2 Signs of change in the automotive landscape

Photo courtesy of Hyundai.
CARY, N.C.  - 

To understand the change in the way today’s consumers interact with the auto industry, look no further than the moves made by two major automakers  on Tuesday.

Porsche Cars North America is teaming up with Clutch Technologies to pilot a sports car and SUV subscription program in Atlanta.

On the other side of the country, Hyundai launched a Shopper Assurance program the company says “streamlines and modernizes the car-buying experience” by making four often-challenging elements of car-buying easier, including moving some of the process online.

“This is a good opportunity by Hyundai to synchronize the retail experience with evolving consumer retail behavior,” Kelley Blue Book executive analyst Rebecca Lindland said in comments provided to the media.

“The research we're doing at Cox Automotive validates much of what Hyundai is addressing with this program,” she said. “As an industry, we need to make car buying a positive experience, not a periodically painful process!”

And the industry — including other automakers, dealers, startups and Cox Automotive, which offers its own digital retailing platform to dealers — is beginning to respond, both to demands for change in the car-shopping process and in vehicle ownership itself.  

Lindland’s comments regarding evolving consumer retail behaviors were specific to Hyundai, but that sentiment certainly applies to the changing ownership experience that spurred the move by Porsche and Clutch. 

After all, this is the auto industry in 2017: On the same day Porsche announces a car subscription pilot, Hyundai launches a program that allows more of the process to be online.

Here is how each of those plans shake out, starting with Hyundai’s.

4 Elements of Shopper Assurance

In a news release, Hyundai chief marketing officer Dean Evans said: “For nearly a decade, the word ‘Assurance’ has been synonymous with Hyundai and represents our efforts in redefining the car ownership experience. 

“Shopper Assurance is the next step in that tradition, and is car buying made simple. We expect this to be a differentiator, as our research showed that 84 percent of people would visit a dealership that offered all four features over one that did not,” he said. “It is the future of car buying, and our commitment to creating a flexible, efficient and better way to purchase a car in partnership with our dealer body.”

Hyundai’s program begins with transparent pricing. On their respective websites, participating dealers post what is determined to be “fair market pricing,” which is the MSRP minus incentives and any dealer discounts.

When it comes time for the test drive, the consumer can utilize Hyundai Drive. That platform lets the shopper contact the dealer through the store’s website, by phone or through a custom-built app available in certain markets. The consumer can actually choose where he or she wants to do the test drive.

If the shopper is ready to purchase, the program allows most of the paperwork — like the finance application, getting credit approval, trade-in evaluation and calculating estimates — to be done online, before the consumer heads to the store.

Lastly, the program includes a three-day money-back guarantee, which does require a dealer inspection and less than 300 miles driven since the purchase or lease.

Hyundai is offering Shopper Assurance on all of its new models and is rolling it out first in Miami, Orlando, Dallas and Houston, with nationwide availability set for early next year.

“Consumers have never been pleased with the car purchasing process, as most feel completely out of control and at the mercy of the dealership,” said Michael Harley, group managing editor from Kelley Blue Book and Autotrader. “Hyundai’s Shopper Assurance program appears to put the buyer back in the driver’s seat — or at least in a much more comfortable position.

“Hyundai is making the test drive more convenient, offering more disclosure with pricing, and helping reduce the time of the overall transaction,” he said. “Best of all, consumers will now have a worry-free purchase with the company’s new three-day buy back offer. While this isn’t the first time an automaker has promised to revolutionize the car purchasing process, Hyundai’s Shopper Assurance program takes a realistic — consumer friendly — approach that just may work.”

Addressing these pain points couldn’t come at a better time.

According to data provided by Cox Automotive in its 2017 Car Buyer Journey study, paperwork is the biggest pain point for car-shoppers. And they want to do that online, particularly when it comes to filing out the finance application, the company said.

“Customers are frustrated with the automotive retail experience in the age of Amazon. Hyundai is trying to address some of the shortcomings with its latest effort,” said Autotrader executive analyst Michelle Krebs.

“Cox Automotive studies repeatedly show consumers want to spend less time in the dealership, an hour versus the typical three hours. They want to complete more of the process online, notably the paperwork and financing,” she said. “They want to focus more on the test drive and the in-vehicle technology. The automotive retail experience sends consumers on a roller-coaster ride of emotional highs — the excitement of buying a car, the thrill of the test drive, the enjoyment of taking delivery — and lows of the paperwork and price negotiation.”

Porsche Passport aims for ‘simple and flexible driving solution’

As for Porsche’s move, it addresses the change in vehicle ownership.

Through the Porsche Passport month-to-month subscription program, users will have on-demand access to up to 22 different Porsche models.

The program will include two different membership plans for dealers? 

The “Launch” plan includes eight model variants like the 718 Boxter, Cayman S, Macan S and Cayenne. Its monthly fee is $2,000.

The “Accelerate” package includes access to 22 model variants, including the 911 Carrera S, Panamera 4S sports sedan, Macan GTS and Cayenne S E-Hybrid SUV, plus any of the “Launch package vehicles. That package costs $3,000 a month.

“Our Strategy 2025 vision is to be the most aspirational brand in a new era of mobility and consumer expectations. Catering to customers' desire to experience our sports cars in new ways is a part of our core strategy,” said PCNA president and chief executive Klaus Zellmer in a news release.

“With Porsche Passport, we now offer our customers a simple and flexible driving solution at their fingertips,” Zellmer said.

Clutch, which is part of an incubator program headed by Cox Automotive parent Cox Enterprises, will be used for the customer interaction and end-to-end service delivery of the program.

“Porsche Passport will provide increased choice and flexibility for new target groups in the Atlanta market,” Clutch president Vince Zappa said in a news release. “Clutch is proud to be the enabling technology behind the service.”

 

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