I can’t help being excited and impressed when a fellow South African makes it onto the international stage. After all, South Africa is at the tip of the continent, far away from the centres of big multi-billion dollar businesses. In addition, being from the automobile district of the country, Port Elizabeth, means that I have always had a passion for cars. So it was much to my joy when my young friend, Max Unterhalter, gave me a lecture on emissions and renewable energy and waxed lyrical about Elon Musk, the founder of Tesla. That was it for me – I was sold! So important has he become that Elon must be the first South African businessman to appear on an episode of the Simpsons!
On Thursday this week, Tesla reached a new level in its mission to bring electric cars to the mass–market with the unveiling of its most recent creation: the Model 3. With the ability to go over 200 miles on a single charge and priced at the average value of a new car in the US, it’s clear that this is Elon’s big step in moving Tesla from its position as a concept luxury brand to one that caters to the general public. However, competing with giant companies like General Motors, Toyota and Volkswagen, Elon has had to be a leader and a real market disrupter – in all ways. As our high streets struggle with soaring rents and the onslaught of ecommerce, Tesla’s new showroom rollout, with one recently opened on London’s Oxford Street, is redefining the way consumers approach buying cars – a process which has needed refreshing for years.
Other than Selfridges, the Tesla store is the busiest on Oxford Street. With a great shop fit, carefully chosen product specialists who are helpful and know what they are talking about and with a sense of retail theatre, it breaks the mould in car showrooms. With his background in financial services, the product specialist who helped me impressed me with his intelligence, style and expertise not only on the car itself but also energy, digital and global warming. Car dealerships have held a special role in society’s stereotypes, with hard salesmen, and often located in standalone locations – but along with a new generation of cars, many manufacturers are opening new, innovative city-based dealerships, replete with high-tech digital capabilities that are reinventing the car-buying experience.
The automobile industry has been undergoing a noticeable change in recent years, with the introduction of driverless cars and the car-sharing industry through platforms such as Autolib’ and Zipcar. The industry’s big players, including companies such as BMW, Audi and Hyundai are radically rethinking their flagship dealerships in line with customer experience and expectations, in addition to launching online platforms to customise and buy cars. Although on a slower upward trajectory than that of regular household items, research shows that consumer confidence in shopping for cars online has grown significantly in the past three years, signalling a new era of car shopping that can be done at home from platforms such as CarWow, instead of a dealership.
But the need in the automobile industry for physical retail locations is also apparent – just as it is for any other multichannel brand. With an almost inherent negotiation process and a higher value than many of the items typically purchased online, the role of the car dealership is in a period of transition. The image of driving a car out of the dealership is slowly fading from the minds of consumers, and retailers have increased flexibility to use their showrooms to position themselves individually as brands, choosing specific locations and features to reinvent the consumer experience.
“Our technology is different, our car is different, and, as a result, our stores are intentionally different.” – Elon Musk, Tesla chairman, product architect and CEO
Tesla has become known for its completely vertical integration of the process, from design to manufacturing to sales, giving the company total control – and this is reflected in Elon’s title. But it is a small company in a niche industry, targeting volumes in the tens or hundreds of thousands per model, when other giants have annual sales upwards of one million cars. The position of the company among the numerous luxury brands of Oxford Street points clearly to the market that the brand is targeting. In-store features such as iPads for customisation and salespeople trained in the science of electric vehicles signal that the stereotypical image of a car salesman is on its way out.
As the retail industry becomes almost wholly multichannel, the difference in approaches from different sectors toward a digital strategy has shown that there is no ‘one size fits all’ solution. Whereas supermarket and high street brands such as Sainsbury’s and Next have created an online presence that replicates the in-store selection, more high-end and luxury brands have struggled to find the balance between becoming modern and remaining exclusive.
With car retail finding its place in the digital world, the evolution of the car dealership to become a complementary system has not quite paralleled that of other sectors. As with the rest of the luxury world, car makers will need to figure out how to position both their physical and online locations to work together in order to attract consumers – that is, until someone figures out how to bring the test drive to a computer screen!