Stefan Jacoby was this week looking well recovered from a (mild) stroke that struck him last year

Stefan Jacoby was this week looking well recovered from a (mild) stroke that struck him last year

Car companies are facing bigger challenges than ever before, according to ex-Volvo Cars chief Stefan Jacoby. 

The economic, environmental and engineering challenges facing the automotive industry are well known. However, Jacoby told journalists at a media lunch this week that the accelerating speed of technological change in communications, alongside the rapid growth of emerging markets and the need to understand significant cultural differences that impact attitudes to car purchase, are also emerging as big challenges at the retail end of the value chain.

“The internet has changed the way many industries operate,” he said. “But the automotive industry appears relatively unchanged in terms of distribution. Wherever you go in the world, there are still dealers who sell cars, but beneath the surface much is changing and it is an increasingly complex world that carmakers face, in terms of how they communicate to customers and the marketing methods that they use. There are some big cultural differences out there and some very different behaviours by car buyers across the globe.”

Jacoby noted that in developed car markets, consumers are increasingly carrying out extensive pre-buying preparatory research through online media, car trading websites and burgeoning social networking. “That can mean that the prospective buyer at the dealership knows more about the car, the specifications, performance, the competition and its market proposition than the salesman,” he said.

However, Jacoby also pointed out that it's a complex and fragmented picture when considering customers across the world and especially in emerging markets.

“In emerging markets, it is frequently the family, rather than the individual, that buys the car,” he said. “In places like Turkey, Brazil and India, word of mouth is extremely important and the purchase decision will reflect what the whole family thinks and a consensus view, backed up by word of mouth influences. Reputation and word of mouth, what people say to each other about brands and cars, is very important.” 

Jacoby also noted that social media is becoming more important than conventional online information sources in some markets. “In China, for example, there is a general mistrust of websites,” he said. “Views and opinions communicated widely by social media are much more important.”

He also pointed out that even in a market like the US, there are diverse cultural patterns that present marketeers with potential pitfalls as well as opportunities to target particular ethnic groups, with particular wants and preferences.

“Take the Hispanic population in the US,” he said. “It's a big group – thirty million people, but it is not a homogenous group. In California, for example, many of the Hispanic population came from Mexico. In Florida, many came from the Caribbean and countries in South America. There are real cultural differences, even in the way they speak Spanish. The carmaker and the dealer have to understand the differences and the mentality of the people they are selling cars to, their needs at a local level. What do they want? What do they not want? What appeals? What works? It's actually a complex picture and far from uniform across the globe or even across countries.

“You have to really understand your customer and that's never been as big a challenge as it is in the information rich and fast-moving, and yet fragmented world that we have today. There are now many diverse customer journeys to the point of purchase and you have to get your marketing right to accommodate them, market by market.”

See also: UK: Former Volvo Cars chief downbeat on EVs