Dr. Gordon Shields
Making sense of an ever-changing automotive landscape
The century-old Henry Ford quote that “Any customer can have a car painted any colour he wants, so long as it’s black,” cannot be further from the truth in today’s automotive landscape. Brand, segment, model and variant proliferations are immense. While peak auto may have been reached in mature auto markets like Canada, peak brand and model have not.
The role of retailers to help shoppers decide on the right product has never been more important as choice multiplies. Variety and options can both excite and stimulate a market, but also confuse consumers, leading many to look for more advice, reviews and guidance from trusted sources before making a decision on a new vehicle.
The record attendance at this year’s Canadian International AutoShow (CIAS) in Toronto (over 371,000 visitors) and the Montréal International Auto Show (over 168,000 visitors) highlight how keen consumers are to see new products across an ever wider range of brands and to use the show as a key step in their decision process.
However, despite visitor enthusiasm to see what’s new, many Canadians remain tentative about moving to electric vehicles.
Results from the 2024 CIAS Visitor Experience Study conducted by the Clarify Group confirm that both plug-in options (PHEVs and BEVs) record lower consideration among visitors than the previous year, despite the federal government’s ambition to move to an all-electric market by 2035.
Visitors to the Toronto show overwhelmingly intend to consider gas and hybrid powertrains for their next new vehicle (see figure 1).
When CIAS visitors were then asked to confirm their “most likely” powertrain preference, fewer than 1 in 5 (18 per cent) indicated that a BEV or PHEV will be their next ride.
We see similar results in other developed markets.
South of the border, J.D. Power reported in the May 2024 U.S. EV Consideration Pulse Report that only 1 in 4 new vehicle shoppers (24.6 per cent) were “very likely” to consider an EV in the next 12 months.
In Germany, Europe’s largest vehicle market, recent consideration figures for new a EV declined for the third year in a row to 17 per cent of respondents in the annual 2024 Mobilitätsmonitor conducted by Allenbach.
The role of retailers to help shoppers decide on the right product has never been more important as choice multiplies.
Moreover, in the first quarter of 2024, EV registration declined by 14 per cent year-on-year to 81,000 units, compared to an increase of 4 per cent for gas vehicles (375,000) for the same period, highlighting the need for an affordable ‘everyman’ electric vehicle in this important market.
The top three barriers to EV purchase are consistent across global markets:
- affordability (price);
- range anxiety;
- insufficient charging infrastructure (see figure 2).
These barriers to purchase are real and largely explain the loss of EV sales momentum.
OEMs are working hard to bring more affordable BEV vehicles to market. We can soon expect an entry-level Jeep EV from Stellantis in the US$ 25,000 range, Volkwagen’s introduction of two or three sub-US $30,000 compact EVs, Hyundai’s Ioniq 2, Kia’s EV3 and the return of the Chevy Bolt among other new EVs recently announced.
In the meantime, despite the softening demand for full battery electrics, it is clear that consumers are interested in ‘electrified vehicles.’
In fact, more than 1 in 2 visitors to CIAS this year are considering a hybrid vehicle (51 per cent) and nearly 3 in 10 visitors are contemplating plug-in hybrids (28 per cent). Both powertrains eliminate range and charging anxiety objections and can be purchased at considerably lower price points than full BEVs. These options are the ideal ‘transitional’ step for many consumers on the path to a fully-electric vehicle.
This trend is not lost on most automakers. Several OEMs including Ford, GM, Nissan and Volkswagen are accelerating plans to bring new electrified hybrid and plug-in hybrid powertrains to Canadian dealers in the next two model years.
To capitalize on the full ‘electrified’ vehicle opportunity, retailers need to prepare their sales (and service) teams now to engage existing and prospective customers in meaningful conversations about their mobility needs.
The role of the sales consultant is evolving rapidly from “selling” to “advising” customers on which vehicle technology will best meet their specific use case including budget.
For example, fully electric vehicles work great in households with more than one vehicle and/or when the majority of driving is within commuting distance and the customer has access to Level 2 charging at night. For other use cases, a PHEV, hybrid or gas vehicle may be the right solution.
To capitalize on the full ‘electrified’ vehicle opportunity, retailers need to prepare their sales (and service) teams now to engage existing and prospective customers in meaningful conversations about their mobility needs.
The needs assessment skills of our sales consultants must be fully developed again, in ways that did not seem so important during the pandemic when demand far outstripped supply. Discovery questions such as whether the new vehicle is the primary or secondary vehicle in the household, typical mileage, how the vehicle will be used — for commuting and for longer road trips — and whether the customer has access to charging at home or at work, all become required baseline information for sales consultants to advise the customer on the best option(s).
If an electrified option is not the right solution, the retailer can facilitate the transition over time when the timing is right.
Increasingly in Europe, retailers are becoming “mobility houses,” advising consumers on how to benefit from the transition to electric vehicles.
Working with different suppliers, retailers advise consumers on how best to maximize energy options at their individual properties (at home or in a business), provide advice from simple charging solutions to wider smart technology support including solar panel and photovoltaic installations, EV tariffs, home batteries and Vehicle-to-Grid (V2G) options.
This advice not only provides great value to consumers, but leads dealers to extend their services beyond the vehicle itself to installation services, eBikes sales, as well as new subscription services. Many dealers are also building relationships with small business owners to increase sales beyond the traditional private customers by providing smaller fleets to these local companies.
European dealers are becoming trusted advisors on if, when, and how their customers should transition to electric while still providing core ICE expertise.
The transition to fully electric will still happen, not based on government mandated timelines but based on consumer willingness and demand. Canadian dealers have the very same opportunity to help consumers navigate a confusing array of brands, models and powertrains.
Successful dealers will leverage their strengths in the delivery of personalized consumer advice, which comes in every form and colour, not just black.
