Auto Insights: Will digital showrooms be the new norm in 2020?

Where are we now?

2015-08-24

As you may be aware, in 2013 the Australian Automobile Dealers Association (AADA) commissioned our office to undertake an Australian automotive industry survey, the first of its kind in over 20 years.

Focusing primarily on the Australian automotive industry, the survey collected the opinions and predictions of a wide range of stakeholders in order to determine what the automotive retail industry would look like in 2020. 

The survey was split into six distinct segments that were thought to evoke the greatest challenges and areas of change for the industry between 2013 and 2020. A critical focus area for the survey was dealer facilities, given that rent and facility costs remain one of the largest expenses in a dealership operation.

Dealer facility key trends in 2013

Survey respondents were asked to assess where future facility investment would be required and assess the physical marketplace presence of the automotive retailer of 2020. Notable key responses were as follows: 

1. New investment in workshop and service capabilities
64% of survey respondents believed that future investment would be required for workshop and service capabilities, which was not surprising given the downward pressure on front-end gross profit in the market.

2. Investment in virtual or digital showrooms
52% of survey participants believed that investment was needed in this area.

3. New format dealerships
84% of respondents identified a future requirement for new or upgraded facilities by 2020.

Where are we now?

Whilst it has only been two years since publication of the survey, we have already seen a significant shift in facility efficiency and innovation, both in terms of maximising existing capacity and in changing the traditional facility investment model.

To increase workshop capacity, simple strategies such as the implementation of quick service bays have become the new norm. On a larger scale, dealers have considered the modernisation of existing facilities and the construction of service facilities on ‘satellite’ sites.

Dealerships in Australia are increasingly embracing the digital showroom concept, with the implementation of modern technology (e.g. tablets and touch screens) in their dealerships. Audi Centre Melbourne, for example, has installed a large touchscreen into their newly constructed facility to allow customers to create virtual versions of their desired vehicle.

We are also seeing an increased number of dealers constructing mixed-use developments to extract the highest and best use of existing property holdings while continuing their business. A number of dealerships in Melbourne and Sydney are constructing showroom facilities on the ground floor of commercial or residential towers.

The digital showroom trend is not confined to Australia. There are a growing number of examples appearing globally, including:

  • The Audi City London digital car showroom was one of the world’s first fully digital car showrooms.
  • The Rockar Hyundai showroom in Kent, England was constructed with digital displays and devices in a high traffic shopping centre, with only a few vehicles located in the store.
  • The new Audi Virtual Reality Experience allows customers to view the interior and exterior of their new vehicle via a virtual reality headset paired with their smart phone.
  • A proposed boutique store concept by Cadillac in the United States plans to introduce virtual showroom technology in each of the new or upgraded stores.

As you can see, the questions posed to the industry in our survey two years ago are still highly relevant today and with a continually changing automotive industry and property market, the nature of dealership facility developments will continue to evolve.

For further details, please contact Brett Fowler, Partner of ShineWing Australia.