Leveraging creative new data partnerships can break down legacy silos and unlock growth in the automotive industry. By Graham Tricker
Over the past three years, the impact of the pandemic combined with global supply shortages and an ongoing cost-of-living crisis have resulted in the most challenging market conditions in decades for automakers.
In the UK, for example, figures from the Society of Motor Manufacturers and Traders revealed that the number of new car registrations in 2022 was still well below pre-pandemic levels (-29.5%). Meanwhile, online marketplace Auto Trader reported that the volume of consumers viewing new car ads and inquiring about new cars fell by more than 12% and 40%, respectively, suggesting a decline in hunger among cash-strapped consumers. Similar trends are being observed around the world, with global vehicle sales forecasted in 2023 expected to underperform compared to those achieved in 2019.
While there’s little auto companies can do to deal with inflation or weak consumer spending, there are still new revenue streams and new growth opportunities to explore right now.
Indeed, in the year 2023, the maxim “knowledge is power” has never been truer. Given the extensive and detailed consumer data that automakers have collected over the years, this has become invaluable to a number of partners. In an increasingly competitive market, how automakers leverage “data collaboration” over the next few years will be crucial to their success.
The value of data collaboration
When automakers combine their customer data with partners’ pre-existing datasets, this collaboration can deliver significant marketing benefits, such as improved product offerings, advanced analytics, and better targeted campaigns.
Volvo Cars partnered with Starbucks in the US to offer drivers discounts on coffee or snacks while they wait for their car to charge
For example, in the “consideration” stage, customers are looking at different makes and models: fuel types, financing, insurance. A manufacturer could therefore look to marketplaces, dealers, comparison sites, insurance companies and utilities as potential data partners. Meanwhile, if customers want to switch to an electric vehicle and explore charging rates, home chargers, etc., providers of these products and services would be potential data partners.
As the customer moves into the “buying” phase, along with the manufacturer’s proprietary data sets, customer data owned by auto markets, dealer networks, and finance companies becomes increasingly relevant. After purchase, potential data sources change again to include value-added partners and other third parties in the automotive ecosystem. This can extend from public charging networks to chain restaurants. For example, in 2022 Volvo Cars partnered with Starbucks in the US to offer drivers discounts on coffee or snacks while they wait for their car to charge.
Collaboration focused on privacy
Given the sensitivities and regulations surrounding consumer data privacy, the opportunity should be approached with care. Therefore, a key component of any kind of data collaboration is technology that can help partners get the most out of consumer data in a way that protects privacy and is secure. Fortunately, the advancement of privacy-enhancing technologies, such as those used in enhanced data cleanrooms, have made it possible to collaborate on data at scale, in a way that complies with the privacy policies of partners and is aligned with the evolving regulation.
With major disruption and innovative new players breaking the rules of legacy automotive marketing, now is the time for OEMs to test data collaboration solutions. Manufacturers best equipped for the future will be those who best understand their customers and quickly recognize changes in their needs. In 2023, the wisest way to do this is through data collaboration.
About the Author: Graham Tricker is UK Commercial Director at LiveRamp
