 4Plus Care Plan. It’s hard to imagine a consumer being able to make a more confident second-hand purchase in the automotive market.

As Volkswagen’s PR and brand experience manager, Kurt McGuiness, explains, it was simply about capitalisation. “From a marketing and communications point of view, the real key to understanding or influencing any sort of market trend is to actually capitalise on opportunities. Speaking from a Volkswagen Group Australia perspective, we really just got down to the business of distilling what was important in terms of what we delivered to stakeholders and customers.

“We’ve spent quite a bit of time developing our used car program,” McGuiness adds. “We wanted to bring some of those new car elements into a pre-owned program. So we have a certified pre-owned program that’s largely marketed through the dealer network and again, you can buy online and add in servicing plans.”

It’s worth noting that the German brand also tried some interesting campaigns during the height of COVID, including The World’s Smallest Dealership campaign which was AR-based.

So the disruptors disrupted and have now, themselves, been disrupted. The established brands have sensed an opportunity – some, not many, are looking at how they jump on it. Marketers will play a huge role if they are able to help their brand ride the wave well beyond the pandemic. Having that seat at the leaders table is potentially never more important than now if you’re an automotive marketer.

This is a massive opportunity for manufacturers but the window of opportunity is closing fast.

Electric vehicle uptake: currently slow but could the government turn on the tap?

There is one final complication, however. The EV. Why? Because consumers themselves will soon, if they haven’t already, find themselves at a crossroads in terms of whether they invest in a gas guzzler which could be worth almost nothing very soon, or spend more on an EV which is expensive at the moment but will (likely) retain its value down the track.

Manufacturers are lobbying the government to back EV uptake which would allow for cheaper EVs for consumers, but it’s not going to see increased consumer uptake this year.

Marketers therefore can’t afford to wait, they must back what they have in their arsenal now.

Can they capitalise? Yes, of course they can, there are some great marketers and fantastic agencies working in the automotive space. Will they? Well, there are a multitude of reasons why they may or may not – it’s not a given and it may not be totally in their control. Global HQs, stock, budget cuts and myriad other items come into play.

But if they do, and they do it well, it will likely have a bigger effect now than ever before while consumers are in a rapidly evolving state.


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