Car dealers look for niche opportunities to attract passing parade
Tyre kicking could eventually be a thing of the past with some of the biggest luxury car makers considering a radical new dealership model that eschew cars for technology and customer interaction.
The new dealerships would be smaller and leaner - potentially with only one or two cars on display - but with giant interactive screens and tablet computers designed to showcase vehicles in a virtual world. The radical new showrooms would also be situated within traditional shopping areas or places of high pedestrian traffic.
BMW Australia marketing director Tom Noble says the high-tech invasion will reshape a brand that has been around for decades.
"The dealer of the future will look different to the dealer of today," he says. "You'll be seeing potentially more outlets but smaller outlets from a sales point of view."
Already tech- and fashion-driven showroom models are being trialled in Australia and overseas.
Leading the charge are two of Germany's most prominent luxury brands, BMW and Audi.
As with rival Mercedes-Benz, each has been on a model explosion for more than a decade, doubling and in some cases tripling the number of models on offer. By the time different engine variants, special editions and options are thrown into the expanding mix, it makes it prohibitively expensive to build a dealership large enough to house one of each model.
"The internet becomes more important, how you use tablets at the showroom becomes more important. Your ability to virtually take people through a car becomes more important," Noble says.
Overseas there have been examples of similar showroom models. The Champs Elysees in Paris has numerous high-profile dealerships mingling with big name fashion brands.
In Los Angeles electric car start-up Tesla has used an Apple-inspired approach to its more intimate stores in places such as Santa Monica's trendy 3rd Street Promenade. This year, Audi opened "Audi City" stores in Beijing and Picadilly Circus in London.
With floor-to-ceiling "power walls" shoppers can tailor their car virtually before having it presented on the screen as a full-sized image, albeit one that doesn't give you seat-of-the pants experience car makers like to boast of.
"It's infinite what cars you can highlight in a virtual way," says Audi Australia managing director Andrew Doyle.
While there are no plans for any new-age dealerships under the Audi banner here, Doyle says he would be investigating opportunities shortly. "You can have all the samples and colour chips there, maybe have one or two cars there as well."
While such models will help contain costs, as much as anything it's about reaching potential buyers more easily.
The push for more smaller dealers in highly trafficked areas could segue nicely with the woes of the struggling retail sector, which has seen many traditional stores close their doors as buyers continue to embrace online shopping.
While shopping centres and shops as we know them are a long way from shutting their doors, there's likely to be a shift in the types of stores offered, which could present opportunities for car makers looking for something fresh.
Already Mini, a BMW-owned brand, is trialling a pop-up store in Melbourne's trendy Chapel Street.
"Because it's Mini we've brought in high-end jean manufacturers, [and there's] a leather guy coming from Portland, Oregon," says Noble. "Instead of waiting for people to come to the dealership, [we're] bringing the dealership to where those types of people might be."
Such temporary dealerships are something Noble says could be an interesting addition to the fixed outlets. He points to the brand's Motorline dealership in Brisbane, which last month showcased the just-released 3-Series GT before its arrival in traditional dealerships.
He also points to increasing rents for the large plots of land required in a dealership as well as fast-improving interactive technology being developed by the brand's head office in Munich, Germany.
Noble says it will also change future investments in the traditionally expensive dealer model.
Mercedes-Benz is not planning any smaller outlets, saying its larger stores are enjoying high traffic as the brand expands to more affordable, youth-focused models such as the A-Class.
Years ago it also opened service-focused centres at Melbourne and Sydney airports designed to offer valet parking and servicing for busy executives, who also get more opportunities to peruse the latest models. Senior manager of corporate communications David McCarthy says the Airport Express centres have been a success.
Later this year the brand will add to the offering by providing an express helicopter service from Melbourne's Tullamarine Airport to the CBD, potentially allowing business executives another hour in the office.
Mercedes-Benz also last month began dabbling in online sales with its Smart brand, something it will explore on core models.
"We're very pleased with the success of Smart online ... one bloke bought one at 9.30 on a Saturday night," he says.
McCarthy says it would require discussions with dealers to shift to more mainstream online sales but the desire was there to explore further opportunities.
However, despite the push to bytes and bits no one will predict the demise of the traditional car yard.
Doyle suggests the technology push and potential for smaller dealerships will complement existing outlets. "There will always be a place for dealerships, it's just about modernising the way we do business," he says.
New dealership models are nothing new. A decade ago struggling Malaysian brand Proton did away with most of its dealerships and instead tried its hand in shopping centres in an effort to put the brand on people's radar. It flopped and the brand, which is now up against a price-led onslaught from new Chinese brands, has since established more traditional bricks-and-mortar dealerships.
In Japan Toyota has the aptly named Mega Web, a cross between a theme park and dealership, with cars and demonstrations mingling with rides and infotainment breakouts.
And car makers regularly display vehicles at airports and other areas with high traffic, although without a sales person nearby.
Frequently Asked Questions about this Article…
New‑age car dealerships are smaller, tech‑driven showrooms located in high pedestrian areas or shopping centres that use giant interactive screens, tablets and virtual displays instead of large lots full of cars. Luxury carmakers like BMW and Audi are trialling them to showcase many model variants virtually, contain rising dealership costs and reach potential buyers more easily, as described by BMW Australia marketing director Tom Noble.
The article highlights BMW and Audi leading the shift; BMW is trialling pop‑ups and interactive tech, Mini (a BMW brand) has a pop‑up on Melbourne’s Chapel Street, Audi has opened 'Audi City' stores in Beijing and Piccadilly Circus, and Tesla has used Apple‑inspired stores in Los Angeles. Mercedes‑Benz has instead focused on larger stores and service‑focused Airport Express centres, while Toyota’s Mega Web and Proton’s shopping‑centre experiment are also discussed.
Smaller showrooms can reduce the need for expensive large plots of land and help contain construction and operating costs. The article notes rising rents for large dealership sites and points to improved interactive technology (developed by BMW’s Munich office) as a way to present many model variations virtually, lowering the need for physical inventory on site.
No—according to the article, no one is predicting the demise of traditional car yards. Audi Australia’s managing director Andrew Doyle says new technology and smaller dealerships will complement existing outlets, and Mercedes‑Benz has begun dabbling in online sales via its Smart brand but acknowledges dealer discussions are needed before mainstreaming online sales.
They can be but results vary. The article gives positive examples—Mini’s Chapel Street pop‑up and BMW’s Motorline dealership in Brisbane showcasing the 3‑Series GT, and Mercedes‑Benz’s Airport Express centres which David McCarthy describes as successful. It also notes Proton’s past shopping‑centre experiment failed, showing these tactics carry execution risk.
Automakers are using tablets, floor‑to‑ceiling 'power walls' and large interactive screens to let shoppers tailor vehicles virtually, view colour samples and options, and see full‑size virtual presentations. Audi calls this capability 'infinite' for showcasing cars, while BMW emphasises virtual walkthroughs as increasingly important.
Investors should watch for capital reallocation toward interactive retail tech and smaller footprint outlets, changes in dealership economics (lower land and construction exposure), pilots or rollouts by brands such as BMW, Audi and Tesla, and the success or failure of pop‑ups and online sales experiments—since past examples like Proton show not all approaches succeed.
Yes. BMW’s Tom Noble says the 'dealer of the future' will look different and that new models will change future investments in the traditionally expensive dealer model. Mercedes‑Benz is also exploring online sales and alternative offers (like express helicopter service tied to its Airport centres), indicating brands are rethinking how they invest in retail and customer interaction.
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