“Digital dealerships,” as they are now being called, are growing by leaps and bounds and presenting a new avenue for hackers. 2020 and the next decade is set for an even higher technological step into the digital space. Traditional brick-and-mortar dealers, who are struggling with inside cyber threats and vulnerabilities, are now looking outside traditional car sales to find innovative ways to reach customers. This adds and even higher dimension to the potential threats to their networks.
The growth of the “Subscription Model” is already being deployed. Over the past two decades, the average car loan has remained steady at five years, but now dealers are seeing a shift towards longer-term loans. Cars are better and people are keeping them longer, which drives down the demand. On the negative side, people are having to abandon their loans due to being underwater. This is where the new subscription model comes into play, which offers customers an alternative option to free themselves from long term lease commitments and drive what they want, when they want. Clever, huh?
This new subscription model will likely undergo rapid growth into 2020 and beyond, since it provides drivers the freedom and flexibility to use multiple vehicles, while simultaneously giving brick-and-mortar dealers another avenue to reduce their inventories. An alternative to owning or leasing a vehicle, subscription platforms like Clutch, Flexdrive and Drive It Away, benefit dealers by prompting repeat customer visits for things like subscription renewals and vehicle servicing. Much of this will be through mobile apps, which may not be the best. Every time a customer renews their “subscription,” they communicate with a dealer via the Internet. From a dealer’s perspective, the subscription model allows dealerships to continually keep in contact with their customers, building better lifetime relationships over the long run. On the downsize, it offers yet another avenue for malicious cyber activity.
Independent Digital Platforms are additionally gaining steam. Brick-and-mortar dealerships have consistently spent a tremendous amount of money advertising with massive, third-party aggregators like Autotrader and Cars.com. These businesses have huge overhead due to the operating costs associated with them. So they are subsequently creating an opening in the market for something smaller and nimbler, like a simple app that creates a digital marketplace where customers can transact where and how they want. Essentially, digital retailing that ebbs and flows with how consumers naturally interact. Apps are great, but again create cyber vulnerabilities. Cyber researchers have already witnessed this new surge of independent digital platforms. One example is Carvana, a website that features a wide variety of cars and facilitates the entire transaction from start to finish. The website offers dozens of makes and models with the hook, “A Better Way to Buy a Car.” This is a truly appealing offer for a generation of digital-first millennials who are increasingly connected to their smart phones.
Seamless Insurance Coverage for Carsharing
Carsharing is projected to hit an all-time high in 2020, rising to 12 million members by next year. Just as customers switch between Hulu, Netflix, and Amazon for their streaming services, car drivers may use various platforms like Getaround and Turo, that allow urban customers to use an app for car-sharing as needed (for the day or even just a few hours). To be honest, a driver in Los Angeles is going to need a different type of car-share program than someone in New York City. But a higher concern is; how do customers acquire insurance that supports them throughout their mobility journey?
As new opportunities to share vehicles arise, there will be a need for all-encompassing insurance that offers seamless coverage, no matter what car a customer is driving or what carshare company they are using. From 2020 and beyond, drivers will see more insurance options like non-owner umbrella programs geared toward customers that drive other people’s cars. These new insurance provider options have the capacity to offer affordable rates at half or even a third of normal insurance costs. These options will likely be a new app, which again pushes vulnerabilities upward.
Traditional auto dealers should be aware of these new emerging options in 2020 and beyond. This this “Brave New Auto Dealership World,” comes with heightened and serious cyber security concerns. In addition to the surging subscription model, arrival of agile digital marketplaces, and necessity of tailored insurance policies, there will be increasingly more ways for current brick-and-mortar dealerships to evolve alongside their digital counterparts in this coming year.
This brave new world presents cyber threats and vulnerabilities never seen in the auto sales environment. Red Sky Alliance and our RedXray and RedXray+ tool will help your IT providers with the proactive protections needed to support you into the digital age.
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