What happens to physical assets in a digital world?

“Increasingly, automotive organisations are taking a digital-first approach to meet developing consumer expectations. But it is important to recognise, however much technology is introduced to the process, we are still talking about a physical asset. Vehicles still need to be stored, moved, and driven. The way the industry manages that process may be evolving, but the principles stay the same.” – Philip Nothard, Strategy and Insight Director, Cox Automotive.

This year’s Cox Automotive and Grant Thornton Insight Report focuses a lot on digitisation. We look at how digitisation is changing buyer behaviours and changing the face of retail, explore how the convergence of connectivity solutions is creating an exciting mobility market, and investigate how all of this contributes to the creation of a leaner, stronger wholesale ecosystem. But there is still uncertainty among automotive businesses about how, and to what extent, digitisation will affect them in an industry that depends on a physical asset such as a car.

Philip’s quote is hard to argue with. And it’s reasonable to ask: When your core product can’t be digitised, can you ever really go digital?

The answer is that you can – but in ways that may be less obvious. You can’t digitise a car but you can digitise some of the traditional physical vehicle lifecycle services to suit evolving customer needs and preferences.

How? In this blog, we share four examples from within our own business.

Adapting premises for new business models

Writing in the Leaner, stronger wholesale ecosystem chapter, Sam Panayides (nee Watkins), Cox Automotive Europe’s Sales Director, says it best:

“We’re here to enable our customers, to support them as they grapple with the big changes which are impacting the sector, and to provide them with solutions that touch every step of the vehicle lifecycle. For manufacturers, for example, that could include direct to consumer, digital retail or full ecommerce. But, in whatever way the ecosystem is structured, one thing is true: the physical asset can’t be processed in the cloud! So, as well as digital wholesale and retail solutions, we also provide the logistics, storage, refurbishment and so on which happens behind the scenes.”

A great example of this is our Manheim Vehicle Services site in Bruntingthorpe. Today, it currently specialises in three core areas: new vehicle preparation, in-life services, and defleeting. However, should the vehicle ownership model shift towards fleet ownership and mobility-as-a-service, we are already envisioning a future where autonomous vehicles can take advantage of our expansive storage space and in-fleet services, recharging in between journeys and ensuring that maintenance can be performed at short notice, following a predictive schedule.

Taking traditional auctions online

Manheim Auction Services has always been an industry pioneer. In fact, its MD Liam Quegan recently spoke to Car Dealer about how it paved the way for vehicle wholesale. One of our most recent innovations was taking our auction programme online via the Simulcast platform. Fully optimised for laptop, tablet or smartphone, Simulcast uses ‘live’ video and audio streaming so bidders can watch and hear auctions as they happen. Options include bidding and buying with a single click, or instant messaging the auctioneer, all in real time. It means buyers can compete for new stock from the dealership, their home or anywhere else they can get online. It enabled us to keep our auction programme running throughout Covid-enforced showroom closures, and demand remains so strong that it remains key to our business today.

Introducing real-time and timed auctions

Online auctions are one thing; digital auctions are another. But that’s exactly what our joint venture Dealer Auction is working on. With a digital car auction closing every few minutes and ‘buy it now’ stock available 24/7 from a host of trade and auction sources – including fleets, manufacturers and franchised dealers – Dealer Auction lets businesses replenish their forecourts on demand.

Talking about collaboration to counter stock shortages in the Insight Report, Le Etta Pearce, Chief Executive of Dealer Auction, says: “One of the biggest challenges for our industry right now is sourcing stock. Like consumers, retailers have turned to digital solutions in the past 12 months to buy stock, and we see this trend continuing – not only giving greater choice but driving big efficiencies.”

Making a physical asset more attractive digitally

Even during a time when stock is hard to find and most vehicles sell well it always helps to improve the vehicle grade for auction. This doesn’t just help you fetch a higher price, but also boosts your reputation as a seller of high-quality stock.

Online or digital buyers lack the means necessary to physically view a vehicle and ‘kick the tyres’. Therefore, they are highly reliant on the vehicle grade to provide an indication as to the quality level of the physical asset. Often, depending on the condition of a vehicle, the buyer profile and a handful of other factors, a relatively small investment to aid grade enhancement can result in a big difference in the sale price.

A seamless vehicle ecosystem

You cannot digitise a physical asset, but you can digitise many of the key services around that asset, using technologies to maximise value and give customers a convenient, joined-up experience. It’s why Cox Automotive has already formed a specialist mobility solutions group, bringing together some of our future-focused and digitally enabling brands and services. We’ll leave the last word to Sam Panayides.

“With ever-increasing mobility solutions, subscription offers and flexi-rental, it is likely that we will touch the same vehicles more frequently in between drivers. There will be a much wider range of age and time cycles, rather than the more traditional sub-12 month or three-year replacement phases. It is vital that asset owners, whether manufacturer, rental company or dealer, consider how best to maximise utilisation and monetisation, particularly as we see stock shortages in the new vehicle sector at the moment. Digital systems and physical solutions all play a part in this sector, and our Global Mobility division has been created to bring a cohesive approach to all the component parts.”