Europe is over capacity – that is what the European Automobile Manufacturers Association said in 2012, but what is the situation today?
That same year, OEMs announced reductions of 750,000 vehicles by 2015. Plants were to close and jobs were to be lost in a bid to withstand the pressure from low cost brands entering the market. Production footprints had to change for OEMs to sustain their foothold in Europe, which meant they had to look at their suppliers’ plans in emerging markets to make sure they were in line with future market demands within their own production ambitions.
According to the European Automobile Manufacturers Association (EAMA), the EU produced 19.6 million motor vehicles in 2017, which is almost a quarter (23.3%) of the 98.9 million motor vehicles produced globally.
Of that 19.6 million, 17 million were passenger cars. The other 2.6 million were commercial vehicles. So how did the industry diversify and boost its performance? We believe the answer is in the light vehicle after market.
For OEMs, competitive edge is everything. Many car manufacturers invested in understanding the path to purchase their end users made before deciding to buy a new car, and even how they went on to maintain and repair their vehicle.
OEMs who offered their customers tailored products and services allowed them to improve conversations. And, access to diagnostic data gave them the insights into the needs of their customer.
A study by Bearing Point, a management and tech consultancy, looked at the UK as an example of how they cultivated customer retention in the light vehicle aftermarket. They found that customers in the UK wanted a good experience and to be in close proximity to an authorised workshop – theirs. Following a service or repair, follow up engagement improved repeat business for them.
These findings tell us a great deal about the importance of customer communication both in terms of profitable growth and reputational value. As the path to purchase evolves, with many car buyers even using VR experiences as a means of test driving before even setting foot in a show room, OEMs are evolving their customer experiences at pace to remain competitive in a market place that is brimming with digital technology providers who are new to the automotive landscape.
That said, in my view the OEMs will continue to have the edge when it comes to customer experience. My prediction is that while these new tech players are attractive in the short term, they may lack the customer relations skills that are crucial when their tech fails and an inevitable a recall is upon them. The big beasts know how to cope with this better than most.
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