The automotive industry is undergoing revolutionary change driven by developments in transportation and IoT technology. To succeed in the emerging mobility ecosystem, automakers must transform a traditional business model of building and selling cars to providing end-to-end mobility services.
The proliferation of connected devices and advances in autonomous technology are transforming consumers’ views of transportation. The Global Mobile Suppliers Association (GSMA) reports that cars are emerging as the new platform for a wide range of media and services, and that up to two-thirds of new cars sold by 2025 are likely to be connected. While fully autonomous vehicles inch closer to regulatory approval for the public, automakers are already investing in semi-autonomous safety features and advanced driver-assistance systems that are expected to reduce accidents, lower insurance rates and help to gain consumer acceptance for the reality of self-driving cars.
In recent years, consumer behavior has been shaped by the growth of mobility-as-a-service (MaaS) firms that provide ride-sharing, e-hailing and car-sharing services. In metropolitan areas, the ease and accessibility of hailing a car with a mobile app has made MaaS a top choice for local transporation.
Despite the popularity of on-demand mobility services, car sales continue to see steady growth. Digitally savvy millennials are transforming the buying process. Less time is spent browsing car lots and dealerships in person—instead, prospective buyers rely primarily on the internet and mobile apps to research automobile makes and models, find deals and read reviews. A study by Dealer.com and GfK Automotive Research shows that consumers’ buying decisions also are heavily influenced by their social networks—38% said they consult social media when making a car purchase.
Amid changing consumer behavior concerning automobiles and transportation, long-held business models are shifting within the automotive industry. Automakers can no longer differentiate solely on the design and quality of the product; the value of the ecosystem and seamless integration with mobile services and IoT devices are also significant factors that will impact customer satisfaction. There are several key challenges facing automotive companies:
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