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'Dealer showrooms are dying,' says manufacturer

Manufacturers have claimed augmented reality (AR) could replace the car dealership showroom completely.

Global head of brand at Nismo, Nissan’s sports car brand, Darren Cox told Marketing Week: “Showrooms are dying out.

“If you look at costs of dealerships and the profit margins, something has to change. It’s like the big supermarkets cutting back on unprofitable hypermarkets; the retail customer wants something different now.

“Just a few years ago, on average, people visited three showrooms before buying a car, they now visit one – the internet has changed everything. Augmented reality as well as bringing the showroom to say, a Westfield, as a pop-up will become some of the main ways we interact with customers going forward – you can’t wait for the customer to come to you anymore.”

Marketing Week asked Land Rover's marketing director Laura Schwab whether more brands using AR technology was a step away from the traditional showroom. 

“Absolutely! It’s about making the buying experience as easy as possible for the customer. That could mean augmented reality slowly replaces showrooms to an extent,” she said.

Land Rover launched its AR campaign in December creating a life-sized view of the all-new Discovery model, through headsets, for dealerships that didn’t have a real model on display.

Honda’s European marketing director Martin Moll told Marketing Week that he thinks the showroom experience will be trimmed down, using AR instead of expensive concept cars.

National communications manager for Skoda Erica Vernon added: “The digital showroom is what we want to move towards completely. There will always be a room for a showroom, but it won’t be defined by a retail park location like before. The showroom could be an app on a phone or a virtual experience at rush hour within Waterloo station – it can be everywhere.”

Most recently, Skoda was at Waterloo train station in London displaying its AR technology to members of the public. Passers-by stopped to design their own version of the new Fabia model via a pop-up kiosk before adding an image of them behind the wheel and having it displayed on a large screen.

Fiat worked with magician Dynamo to promote the 500X giving customers a ‘virtual’ ride in the model. Ford launched a reality app which allows people to visualise a life-size version of the car right in front of them.

And Audi used 3D technology to give virtual test-drives of the A3 E-tron (see image).

BMW has also created AR glasses to allow drivers to see through the car.



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Comments

  • gezza06 - 12/02/2015 17:19

    So why are dealers having to spend millions rebuilding and reshaping dealerships to comply with manufacturers' "standards"?

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  • jhawkins - 12/02/2015 17:22

    Why are manufacturers making us spending stupid money on corporate showrooms every couple of weeks?

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  • JFitz - 12/02/2015 22:50

    I would be surprised at how many of the contributors to this article have spent time in the Dealership environment. While customers do significant research in advance of visiting the Dealership, their final decision is very difficult to make without driving the car of "choice", which they will have to do for 2-3 years hence. Until the kinaesthetic of actually driving a car can be incorporated into a headset or otherwise, then all of the above is nonsense

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  • DBoyce - 13/02/2015 06:13

    The stats that say people are only visiting one showroom doesn't necessarily mean the end to showrooms. If you look at the housing market, I would presume viewings have reduced significantly in the last 10-15 years because of the available online information a buyer now has when researching - Google maps, schooling stats, photos, Zoopla etc. It is just an indication of the change in the consumers research habits. There will always be a requirement for a retail outlet for vehicle demonstration, order taking and hand over. Where retailers need to get smarter is dealing with the consumers and their service level expectations from online enquiries. Things like AR will certainly enhance the consumers experience but nothing can replace the reality of driving or sitting in the vehicle which will require the retail network.

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  • Jim Reid - 13/02/2015 12:17

    I think you will find Erica Vernon's mailbox and telephone will be very busy over the next fews days trying to explain to Skoda dealers why they have invested millions of pounds in showrooms , upgrades and signage over the last few years! Footfall will drop as more people engage online doing research however they still need to test drive a car!

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  • gareth Matthews - 14/02/2015 08:45

    The key message here is that the dealership needs to be far more tuned into the customer and his requirements when he does visit. The problem is not that the dealerships die out because people visit less but because they still have the mentality that they can sit back and wait for the next customer and deliver below average service when they do. Dealers have to be far more in tune with what they do electronically right through from their website, to social networks, to responding effectively to online inquiry. When the customer does visit, he is ready to buy!

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  • Steve Boucher - 14/02/2015 10:06

    The internet has changed buying habits - Amazon is a great example of how an on-line business affected the viability of high street stores. However, DRBoyce is right - the consumer of big ticket items like cars and houses will do most of their research on-line - the information is readily available at a time an place which is convenient to the buyer. Do you know anyone who bought a house without visiting it first? I'd be interested to learn from the manufacturers how many people, using only virtual reality experiences have purchased a car and taken delivery of a new car without having visited the traditional bricks & mortar dealership at all. Car manufacturers are fiercely protective of their brand identity, but is that any different to Apple, Nokia or Samsung? Why can Carphone Warehouse stock all of these brands and provide any one of them with a contract to a variety of network suppliers when a car dealer has to build the 'Berlin Wall' to separate his customers from different brands?

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  • paul - 14/02/2015 10:50

    Manufacturers doing the "emperors new clothes" follow my leader thing again. Simply where do the manufacturers dispose of the LATE pre reg cars they all engage in doing to hit their targets? Are they going to stop doing this? If they do need to dispose of these cars where do the go? What happens to the older part exchanges? Any dealer can easily change a majority of new car customer into a late low mile cars and the dealer is far better than any manufacturer as retailing, so a really interesting battle will take place putting the new car market under immense pressure as to reduce a new car price means a reduction in the residual value.Perhaps every manufacturer will then need to stop dealing with rental companies or motability as again the residual values will need to reflect any new offers therefore dealers will have access to these units to rival new. Wake up people, the more of these fluffy AR sites you erect the more money you will burn through, the less control you will have and the harder (more expensive) your brand building will become as every VEM will have to sacrifice volume in the short term.....no manufacturer in volume works in any other way than the short term.

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  • Ian A Johnstone, Vantage Toyota Business Centre Manager in North Yorkshire. - 15/02/2015 16:01

    This issue is becoming a reality - and not an artificial one at that! My role with Toyota takes the Manufacturer TO the market. Demo drives and so on are done where the customer is at. Not necessarily at the 'Car Shop'. The industry has to go look for its customers!

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