This year’s Driving Digital’s keynote speakers addressed the macroeconomic climate and its effects on the industry, the importance of digitalisation and the automotive industry's ability to adapt to changing circumstances.

Driving Digital 2022 took place in London at Westminster Hall on Thursday 13 May 2022.

The event started with a warm welcome from NFDA Chief Executive Sue Robinson, who mentioned the association's ongoing lobbying efforts, particularly around the possible future scenarios for the dealer/manufacturer relationship and the agency model. Sue touched also on the progress made by NFDA’s Electric Vehicle Approved (EVA) accreditation scheme and Drive My Career.

Big Tailwinds in the Automotive Industry

Following the introduction, Automotive Business Consultant from Grant Thornton Owen Edwards provided an overview of the UK's economy and the current impact on the automotive sector.

Following the significant disruption caused by the pandemic and Russia’s invasion of Ukraine, he highlighted that it will take until 2023 before vehicle production returns to pre-pandemic levels.

Owen also shed light on how extensively the war between Russia and Ukraine is and will affect the manufacturing of vehicles as Russia is a large manufacturer of raw materials such as cobalt and petroleum (?) based products.

Similarly, Ukraine accounts for 50-60% of neon gas, affecting the production of semiconductors. With current trends, Owen predicted that in 6-12 months, new vehicle (?) prices would go up to reflect the reduced availability of raw materials such as neon and cobalt.

Owen went on to provide valuable insights into consumer outlook and behaviour. Consumer confidence dropped to its lowest since June 2008 due to the softening of GDP and the reduction of disposable income by 2.2%, and inflation rising quicker than wages. Though financial circumstances are in a dire position, we learned that new car sales are expected to grow towards the end of 2022. Owen ended his insightful presentation with a hopeful comment, 'The automotive industry has adapted before, and it will continue to adapt to the looming changes'.

The Rise of Electric Vehicles

The Second speaker was Auto Trader’s Commercial Director Ian Plummer. Ian Focused on the electrification of the market and consumer attitudes towards electric vehicles.

As most of us know, electric car interest has been steadily rising over the years. Although interest in EVs spikes considerably during times of financial unrest and fuel crises, Ian provided data that indicates 1 in 4 people are now considering an electric car.

Ian highlighted that the shift to electric is bound to happen due to strong government backing and manufacturers producing an ever-increasing amount of EV cars whilst gradually phasing out ICE vehicles; as a result, EVs will account for 50% of new car sales by 2026 and by 2030, a third of all cars on the market will be electric, which will undoubtedly alter the aftersales business.

As we step into a post-pandemic era, Ian highlighted the need to adhere to consumer behaviour regarding the digital economy, providing customers with choice and convenience. Retailers who adopt a hybrid and tailored approach benefit from increased revenue from sales. For instance, digital-first retailers are selling 5% of the 0-7-year-old stock.

Ian concluded by saying as retailers we must adapt to changing times and remain consumers focused by providing them with a worry-free digital experience through money-back guarantees, online financial applications, and reservations. 'By giving the consumer what they want, we are also more likely to benefit'.

Value of Trust and Improved Hybrid Experiences

Kim Costello, chief marketing officer for Pendragon, reinforced what was previously said, ‘the market has been in constant change, directly impacting the automotive sector. 'The war in Ukraine affecting mining, constraints on petroleum-based products, and a multitude of issues on the horizon impacting manufacturing, basic economics tells us we are looming down the barrel of a recession'.

Like many others, Kim highlighted the industry's ability to adapt in the face of change. In order to remain profitable, it has become clear that the automotive sector needs to focus on customer interactions. However, this is also becoming difficult due to the population's reluctance to share data.

Instead, Kim says auto retailers need to leverage Artificial intelligence to see where the opportunity lies within potential user experience. If done right, retailers can understand what consumers want and continue to serve their needs. Companies that leverage this are at a competitive advantage.

As we emerge from the pandemic, it should be said that ultimately, consumers want choice. many retailers have listened to customers by providing customers with options instead of forcing them down a fully digital or physical route.

Buying Electric: ‘More Than Electric Dreams’

Developing on Ian Plummer’s points, Marc Palmer from Auto Trader provided additional, valuable insights into the EV market.

Marc discussed how to keep up with growing electrification, the government is placing a greater focus on EV infrastructure, setting aside half a billion pounds to facilitate this change.

However, Palmer stated that electric infrastructure is ‘patchy’ and inconsistent in terms of availability. For example, London accounts for 45% of all public charge points.

Furthermore, EVs remain more expensive than counterpart ICE vehicles. For this reason, individuals who earn upwards of £50,000 a year show a greater interest in purchasing one. Affluent customers are driving EV adoption, but ‘democratisation remains uncertain’.

To successfully market EVs, retailers must emphasise the lower running costs of EVs, like saving £140 per 1,000 miles.

The ‘Dodo’ and The Power Of Upselling

Moving on, Neil Addley perfectly demonstrated the importance of adaptation through his example of the Dodo bird failing to adapt to changing circumstances leading to extinction. Like many others, he emphasised the need for impeccable customer service.

Interestingly, he mentioned that ‘up-selling’ is not seen as a negative from the customer, instead, offering add-ons contributes to increasing promoter rates and customer satisfaction.

Findings From the Best Dealerships in Digitalisation

Last on the stage, CEO and Group Managing Director of Arnold Clark, Eddie Hawthorne, proved the auto retail business can not only survive but thrive under the changing dynamics of the market through digitalisation.

Arnold Clark saw 50 million visits to their website in 2021, 75% of which from mobile, and 90% of their sales were digital in some way. Over the years and during the lockdown, this figure rose considerably.

Eddie Hawthorne provided an overview of the plethora of projects and digital services Arnold Clark is currently working on. The company has been improving customer satisfaction, simultaneously introducing new digital processes such as check-ins, resulting in a significant increase in efficiency for both customers and technicians, who can now service more cars than ever before.

Linking to what Kim said, Eddie mentioned that Arnold Clark’s success was through dedicated investment in user Interaction and experience, hiring developers to research customer journeys from beginning to end. Like others at the event, Eddie said the company adopted a hybrid approach in which customers are ‘empowered’ as they can personalise their buying experience to suit them, a leading reason why Arnold Clark remains one of the most profitable auto retailers in the UK.

The event recognised the challenges the auto retail sector would face in due course, though, as all the speakers mentioned, the auto retail industry is highly adaptable. By embracing digitalisation and providing exceptional customer service, the sector will be able to thrive regardless of circumstance.

All speakers’ presentations will be available next week and downloadable via the Driving Digital website.