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The Future of Automotive Commerce: How DTC Impacts Consumer Engagement in Automotive
Electric vehicle (EV) brands like Tesla pioneered the direct-to-consumer (DTC) model in the automotive industry — and they were right to do so. When COVID-19 hit, these auto leaders were still able to sell vehicles online while others shut down their dealership-dependent offline sales channels.
Today, the model is shaping the industry in Asia, with both EV brands and established brands, like Mercedes-Benz and Ford, adopting it.
The DTC model encompasses every interaction between a brand and its customers. This means that brands need to seamlessly integrate online and offline components throughout the customer’s journey, expanding beyond the physical car, services and digital experiences to create a long-term, direct relationship.
The model offers exciting business opportunities from deepening consumer engagement to capturing more consumer lifetime value and creating new profitable offerings. However, it also presents challenges to an industry that has traditionally relied on physical dealerships.
Changing Consumer Behaviors & Expectations
Consumer behavior and expectations have drastically changed since the pandemic, especially in Asia Pacific (APAC), which saw 130 million first-time internet users in 2021. Additionally, it’s shaped by industries where eCommerce and omnichannel retail experiences are well established. Today, consumers can obtain information online and get a virtual product experience before making a purchase — even for big ticket items like furniture and luxury fashion. As a result, consumers now expect a seamless interaction with brands across all touchpoints, regardless of sector.
Here is where EV brands outshine traditional auto players. When we conducted consumer research in China, key terms such as transparency, convenience and value-added services came up when describing the advantages of the car-buying experience of DTC EVs compared to traditional brands.
The Customer Journey that Makes a Difference
To offer a differentiated journey, automotive brands need to provide both ‘wow’ moments and mechanisms that can keep consumers engaged in the long term. We have been investigating the best experience strategies in Asia and found three themes that were particularly inspiring.
1. Personalized & Consistent Journey
The car-buying journey cannot remain completely online. Physical experiences such as test drives and car delivery will remain important. But, with the growing adoption of social commerce and eCommerce, consumers might begin their shopping journey through online touchpoints such as websites, social media or chat groups. So, automotive brands must integrate data to create a consistent customer experience.
For example, Nio, a leading EV brand in China, tailored its organizational structure to ensure that the consumer experience is personalized and consistent.
The company introduced a role called ‘customer fellow’ to guide a consumer throughout their customer journey from presale to sale to after sale. The brand also keeps its customers engaged in the after-sale phase by connecting them with maintenance experts as well as battery and financial service providers, in addition to the ‘customer fellow,’ through a dedicated WeChat group.
The DTC model allows automotive brands to own the consumer relationship to build personalized experiences throughout the customer journey.
2. Ownership as a Membership
High-end automotive brands often have membership programs that offer premium services. With the transition to the DTC model these brands now have more ways to make their membership programs impactful.
Let’s take Nio as an example again. The brand built an attractive membership program offering well-curated benefits and services, and supporting its member community via its WeChat mini-app and physical experience centers.
Through the WeChat mini-app, Nio customers can find many social circles, from interest and event groups to even a single’s club. One can also discover many lifestyle products, from wine to home appliances to clothes in its virtual mall. The brand has set a benchmark in the industry for building an active and loyal customer community.
Similarly, Mercedes-Benz's member program — The Mercedes Me Club — leverages the WeChat mini-app to offer its community an ample set of offerings, including a mini-game to collect reward points, a forum for user-generated content, perks on Michelin-starred restaurants and the She’s Mercedes program (a community of female consumers).
Well-curated membership programs can add great value and new meaning to car ownership and help build long-term relationships with consumers.
3. From the Physical to the Virtual
Accelerated by the pandemic, virtual experiences have become a crucial part of the automotive industry. Leading automotive brands such as Toyota, Mercedes-Benz, Nissan and Renault already have virtual showrooms as a key feature of their digital sales journey.
These showrooms give consumers the option to take virtual tours and get a 360-degree look of the car. Renault even offers live guided tours where an expert introduces the cars’ key features and answer questions.
However, the most surprising phenomenon of 2021 is how high-end automotive brands embraced virtual cars in the form of non-fungible tokens (NFTs). Enabled by blockchain, NFTs turn virtual products that used to be easily replicable into unique collectibles with verified ownership. Notable brands like Lamborghini, Audi, Porsche and Mercedes-Benz have launched their own NFT collections. Hyundai is the first and only Asian automaker to offer a community-based NFT marketplace, launching 30 limited digital collectibles.
Despite strict regulations against virtual collectibles in China, Audi successfully launched a series of NFT artworks called “Fantasy Super Highway” in collaboration with artist Chen Ran. The NFTs were distributed in a gamified “blindbox” format to 100 new Audi owners, which strengthened the brand’s image as an innovator.
High-end cars are not just tools to meet mobility needs, but also status symbols in people’s social life. As the metaverse grows popular, NFT could potentially be a way for high-end automotive brands to play an important role in people’s virtual social life.
The Journey Ahead
The rise of the DTC model might not mean the end of dealerships, but it certainly necessitates a more direct and continuous engagement between automotive brands and their customers.
We see promising opportunities for automotive brands to accelerate the digitization of their consumer journey, transform ownership into membership and create new offerings beyond physical cars.