The car buying experience today is much different than it was a decade ago, as consumers increasingly use their greater access to information from digital sources to shift the balance of power in negotiations. The experiences people will have about a decade from now are likely to reflect even greater changes, due to shifts in both the production and the retail distribution of vehicles.
In particular, several major car manufacturers already have announced they will no longer be producing combustion engines. For GM, the promise is that batteries will power all cars made as of 2035. Volvo recently announced an even more ambitious goal, namely, an all-electric product assortment by 2030. In interim steps, it aims for half of its sales in 2025 to be fully electric, and the other half to consist of hybrid models.
But in addition to altering the engines that drive its cars, Volvo anticipates changing how it drives consumers purchase them. Every purchase must take place online, even if a customer shows up in person with cash in hand. The dealerships, rather than serving as sales floors, will primarily function as service settings. People can still visit to learn about the different models, and perhaps the science underlying the new electric vehicles, or to take a test drive. But their ultimate purchase must take place online, which will help Volvo organize and maintain its inventory more efficiently. Some dealerships also will retain their service departments, for consumers to visit after they have made their purchases.
Such changes might be a bit overwhelming for consumers, the majority of whom still have not switched to electric or hybrid engines, despite their increasing availability and capabilities. In the United States in particular, electric cars only make up 2 percent of overall vehicle sales.
Discussion Question:
- Are consumers likely to embrace these changes over time? Or are the changes too much for them to handle?
- What other retail channels might Volvo use, in addition to online, to give consumers more options for buying while still ensuring efficient inventory operations?
Source: Matt Ott, “Goodbye Gas: Volvo to Make Only Electric Vehicles by 2030,” AP, March 2, 2021