Buying a new car should be a positive experience, but for many of us it sits alongside moving house and getting married as one of the most stressful situations we encounter.
Based on limited information, a car buyer typically puts themselves in the hands of an eager salesperson, takes their preferred model on the road for a rudimentary test drive and selects features from a brochure before committing to one of life's biggest purchases. Fewer than 1 per cent of car buyers and shoppers were satisfied with their buying experience in 2015, according to a survey by Autotrader, the US online marketplace for cars.
Sales tool
All around the globe this limited, analogue version of car purchase has barely changed in decades, despite the advent of the internet. But now old technology is meeting new as top car companies from Audi, BMW and Jaguar Land Rover to Kia and Honda rev up to deploy virtual reality (VR) to attract and engage potential buyers.
If its advocates are right, VR and its close relative augmented reality (AR) will transform how we interact with our environment as consumers, at work and in social settings over the next few years. For those not brought up playing video games, VR immerses us in a 360-degree computer-generated 3D world by wearing a headset, whereas AR overlays visual content on to the real world using either head-mounted displays or the screen of smart devices.
When it comes to choosing a car, VR increasingly allows customers to look under the bonnet, check features such as safety and navigation, go for virtual test drives and kick the virtual tyres of models in the showroom, at home or in other locations such as shopping centres.
First movers
Each carmaker has its own approach to VR technology and companies are at varying stages of development. Audi was the first to install VR in its European showrooms in 2017. BMW has an AR app for phones and has just moved into fully-immersive VR demonstrations for its X2 SUV crossover that will appear in US showrooms in 2018. Jaguar's first foray into VR was high-end but niche – it launched its I-Pace electric sports car to the media via a transatlantic VR link-up that featured celebrities such as TV star James Corden and model Miranda Kerr.
For the mass market, Kia has unveiled a VR presentation for its Stinger model in the US to attract people into the showroom. And at the Detroit Auto Show in January 2018, Honda offered an AR tour of its new models that highlighted features as the user walked around and sat in the car.
As more brands get on board, VR is gathering momentum as the auto industry's new tactic to create an aura around brands and sell cars.
Just like the real thing
So why is it taking off now? In part it's a response to the innovation in immersive technologies that has generated excitement across many business sectors. There has been a sudden leap in the quality of the equipment to create a more realistic virtual experience that – combined with greater affordability – promises to turn VR into a mass-use technology. But there are also factors that are particular to the automotive industry.
Using the VR system, Audi's customers can now look around any of the 52 models in the company's range – something no showroom could offer before because cars are such large items and forecourts have limited space. Wearing Oculus Rift or HTC Vive headsets, customers can experience getting inside the car and going on a simulation of a test drive to test the car's feel and sound. They can also customise their own vehicle from the range of colours and features available – and see what that will look like in (virtual) reality. VR helps overcome the traditional problem of asking a customer to sign for a big purchase without fully experiencing the product they are buying.
Carmakers' enthusiastic adoption of VR may appear to put them in the vanguard of immersive tech, but they are actually playing catch-up when it comes to meeting customer expectations in the digital age. Millennials with the buying power to purchase a new car have grown up as digital consumers and expect a more innovative and engaging buying experience than the one on offer. These consumers – born in the early 1980s – are less interested in products and features and more in experience, according to consultancy Deloitte's 2014 report, The Changing Nature of Mobility.
Consumer demand
“Generation Y drivers value customer experience three times as much as vehicle design,” Andrew Dinsdale and colleagues at Deloitte wrote in a 2015 follow-up report, The Future of Auto Retailing. “Retailers need to redouble their efforts to create memorable and painless customer experiences in order to retain today's customers and appeal to new ones.”
Audi has responded to this change in consumer requirements by adding a fantasy element to its demos and utilising VR's ability to immerse the user in another world. With a headset, the company's system can beam the customer and their preferred Audi to Paris, Iceland or even the moon.
Marcus Kuehne, Audi's strategy lead for immersive technologies, says VR can turn car-buying from a fairly joyless transaction into an interactive experience that captures customers' imaginations.
“In the past many customers only came to the dealerships to get the best price,” he says. “Now VR has the power to ‘emotionalise' them – they are surprised by the technology and excited by the chance to use it to explore things. If you really want to show people the power of VR then you show them the car on the moon.”
VR is part of a wider surge in technological innovation, driven by Big Data and leaps in computer processing power, which includes the rapid development of artificial intelligence. These trends have the potential to transform sectors across the economy – and particularly the car industry.
Beyond the showroom
Self-driving cars, electric vehicles, car pooling and the rise of Uber pose big questions for the century-old model of private ownership of vehicles powered by an internal combustion engine. In this context VR may be just part of a wider revolution in the car market. To persuade consumers to buy when other options such as car pooling are growing, manufacturers and their dealers will need to work ever harder to generate excitement around buying a car and become more intuitive about buyers' requirements, according to Deloitte.
“Shifts in consumer expectations will compel auto retailers to focus more on relationships and experiences than on vehicle performance,” Dinsdale argues. “Omni-channel models that fully integrate digital and physical shopping experiences will increasingly become the norm in auto retailing.”
Buying a car may ultimately not require a real one at all as consumers try out and configure their vehicle in the virtual world – leading to big changes for the traditional, physical car showroom.
Sol Rogers, chief executive of Rewind, a VR content agency that worked on the Jaguar I-Pace launch, expects VR to continue to shake up the way cars are bought and sold. “VR enables dealers to showcase models conveniently wherever the customer wants and there are no constraints,” he says. “Physical showrooms will still exist, but they will shrink in size and move to the high street or within malls, rather than out-of-town locations.”
From the perspective of a car purchaser, the introduction of VR can only be good news. As well as a fun experience it offers more choice, better opportunities to sample features – and maybe even a trip to the moon.
