The future of automotive CX will center on ownership more than purchase. Automakers must prepare for the shift now.

For nearly a century, automakers’ efforts to engage with consumers consisted of getting them into a dealership and selling them a hunk of metal. Once the sales contract had been signed and the keys handed over … well, that was that. Any further relationship was between the selling dealer, whose relationship with the manufacturer was often distant, and the buyer.

But this has all changed and will continue to do so. The rise of software-defined mobility has dramatically altered the relationship between a vehicle and its owner; consumers can use tech to customize and manage their cars in ways that were inconceivable until recently.

At the same time, electric vehicle (EV) leaders like Tesla, Rivian, and Lucid Motors have demonstrated the potential of direct-to-consumer (DTC) sales, cutting dealerships out of the equation. And empowered consumers, armed with reams of information about vehicles and pricing, have little patience for the old-school what-would-it-take-to-get-you-in-this-beauty-today sales model.

Bottom line? The purchase experience is becoming more routine, while the ownership experience is moving in the opposite direction. This paradigm shift will require automakers to re-invent everything from marketing to maintenance, and some players will face brutal requirements to keep a seat at the table.

Steering toward after-sale profits

Pre-sale has historically been the star of the buying cycle. Billions were poured into advertising, product placement, car shows, racing events, and more to get a customer into a dealership. And after-sale? OEMs relied heavily on dealers to support the customer through the vehicle lifecycle.

But this is in the process of flipping. Ever since Tesla disrupted the industry with DTC sales in 2008, the potential for profit has been shifting downstream in the ownership cycle. Today, this trend is poised to blossom into an industry-wide shift.

As proof, look no further than recent statements from Ford CEO Jim Farley. “Our model’s messed up,” Farley said at a conference. “We spend nothing post-warranty on the customer experience.” He went on to announce the company’s need to go 100% online for EV sales with non-negotiated pricing.

Ford outspends Tesla on advertising $3.1 billion to zero annually and believes it must reduce its average sales cost by $2,000 per EV to compete. So, it’s easy to see why Ford and every other auto giant is re-engineering operations.

How can carmakers shift their profit model from pre-sale to after-sale? Simple: digitize everything, modernize operations, create an ecosystem for suppliers, and engineer a new marketplace for vehicle owners.

Focus on first-party data

In recent years, digital marketing and retargeting have relied heavily on third-party data built around search patterns, social interactions, location tracking, purchase history, and more.

But due to ever-increasing data privacy regulations, third-party data is less available and less reliable. As a result, OEMs must invest more in novel marketing techniques to gain trust from potential buyers and persuade them to engage—and, in turn, provide their data.

Gaining this trust and nurturing the resulting relationships will be key to achieving long-term profitability. As revenue models pivot from pre-sale to sale of services, subscriptions, and value-added features, both automakers and dealers must collaborate to create value throughout the ownership experience. They must reach an advisor-style relationship with customers, helping them understand how to get the most out of their vehicle. This means reaching consumers at the right time, with the right offer, and through the right platforms.

Create a new marketplace

If the profit model of the future is to be built on services, OEMs must create a marketplace in which to promote, sell and support these services. Identifying the most effective mediums for these interactions may be the most critical element to securing incremental after-sale revenue.

Where will offers be made? In-vehicle displays? OEM/partner apps, websites and portals? At charging stations? On smart speakers? Through gaming consoles and streaming services? The answer is “Yes.” All of the above.

Never has there been a greater need for an omni-channel approach, including in-person experiences both inside and away from dealerships. A centralized marketplace will be required to serve as a hub for these ever-increasing touchpoints.

In addition to optimizing communication across platforms, auto manufacturers must make it possible for consumers to safely and conveniently convert at the moment of the offer. This is particularly important when offers are contextual to timing or location (say upon receiving a toll charge or choosing between navigation routes—a gas-powered vehicle, sensing it’s low on fuel, might offer the driver an alternate route that passes a service station). OEMs must go beyond visual offers and support multiple interactions, such as voice- or gesture-based commands.

Last but not least, these services will require support. Renewals, upgrades and the need for general troubleshooting will inevitably occur, but even bigger technical issues lie ahead. For example, what happens to after-sale purchases as vehicles change owners? Can services be transferred? If so, will manufacturers offer a service package at no fee, for a reduced rate, or with an added transfer fee? Will they provide buyouts of previously purchased packages in order to tempt prospects to switch brands?

These are all new elements of the ownership experience that OEMs have not dealt with at scale before but must be ready to address if they are to maintain loyalty, protect their brand image, and capitalize on a huge opportunity.

Modernize the ecosystem

While virtually all automakers have embarked on a modernization journey to improve customer experience (CX) in the shop-buy phases, this will only result in a short-term advantage. The extended value of modernization will be realized after-sale.

The most important thing to do is act. Automakers that build the foundation for a software-based feedback loop now will capture software-based revenue later.

This digital-first operating model will require an ecosystem of partners and suppliers. Embracing a competency shift is the only way for automakers to enable consistent and elevated CX, cope with the rapid pivot from physical to digital, and strategically evolve into mobility providers.

Follow along in part four of this series as we explore the relationship between supplier ecosystems, operations, and the ability to deliver meaningful CX through the lifecycle of vehicle ownership—including a future in which ownership is optional.

To learn more, visit the Automotive Technology section of our website or contact us.

This is part 3 of a five-part series on the auto industry’s future. Read parts 1, 2, 4 and 5 in this series, The Race for CASE (connected, autonomous, shared, electric), in which we will continue to explore how automakers can navigate this new era with confidence.

This article was written by Aditya Pathak, Vice President and Business Unit Head, and Ritesh Kulkarni, Consulting Lead, in Cognizant’s Automotive, Transportation and Logistics practice.