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How to remodel the automotive retail with Design Futures

In 20 years, automotive retail will have to radically rethink its models. Design Futures can help identify scenarios and perspectives on the evolution of the market.

Luca Mascaro

26.01.2023 - 7 min. read

Anyone who knows me well also knows my passion for engines: I’ve liked cars since I built them with Lego, and I've always been attentive to how they change, both vehicles and their market. 

We are seeing giant leaps in transportation and rising risks for the market in the broadest sense. In 20-30 years, the sector will have to seriously question its models to the point of radically transforming itself. The most exciting transformations will be in the world of automotive retail.

Five macro trends changing the automotive market

Sustainability: more vehicle and component manufacturers are focusing on reducing environmental risks along the entire supply chain.

Mobility as a Service: the emerging models (MaaS) of using the car to meet new customer needs and behaviours are transforming production strategies.

Connectivity: connected cars are changing how companies interact with customers and opening up new business flows related to data usage.

Electrification: car fleets are evolving towards electric vehicles (full and hybrid) and an ecosystem of assistance and supply based on new needs.

Digitalisation: the pervasiveness of digital technology defines a fluid customer experience between online and offline, with an increasingly direct role between producers and end customers.

Three impacts on automotive retail

Declining demand: the expected penetration of mobility services with a shift from ownership to usage and the evolution of customers’ needs and habits (for example, smart working) will cause a reduction in circulating vehicles.

Wider product offering: due to the advent of alternative engines, the supply of vehicles, brands and models is expected to increase, even from new geographies - such as China - resulting in more complexity for dealers and customers.

Network Consolidation: to ensure business sustainability, network consolidation is expected to continue, with a small number of retailers increasing market power, operating a broader portfolio of brands, and adopting more sustainable and innovative models.

Automotive retail in 2040

In Sketchin, for two years now, we have activated a permanent observatory on retail transformations. In the specific case of automotive retail, we have outlined three possible future scenarios.

Dealerships as nodes of an integrated service system

Dealers already sell not only vehicles: when it comes to buying a car, we are offered financial packages: insurance products or loans. With the advent of electric cars, the offer of additional services widens: dealers will propose energy supply contracts to power the vehicle and integrate domestic supplies. Will Enel soon be selling the cars in Italy? Or will Emil Frey also take care of the production and sale of domestic energy in Switzerland?

Car manufacturers will directly sell their vehicles, and dealers will focus on second-hand and rental

Car sales are moving to digital. Many players in this category have opted for small boutiques - permanent or temporary - to integrate dealerships in peripheral or suburban areas. Hybrid stores will offer distinctive experiences with strong interactions between physical and digital.

New opportunities to offer a shopping experience with live and integrated technologies will open up. Sales and assistance services can be provided remotely or in-store to connect customers with experts for any assistance, research, and selection needs.

The core is the brand experience, which extends to an ecosystem of related goods and services. Traditional dealerships will remain but will position themselves above all on the second-hand market or in the sale of rental services.

Cars: from good to service

By 2030, we can expect most of the world's population to live in urban contexts, and it is genuinely unthinkable that everyone will have a car. Electric cars are becoming complex objects, maintenance could be expensive, and municipalities may discourage using private vehicles.

Self-driving cars put another limit on understanding the car as a proprietary asset: Why spend a lot of money buying and maintaining a vehicle when I can use a self-driving service to get from point A to point B in full comfort and safety? Retailers will sell mobility services; there will be more transportation companies like TFL or Uber, with businesses increasingly distant from selling individual cars.

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Design futures as a business tool transforming uncertainty into value

Design futures are a powerful tool available to companies to govern transformations and direct them towards a desired direction. At Sketchin, we use them for just that purpose with clients in contexts characterised by great volatility. 

It is not about making omens but strategically reading reality. It’s about identifying the great forces of change in society, technology and the market to choose among the most probable trajectories of change, those that are preferable for various reasons. From those visions, it is possible to obtain useful perspectives and indications for governing change and guiding the economic enterprise in a clear direction. 

Design futures are tools that work best in situations where a major change is certain to occur, the outcomes of which are still uncertain. They are used to thinking about long-term and strategic solutions.

Using the future as a heuristic tool to discover and shape the experiences we are already planning today allows us to face transformations with greater confidence, exploiting uncertainty as an opportunity.

Speak to us to discover how Design Futures can help your organisation realise the full potential of its future.