The Digital Vehicle Ownership Experience Automotive in China s Digital Age

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1 China Digital Byte series The Digital Vehicle Ownership Experience Changing the customer journey In 2009, China overtook the United States as the largest automotive manufacturing and sales market in the world, a position it will occupy for years to come. Since then, light vehicle sales in China have increased from 12.5 million to over 19.9 million by 2013, the equivalent of a CAGR of 12.3% 1. As the country maintains its standing as the largest automobile market in the world, more and more automobile brands are appearing on the streets of China. In fact, recent statistics indicated over 120 different brands were already in existence by In a market already dominated by many notable brands, PwC believes that an important method of differentiation for OEMs and their dealer network is to offer greater levels of engagement along with more personalisation. Today s Chinese customers are characterised by increased use of social media, high demand for customisation and information and the need for efficient integration of in-vehicle features. As a result, it is our opinion that the continued success of an OEM and its dealer network is heavily dependent on its ability to successfully maintain its competitive advantages by integrating a digital experience throughout the customer journey, from discovery and research, through dealer sales, to customisation of the vehicle, and finally to service and care. Social media as a customer touch point Social media plays a major role in the lives of Chinese netizens. The overall scale is unparalleled: 6 of the world s top 15 social networks are Chinese and successful social media businesses are being rapidly adopted by users at a rate unseen before in Chinese technological history. For example, it took WeChat just 18 months to reach 100 million monthly active users; it took feature phones 15 years to reach that many people. Arguably, most interestingly for automakers, however, is the role of social media in buying decisions. Recent PwC research showed that no other country displayed the same level of engagement and interaction Chinese users had with their brands on social media. In the pre-purchase phase, 87% of Chinese users would use social media to research a brand and 86% have also bought products through social media. Most strikingly, 93% of Chinese online shoppers have commented on an experience 3. Peer-to-peer recommendations over social networks are a critical part of brand building, customisation and consumer experience in China. Using social media, customers are able to conduct research on peer experiences with selected brands and find information about specific vehicles prior to their first visit to a dealership. Upon visiting a dealership, social media channels allow customers to share their opinions on the services received and gather immediate feedback regarding pricing information, 1 Research and analyses conducted by PwC Autofacts, China Auto Dealers Chamber of Commerce (CADCC), PwC, Global online shopping survey (2014)

2 customization options and service quality from friends and family. Long after the sale is concluded, OEMs and their dealer network can effectively utilise social media outlets to resolve customer complaints, answer maintenance inquiries, offer discounts on aftersales services and deals for special occasions. While many OEMs are embracing the use of the social networks for marketing purposes, few are actively leveraging the insights and analytics gathered from these networks, and then responding accordingly. At PwC, we believe that by adopting social selling strategies, OEMs and their dealer network will be able to fully utilise social media platforms to take ownership of the conversation that customers are having about their brand experience. In doing so, they re able to effectively improve brand reputation, increase customer loyalty, and reduce the number of customers they lose. No other country shows the level engagement and interaction Chinese users have with their brands on social media Which of the following have you done using social media? PwC Global online shopping survey (2014) Bought products 86% 29% Interacted with favourite brand Commented on an experience Followed brands or retailers Researched a brand 88% 91% 93% 87% 48% 37% 38% 59% 59% 52% 55% 49% 49% Source: PwC, Global online shopping survey (2014)

3 Enhance ownership experience through digital services The digital lifestyle of today s Chinese netizens is changing the offerings that appear in recently launched motor vehicles. The proliferation of smartphones has heightened expectations of integration and connectivity between devices and cars. As a result, OEMs are looking to build upon the strong foundation established by subscriptionbased motor vehicle support services, such as GM s OnStar, to better leverage 3G and 4G technologies and thereby provide the ultimate in-vehicle digital experience. OEMs can provide a myriad of services, including but not limited to, constantly updated maps which take into account new highways in China, navigational support, entertainment services, vehicle diagnostics and emergency services. More importantly, PwC believes that connectivity and machine-to-machine (internet of things) opportunities are transforming these subscription-based services into another touch point along the customer life cycle. In offering efficient support during everyday situations, OEMs will be able to improve not only the customer s circumstances, but also their perception of and loyalty to the brand. The use of mobile engagement is also key to the dealership of the future not only in creating the personalised experience of knowing the customer as they walk in, such as whether they booked a test drive online, but also in creating the truly interactive and personalised experience of customising their future car. PwC predicts that by determining the ideal combination of desired digital services and products to be offered, OEMs are able to further enhance the ownership experience and secure reoccurring revenue originating from renewed subscriptions. OEMs and their dealer network are looking to generate recurring revenues through in-car telematics and digital services In-Car Apps In car entertainment services Value-added extras can be on-demand Recurring resale revenue opportunities Real-time performance monitoring Electronically monitors performance Reduces labor costs Enhances customer service Virtual Showrooms Seamless digital channel sales process from lead through to service Maximise consumer brand engagement Minimise further physical dealership rollout

4 Going the path of digital As OEMs and their dealer network transform to better integrate technological advancements into their operations, they should also be mindful of some key considerations. Successful social media and mobile strategies can generate a plethora of benefits if implemented correctly. However, OEMs and their dealer network need to focus on these channels throughout the customer journey from discovery and browsing, to in-dealer digital experiences, customisation and personalisation during the pre-order phase, and then through delivery, sales and service. Customers have been expecting more distinct social, mobile and online-to-offline experiences. Finally, as in-vehicle systems innovations continue to advance at an unprecedented pace, it is important to ensure these developments are in alignment with Chinese preferences. The development of pay-as-you drive insurance, in-car services, and servicing updates/feedback direct to the owner s mobile are all on the rise. Careful monitoring and integration of customer feedback will ensure research and development initiatives are relevant and in demand. OEMs and all customer-facing functions must work together to track, analyse and incorporate customer opinions to continue enhancing the vehicle ownership experience in the future. PwC believes that by focusing on the aforementioned customer touch points, OEMs and their dealer network can take ownership of the ongoing discussion between brand advocates and detractors to improve the overall brand perception and the vehicle ownership experience. OEMs will need solutions to capture and route leads from any channel and manage them through the test drive and sale closing the loop on the marketing investment. Customers want a seamless experience with their brand wherever and whenever they engage, so OEMs need a platform that allows them to do that and innovate in their own ways. PwC has helped clients develop strategies, such as social media platforms, which enable OEMs and their dealer network to better manage digital and online touch points along the evolving customer journey. For OEMs, data integration and analysis capabilities are also essential to properly make use of acquired customer data when redesigning business process and networks. However, the key to success for OEMs is to first recognise the shift from the traditional customer lifecycle to a more customer-centric digital approach that allows seamless integration of on- and offline information and services. Furthermore, as digital products and services become the norm for all recently launched vehicles, it has become imperative for OEMs to identify the ideal offering of The Digital Customer LifeCycle Follow Purchase Intention Collect Info Compare & Evaluate Purchase & Sign Contract Social Media Platform subscription-based products and services to best enhance the vehicle ownership experience. PwC has conducted numerous successful Voice of Customer (VoC) projects aimed at connecting those most knowledgeable about creating solutions directly with target customers. PwC s VoC tools provide insights into the daily use requirements of customers and allow for the conversion of Customer Voices into Customer Requirements for design and functional purposes. In doing so, we work with clients to help determine which in-vehicle services accurately reflect Chinese customers preferences and demands by allowing cross- functional teams and target customers to work in tandem to develop the ideal digital product and service offering. Our VOC studies have shown that Chinese car buyers increasingly expect telematics services with location-based features, such as real-time traffic navigation, weather and pollution information, directory assistance, and emergency response. While these services are often available in luxury vehicles, PwC believes carmakers should explore how to bundle the most desired telematics technologies in all segments. Owner Share Maintain Repair Repeat purchase What does good look like? In today s digital age, we believe OEMs and their dealer network need to meet their prospects where they are: online, on mobile devices, and on social media. As such, Forecasting & Analytics Leads & Data Accounts & Contacts Workflow Cases Opportunities

5 PwC digital team - Automotive At PwC, our digital team in China creates value by bridging the gap between business and technology. With a focus across all key industries, our team can provide insights on the latest digital trends, technology developments and innovations. We are committed to working with you to design the best approach for your business - from strategy to execution - to help you make sense of an ever-changing world, throughout your digital journey. For full details on how we can help, please visit digitalconsulting or pwchk.com/ automotive Colin Light Digital Consulting Leader Simon D Strom Consulting Automotive Leader +86 (10) Marco Fischer Consulting Senior Manager +86 (10) Wilson Liu China Automotive Leader +86 (10) Gang Xu Consulting Partner +86 (21) Yukai Chen China Automotive Sector Program Manager +86 (10) PricewaterhouseCoopers Limited. All rights reserved. PwC refers to the Hong Kong member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.

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