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Online car sales have been slow to take off – how OEMs can change that

Munich, June 2024

Online car sales have been slow to take off - how OEMs can change that

Munich, June 2024
B

erylls’ Online Sales Acceleration Assessment can help automakers understand their current performance and identify the obstacles holding back online purchases

Expectations were high when leading OEMs first announced their ambitions to sell a significant share of vehicles online    within only a few years. Mercedes-Benz was first to put a number on it in 2019, with the goal of achieving 25% of sales online by 2025. BMW followed two years later with the same target. Other OEMs including the Stellantis group and Volvo have since raised the bar even higher, aiming to generate a third and 50% of sales online by 2030 , respectively. However, most OEMs have neither publicly revealed their online sales objectives, nor their progress in reaching those.

For OEMs, the benefits of selling online are various. From greater efficiency in their sales processes, meeting customer demand for omnichannel experiences, and using the data generated by digital interactions to continuously improve customer service and product offerings.

The definition of an online sale for this article is the purchase of a vehicle in which most of the sale journey – including an initial information search, vehicle selection and contract closure – is completed online. However, even during an online purchase, customers may have offline touchpoints including a test drive or dealer consultation.

Figure 1: OEM Online Sales Targets

Source: Berylls by AlixPartners

Yet online car sales have still not fully taken off. Even after spending multi-millions to ramp up their online sales capabilities and build their own online sales platforms, OEMs are still struggling to consistently draw customers into their digital channels, beyond early-phase information searches and vehicle configuration. In Germany recent figures show that the revenue generated from online vehicle sales was actually 14% lower in 2023 than in the previous year.

So why are online sales lagging behind OEMs’ ambitions? Inadequate digital solutions cannot be used as an excuse anymore. In fact, digital channels now provide additional benefits such as convenient self-service options that reduce the pressure some customers may feel when they visit a dealer.

We wanted to dig deeper to understand the root causes of the slow pace of change, and developed our Online Sales Acceleration Assessment. This assessment evaluates the current performance of OEMs’ online purchase journeys and uncovers the underlying challenges that are still holding customers back from buying a car online.

Time to look below the surface

The fact that customers are used to buying a car in person from the dealer, or are not aware of the latest online buying options, is only the tip of the iceberg. To fully understand the online sales environment, we must look below the surface and also go beyond the customer journey. Here are some of the key questions that OEMs need to answer:

  • What are the customer perceptions and expectations of online sales in each local market?
  • Are there attractive online-only offerings or incentives to encourage customers to shop online?
  • Are retailers incentivized to support online sales?
  • How is the broader sales organization set up to support omnichannel sales?
Authors
Henry Lundt

Principal

Philipp Purrucker

Senior Associate

Henri Laux

Associate

Pia Wurst

Analyst

Figure 2: Potential online sales challenges

Source: Berylls by AlixPartners

The Berylls Online Sales Acceleration Assessment helps to answer these questions by following a structured approach that can be broken down into three clear steps:

1 Reverse journey root cause analysis

2 Conducting the Online Sales Acceleration Assessment

3 Developing online sales acceleration levers

1. Reverse journey root cause analysis

    1. Start with the number of digital leads that are converted into sales. Here, investigating the retailers’ involvement and what technical, financial or online sales mindset obstacles they face can reveal initial obstacles to achieving the targeted level of online purchases.
    2. Secondly, look at the vehicle offers available and how attractive they are to potential customers. OEMs need to ask what would draw a customer to carry out the purchase online in the first place and investigate if the online offers are a good fit for the market.
    3. Next, take another step back through the customer journey and assess the website, to understand how the online sales options are presented to customers and if customers are guided and supported to find the right choice for their budget.
    4. Lastly, analyze the current marketing strategy to validate if it is successfully increasing awareness of online sales options and communicating them proactively to the customers. Is there enough focus on the transaction as well as the brand?

Figure 3: Root cause analysis: Sales Journey in reverse

Source: Berylls by AlixPartners

The root cause analysis is enriched by field interviews with retailers and gathering the views of management teams, to support quantitative data with qualitative insights. This first step gives us a solid foundation of information, to which we can apply our proven Online Sales Acceleration Assessment.

2. Conducting the Online Sales Acceleration Assessment

While generating insights using the reverse journey approach, we match the findings into our six enablers acceleration framework. Working with clients, we have found that any of the gaps that hinder OEMs from reaching their target levels of online sales can be attributed to one of the six enablers. For each, we list here some of the key success drivers in our Online Sales Acceleration Assessment checklist:

Figure 4: Six enablers acceleration framework

Source: Berylls by AlixPartners

  • Online product offering is attractive to customers (for example, online exclusive models)
  • Online journey can be adapted to different customer segments (for example, direct to consumer or to a B2B customer)
  • The full range of the product portfolio is represented online
  • Physical stock is fully available online
  • Customers view the brand as one that offers convenient online sales
  • Customers land on the online sales tools at an early stage of the purchasing process
  • All steps in the purchasing journey integrate online sales elements
  • Digital touchpoints are transactional
  • Digital features are fully functional and don’t have bugs
  • Digital features are easy to understand and use
  • There is a good balance between the number of features and their relevance for customers
  • The features are on a par with or better than those of competitor brands
  • Customers report they are happy with the online purchase journey and its stages
  • Retailers are incentivized to promote digital channels
  • Retailers understand the benefits of digital channels
  • Retailers have the tech skills to use and promote digital channels
  • There is transparency about the number of online sales, and figures are communicated to teams on a regular basis
  • Online sales are clearly defined and understood by the relevant stakeholders
  • There are quantitative online sales targets and KPIs
  • Online sales data is presented in a dashboard that is used by key decision-makers
  • Conversion along the entire sales funnel is monitored and evaluated
  • The impact of online sales on cost and process efficiency is analyzed and known
  • Integrated backlog for cross-team prioritization
  • Streamlined development cadence
  • Online sales targets apply to the broader organization (e.g., HQ and NSCs)

In carrying out the Online Sales Acceleration Assessment, we identify and prioritize the gaps between success driver potential in the six categories outlined above and the OEM’s current maturity, using a standard scoring system.

We also recommend structuring the assessment by markets – or at a minimum by geographic regions. That allows OEMs to take account of market differences both internally, for example different levels of sales organizations’ online sales maturity in different countries, and externally, to include local market conditions, legal requirements, and customer demand for online sales. The assessment can be applied to OEMs’ direct and indirect sales models.

3. Development of online sales acceleration levers – two examples

We are aware that knowing where the areas for online sales improvement are is only the first step. Taking the right action to close the gaps is what will differentiate OEMs’ online sales performance. From our experiences on a range of client projects, we bring proven approaches to increasing online sales, as these two examples (one from marketing and communication, and one from customer and product) show:

Transactional marketing campaigns

Transactional – rather than brand-focused – marketing campaigns build engagement with customers by showing them how they can jump directly into the online purchase journey. They also create awareness about online buying options in the first place. Transactional campaigns create direct business impact by matching available vehicles with interested customers.

In our previous engagements, generating transactional campaigns has resulted in a triple-digit increase in conversion rates compared to generic ads. Naturally, they are not relevant for every potential customer and usually play a bigger role later in the purchase journey, once the customer has developed a high purchase intention for a specific vehicle. Transactional campaigns may range from informal presentation of available cars, to sophisticated one-to-one offers on cars from nearby retailers for prospective customers that have directly or indirectly expressed an interest already. Specific purchase prices and leasing or subscription rates create transparency and trigger the commitment to buy.

Figure 5: Exemplary Campaign

Source: Berylls by AlixPartners

B2B Online Sales

Today, many OEMs limit their online sales tools to their direct-to-consumer business. However, premium brands in particular primarily sell their new vehicles to business customers in many European markets. Adapting the online purchase journey to include business customers can therefore help OEMs reach a much bigger share of their potential market. In Europe, and especially in Germany, not being able to address this target group would leave out more than half of the potential customers for many premium OEMs.

Large fleet customers will most likely not be the target group, but smaller businesses and self-employed customers may contribute a significant share. Their customer experience could be significantly enhanced online, for example by showing relevant vehicle specifications and prices, or by offering individual packages, discounts and bundle offers.

Just as for individual consumer sales, B2B purchase journeys don’t need to fully happen online, but increasing the share of online interactions can reduce selling costs and ensure a better customer experience, thanks to higher levels of standardization and control.

 

HOW WE CAN HELP ACCELERATING ONLINE SALES​

As we develop and implement different types of online sales acceleration levers with clients, we build on tried-and-tested approaches. These focus on delivering fast solutions that generate customer feedback early, ensuring iterative development and continuous improvement.

In summary, by carrying out Berylls’ Online Sales Acceleration Assessment, OEMs create transparency about the root causes slowing down their online sales ramp-up. The assessment also helps carmakers to prioritize the most promising levers that will efficiently speed up online sales and establish their reputation as a brand with a seamless online sales process.

If your organization is struggling to scale up online sales and the assessment approach sounds interesting, please reach out to Berylls Mad Media and we can discuss together an approach customized to your specific needs.

Henry Lundt

Henry Lundt (1984) is a Principal at Berylls Mad Media (part of Berylls Group), the experts for transforming sales & marketing in the automotive industry. He is an expert in digital automotive commerce as well organizational transformation and can look back on many years of consulting experience in various roles.

Henry Lundt has been digitizing automotive sales & marketing for manufacturers and suppliers since 2009 and has experience in the areas of holistic strategy development, digital product development & applying and optimizing agile working models. Beyond this, Henry Lundt built expertise in digital automotive commerce, consulting our clients to build and optimize transaction journeys. Prior to joining Berylls Mad Media, he set up Berylls Digital Ventures as first Berylls Group entity – prior to joining Berylls, Henry Lundt was Head of Automotive at TD Reply, a marketing & innovation consulting firm, focused on digital business.

He graduated as business economist from the University of EBC Berlin in marketing & media with a combined studies in Business Management in University of Sunderland & University of Newcastle upon Tyne (UK).

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