Features
The road ahead: experts discuss the challenges, possibilities, and opportunities in the auto industry
A global pandemic has altered transportation habits, climate change has seen a scramble towards a greener future, and a ban on Russian fuel imports has meant driving a car has never been more costly. As the global automotive industry enters a new era, will it embrace this change or be late to the party? Ahead of the 2022 Mumbrella Automotive Marketing Summit, Emilia Roux speaks with industry experts Toby Talbot, Damian Pincus and Annie Little on what’s currently being done and what’s in store for the future.
The automotive industry is experiencing dramatic upheaval. Electric vehicles, ride share schemes and changes to the ownership consumption models are just some of the changes starting to emerge as a result of recent global events. And as we enter a ‘new normal’, the most significant changes to the industry are perhaps yet to come.
We asked three industry experts their views on the challenges, possibilities and opportunities within this changing landscape.
What do you see as the number one challenge facing the auto marketing industry in Australia?
Strategy director at The Royals, Annie Little, sees supply chains as the biggest immediate challenge facing the industry, with customers waiting up to 12 months for new vehicles. “In an on-demand world where Amazon Prime promises next-day delivery and Send can bring groceries in under ten minutes, an average wait of 146 days feels like daylight robbery.”
Annie Little, strategy director at The Royals
She believes that long wait times are leaving customers susceptible to competitors and are a wasted opportunity for customer engagement. “Auto brands need to seriously consider ways to meaningfully engage with the dormant customer during that time, and create well-branded moments of anticipation and delight,” she says. “An EDM plan that barely goes beyond shipping updates won’t cut it. If the dealer next door has stock of their fifth choice, a customer will happily lose that deposit rather than wait a year.”
Founder and creative partner at The Works, Damian Pincus, acknowledges that while there are multiple challenges facing the industry right now, the uptake of electric vehicles in a competitive and developing market is at the forefront of his mind.
“Brands will have to be focused on what makes them magnetic and trusted as we move into a world of high-tech vehicles,” he says. “How will the authentic car brands win against the new start-ups and tech companies coming into this space?”
Meanwhile, Toby Talbot, chief creative officer at Ogilvy ANZ Network, believes that one of the greatest challenges facing the industry now is the transition away from an ownership model.
“There’s a fair bit of denial going on for some local brands and I say that because we are witnessing a seismic shift in the way that Australians’ mobility needs have changed,” he says. “In the 2022 context, the idea of ‘ownership’ is no longer the predominant modality of thought. Given how diverse our mobility needs now are, ownership feels like an outdated model.”
As Australia’s workforce accepts the movement towards working from home and public transport returns to pre-pandemic levels, what does the demand for vehicles and the change in brand opportunities look like in this ‘new normal’?
Anne Little has noticed some of the key changes taking place in the market as a result of the prevailing influence of a ‘work-life balance’ mentality.
“A widening gap between SUV growth and passenger vehicle stagnation has accelerated since April 2020,” says Little. “This indicates that family, leisure and comfort pose greater priorities than they previously might have done.”
She sees increased demand for SUVs as an opportunity for brands to engage with mass audiences. “Which spaces of culture can cars intersect with outside the expected auto context and where can we tap into lifestyle-driven category entry points?”
Damian Pincus says that changes in the industry since the pandemic have led to a “demand dip”. Fluctuations in consumer sentiment and supply chain disruptions have put pressure on the industry to perform at a level they cannot keep up with. “Overall, industry revenue is expected to decline by an annualised 3.2% over the next five years 2022 – 2027,” he says.
Damian Pincus, founder and creative partner at The Works
But Pincus doesn’t attribute this decline solely to the pandemic. “More climate-conscious consumers are likely to mean smaller and fewer cars per household. I think there’s a fun opportunity here to give people more flexibility for the type of car they want to use … depending on the occasion, holiday or passengers.”
Pincus believes that car ownership will change to fit consumers’ immediate needs, including ethical and environmental considerations.
Toby Talbot’s focus is on the impact that recent changes have had on young people. He believes the industry has an opportunity to tailor its approach to meet the needs of this cohort to play a role in their unique ‘mobility system’.
“We have an enormous number of young people who aren’t learning to drive,” says Talbot. “That’s because their view of mobility is totally different to the previous generations… they see the category as something that services them rather than products that are to be owned.”
How can auto brands engage with new and emerging customer segments? What channels and strategies can be used to reach them?
Little sees the decline in car ownership as an opportunity to engage with a market squeezed by limited parking spaces and public transport through commercial car sharing schemes. “Booming car-sharing suburbs tend to be inner city suburbs populated by young professionals and families,” says Little. “A ‘test drive’ with no strings attached can prime younger consumers for purchase at a later life stage.”
Pincus takes a different perspective, viewing personalisation and interactivity through digital communications as a key pillar of an engagement strategy. “Consumers will continue to demand better and more seamless experiences between touchpoints and communications,” says Pincus. “I think improved ongoing customer engagement to foster loyalty through brand activations and well-planned and engaging CRM will be a necessity.”
Alternatively, Talbot believes brands should be focusing on their own contexts before expanding into new markets. “I think brands need to figure out their own backyards first,” he says. “There’s no point in trying to reach new segments, with the same old offering, Auto brands need to get embedded in mobility systems first, and deliver value that way.”
How can legacy brands ensure their marketing strategies remain in step alongside contemporary initiatives and issues, such as the movement towards sustainable technologies?
Brand-led thinking will be key in the move toward a sustainable future, according to Anne Little. She says distinctive positioning and strong brand promise are essential. “Why people have always turned to your badge should remain the reason they continue to for generations to come – whether that’s craftsmanship, safety or horsepower – despite changing contexts,” she says.
Little believes that the benefits of electric vehicles need to be made relevant within everyday life to appeal to a mass audience or risk getting left behind. “Those that lean too far into the tropes of futuristic prototypes or generic sustainability and ignore their mass audience in favour of a small group of early adopters, will soon be left behind failing to differentiate when it matters,” says Little. “Like Beyond Burgers sitting alongside their counterparts in the meat aisle, how can we make the gap between choices feel smaller?”
Pincus says that for legacy brands to remain in step with contemporary initiatives, they will have to go head-to-head with encroaching tech brands. “I would encourage legacy brands to look at interesting innovation and content partnerships that drive sustainability, safety and entertainment to continue to differentiate and stand out.”
Talbot says, “if your brand is strong and authentic, there shouldn’t be any discrepancy between what your core strategy is, and how contemporary initiatives can complement this.” He cites Volvo as the best global example of a brand doing this well right now.
Toby Talbot, chief creative officer at Ogilvy ANZ Network
Any other missed opportunities? What does the auto marketing industry need to pursue as it heads into the future?
For Pincus, safety is one of the most important things that the auto industry has yet to focus on as it moves into the future. “This weekend the media was littered with articles about what government and manufacturers can do to help prevent deaths on roads,” says Pincus. “Let’s get focused on developing technologies in cars that can do this.”
Little’s focus is on premium brands and the importance of cultivating desire and identity in order to set them apart. “Top range models are being successfully mimicked in spec and appearance, so customers are happily trading down for a better price,” she says.
Little describes the paradigm shift towards an agency model that has seen businesses transition from dealer autonomy and setting their own prices towards a central fixed price. “This raises the issue of how to meaningfully empower and engage a fundamental cohort of the business, which are critical to the last mile of the customer journey and personally hold long-standing relationships with loyal customers.”
Little also says that the industry needs to keep customers connected throughout the lifecycle of their purchases and is missing opportunities to engage with centralised customer data.
“Considering that Australians keep their vehicle for an average of six years, the time to prime for the next purchase is pretty long and heads are easily turned. Hooks like guaranteed future value and included servicing are just as important as continually deepening the brand experience, with the aim of achieving loyalty.”
Talbot stresses the importance of considering citizen mobility needs as we move toward the future. “Citizen mobility needs municipal partnerships,” he says. “If we can’t start thinking about mobility needs within a broader citizen mindset all is lost”.
The Mumbrella Automotive Marketing Summit is on the 21st of September at the Sofitel in Melbourne. Tickets are on sale now.
topics
Automotive BrandsAutomotive industryCost of LivingCOVID-19Electric VehiclesMumbrella Automotive Marketing SummitOglivyroad safetyThe RoyalsThe Works
Have your say