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the invitation to come and speak to the about digital Miss physical it was such an unusual one because people who know me very well will know that they're digital and Internet and everything to do with electronics is probably not my strongest subjects so what I'm going to try and talk about today is how how the automotive industry is beginning to respond to the change in buying habits from from retailers thank you for the introduction : almost as if I'd written that one myself but actually I think that's a fiercely patriotic Rangers fan is even more than Pierre fiercely patriotic Scotsman that's excellent I got a bit of a reaction to that one and Volkswagen Financial Services just to let you know if you don't know already we have the finance company behind Volkswagen Group and I still a affiliative air brands so that's folks where I can oh they say she scored our Volkswagen commercial vehicles bugatti bentley Lamborghini and Porsche so that's a huge marietta bride across the UK and as well as providing retail financing for customers we trade as a bank specialist Bank for the automated in this industry we treated as a fleet services company with their portfolio no in excess of a hundred thousand vehicles and after-sales business where we've got almost 600,000 vehicles from an after sales point of view and an insurance business we have got over 300,000 insurance contracts as well so I guess we cover the huge myriad of the of the industry across all the different product ranges and all of that all across the different segments and across a huge myriad of brands I guess that gives me a lot of knowledge to be able to talk of around around the changes in the automotive industry most of the people in here today appear to be fully orientated people or appear to be electronics and and and and so now related people and systems people so I think I'm going to introduce a lot about consumers because actually consumers with every single one of us are consumers and whether you operate as an individual by out of a car or you're part of a fleet it's the same thing what actually researching this at the recession are cars and we research and information and exactly the same way whether were the drivers or flee or whether we're consumers in front of the TV watching or researching what's going on now so the subject was was was digital meets physical I guess we all know about the huge change in the customer buying habits we've seen successful in the UK because I guess the sophistication but it's the same same throughout the world and there's a lot of a fallacy that says that because of the upcoming changes in the way that customers are buying cars that dealers are going to be dead soon and I'm gonna try and and get rid of that myth people at Volkswagen and other brands across the UK would not be investing the hundreds of millions of pounds in new shirin facilities if they didn't think there was a future available for dealers so whilst that well that the buying process is changing there are still a strong need to prepare for for dealers to operate within the UK and I picked out I picked I a bit of research from McKinsey I researched all the people who are attending the conference today and I think McKinsey were the only consultant company who are not attending today so I've actually chosen McKinsey as the people to refer to and this report comes from this report looks at the automotive retail industry specifically a new key but touches upon some of other countries across Europe and it's the results of the the the analysis that I've done so some of the things they speak about is that this with all the recessed have done 85 percent of customers are still using the dealer as a mean touch point and the buying process one in four customers aren't particular satisfied with the process I'd like to see that's because Volkswagen group of Godber 20-25 percent market share but that's not the case but they're not satisfied Nestle is satisfied with the deal experience because the dealers aren't keeping up with what customers expect the average number of customers I don't have his number of customer visits has gone from seven visits Parker CO dentist I business pro Castle and it's now just over one visit per car sale and that means that customers already know what they want before they walk into dealerships so an actual fight the salespeople the old traditional sales people within dealerships have to change because the customers already decided and when the custom and when the salesman's tried to it begins to irritate the customer by trying to sell them something that he hasn't researched the hazard wanted that's when you get the level of their satisfaction and that's why you've only got one or four people who are completely satisfied with the process more than eighty percent of customers still like to take a test-drive if they're buying a car duxi forty fifty thousand pounds they're pretty much gonna want to test drive that car before they commit to an eventual purchase but that's at the end of the investigation process that takes place and technology as a green fiber technology conference where the technologies just let us down we're back guys are panicking behind the scenes there to try and illustrate I'll keep on talking and maybe they can catch up with me in a second yeah more than one-third one-third of customers would actually consider buying a car online unless they change the process afterwards I'll fly back in a second the important point is that that's what this research says is that customers still physically want to experience the vehicle before they buy it they're looking for expert advice and consultancy in the one that will air when they walk into retailers and rather than salesman selling and what's currently in stock but that also they both customers and the manufactures really value the personal aspect of the touch point of the customer relationship at the time the customers were prepared to buy and that says that the manufacturers are having to change the environment the customers are rocket are coming towards and the sales process that people come towards to so you can see those changes that are taking place and have taken place over the course of the last couple of years this research also look at the banking industry and the banking industry they have said they when they analyze that that up to fifty percent of revenue by 2018 across most of the European countries will come from digital sales but that's not consistent across every country some of the more advanced countries I guess like the UK and Germany and and and some of the Scandinavian countries will be very much too advanced for 2018 but actually some of the other European countries lag a little bit behind and it's not necessarily with all products and services so things like sea plans and temp deposits may be as high as 50 or 60% digital because we just go online and expect it but things like things like pensions which are much more difficult to understand people still won't buy those one by now but looking for further advice and even mortgages people will still gather the information online in terms of mortgages but they'll research the marketplace an iceless PA I want to speak to somebody afterwards so even that move from the big banks towards digitalization will not be consistent across every country and across every product line and then if they're but they're affected from an automatic financial services position is is that if they're moving and they're investing hugely in terms of the digital footprint and the digital relationship with customers the test for us and the automotive industry is either to keep up or be even further advanced as far so what I'm going to talk to you about a little bit is how Volkswagen and Volkswagen in financial services are beginning to respond to that threat and you could replace Volkswagen Group by any other manufacturer all I'm going to do is talk about Volkswagen because I'm a little bit closer to as you would expect the approach from from Volkswagen as they've introduced a concept the dealer called bricks clicks in people and it really for them it signifies our I guess a revolution and the evolution of how retailers operate Volkswagen to repeal investing tens and five hundreds of billions of pounds and new dealerships across the UK as you drive around the UK you'll see it almost every single day and some of them are very very digitally orientated so the oldest sites over and over and there the other side of the city center is probably the extreme of that well that's a digital showroom and you go into the digital schroeder mat and you and you spec it you spec your current configure your car online and effectively can order it on say other manufacturers there's the the Bluewater site that's just opened up over and over on the east side of London where he and I have built assured him in the shopping center and you can go in there and actually do the same thing as oh they have done in the West and the West End but they've got a pail of stock that sat out the back whether if the customer actually says I don't know want to drive the car they've got cars in the car park you can go out to and actually go and test drive the cars behind the scene all the manufactures are going down the same but Volkswagen is around Blix air brakes clicks and people the point is that they they are trying to deliver a personal experience for each individual person and there's probably what about three or 300 people in the room today every single one of us is going to want something different and the point is that when we walk into a dealership when we look for the sales process we're looking for what we want individually not what they want necessarily they want to sell us and I guess that bit is it's changing in terms of people so you've got the bricks piece we've got the investment in terms that they've built an experience you've got the vast improvement and sounds by making in terms of in terms of the clicks but just to be clear about in a second but actually in terms of people there's a huge amount I guess of emotional intelligence that we have to find within the dealer network people have to be able to respond at an emotional intelligent way to what the customer is looking for because in the end the customers head they've already got all that information they're specifically looking for what for what they want individually and that changes the quality of people it changes the pay plans it changes the way that people are rewarded within the dealer network because that remains there's a very very high requirement for high quality hugely intelligent and emotional intelligent people to handle customer experiences or customer requests that they specifically have in their head we are Volkswagen I guess Volkswagen Group for expanding that expand the data operations to make that easier it's about linking together the the the internal and digital savings a bigger be a bill for customers to get online information on desktops laptops ipads iphones every type of web technologies available today they're looking for the same thing from every single one of them so Volkswagen Group and investing and all the apps to make that available and every single choice and customers because they're so because all of us are so internet and information savvy nowadays they're all looking for instant information to help you I guess investigate compare contrast offer us specifications of cars and specifications of the ocelots of finance solution at the same time we're looking for that to be online and instantaneous they want it to be designed the specific look at what they want and it's a natural flow of information that when they've spent one they wouldn't have configured the car that going to configured the way they're going to buy the car exactly the same time so that natural flow of information is making it easy for the customer to I guess seek out the insurance and after-sales plans the financing offers and plans and in the future and it touched upon in the first presentation around wider vehicle related mobility plans that all that information that that expected to to bring online in terms of Finance it's all about being online as well and it's a bit being integrated through the entire and then trying sales and customer experience process I guess the thing that's changed other thing has changed in terms of consumer finances if you look at the Ordway we used to do it we used to have part exchange of vehicle work out the price of the car the interest rate was usually part of a campaign and you worked out where the rental was and at the end of that sales process you thought what can I afford it or not but actually the retail and this is begins tension it seems much more likely industry whether it's rental driven they know how much they can afford they're starting with that and then and then I've seen what car can I get for the rental and that sales process is beginning to evolve within retail finance as well and fact the whole process is turning in the process of turning upside down and as far as financial services concerned we have to change to accommodate that where Volkswagen dealer begin to implement this into the sales process this is what they're seeing they've seen sure invest it's down 50% but they're seeing in retail sales up 50% so that level of sophistication is to change that process is making it much easier for customers to buy the cars and that's in comparison to market that's up about 10 and 11 percent that's month this year so far so Volkswagen are really winning in terms of making this sales process work for them but then the realtor dealerships the big question is why innocence because if you think about it we all sit in front of the TV at night when we get home after work and as we get we get stimulated by lots of things that are going on you know the TV shows there's documentaries there's lots of adverts on the television and we're being bombarded with information and I'm sure you like me I'm sorry I'm often sat in front of the TV and for us in my wife does it was far as shoes are concerned but I usually sat in front of the TV with that iPad and as soon as the stimulated by something that comes on the TV they immediately go into that iPad and start researching him and that's what customers have come to a with nobodies that's where customers one and if you tried to take them through a sales process in the dealership that doesn't make them and it makes them uncomfortable when they're so comfortable that sales process they're gonna walk away and that's what you're going to get the eighty percent of customers who a bit this sir yeah I bet they're satisfied with the process so we have to make the dealerships comfortable for them we have to make it get the creator in a way where the customer one who comes into this shorten feels at home so that's about they've been able to experience everything within the showroom that they can experience when they're home an eighth research that on the TV so as couches as big televisions that's now they're actually almost more important within the showrooms in the car because actually the customer first and foremost it becomes that there comes in to experience in their experience things first so being able to configure and manufacture and create cars and or to create the offer on huge television screens in front of couches in the middle of the showroom becomes mccredle important and when they get that level of comfort that's when they're prepared to commit and buy the car that they walked into by in the first place and it's not necessarily the car that the salesman looking to sell usually I mean there's one dealership a Volkswagen dealership and North London who has get rid of all these salespeople he's brought in Apple type salespeople and the Frost's and send the sales process and the others can you tell me what car you've been researching online it's not this the sales process is completely changed and that's the type of dealership where you're seeing 50% increase in sales because the customer just becomes satisfied that the salesman is actually going to deliver what they want em to buy in the first place the next theory if we are about become Santilli is that as when you come for information within the retailers and the old days of paper brochures are completely and utterly dead because once you've decided on a specific vehicle you don't want a brochure 50 or 60 page brochures showing you the huge range of different vehicles and and an accessories that are available that for all those range of cars what you want to do is you want to configure the car and actually have an electronic brochure or specifically what you're looking for that gives you all the information that you've collected during the point of time and you can take it away with you on the internet on your debts go home and do it put it on your iPhone or do it on your iPad you're looking for something specifically designed for you and and I guess those brochures are a lot better TV screens it's actually converting the sales brochure the information brochure specifically like the TV because that's what we all trust when I sat at home at night looking at it that's so that personalized digital brochure essential to the future of how Volkswagon are going to be entered are going to be selling their cars it's a big step forward for Volkswagen than invested heavily just as much unless technologies they have done and their cars over the course of the last few years and those range of apps and range of pieces of information are all making it available for people to access I guess I guess right now and the point is that when the cusp when the customer does walk into the showroom and starts looking at the specific car what the salesman is doing with his iPod is tagging the pieces of information are there other things that the customer talks about and where that it's the alloy wheels or whether that's a special as I tell them at its boss or whether it's some other piece of technology that's on the car what the salesman is doing is is walking around the car speaking to the customer but what the customer likes about that car he's just tagging the pieces of information and at the end of that process when the customer says rocky I'm going to going to think about it the salesman can then tag all that information press the button and email all of that information to the cust air to the customers where their website are or Apple iMac or whatever's good whatever these pathetic they're looking for that means these access you're actually creating a specific experience I like to have what is the customers expecting and specific information about what that customers looking for in the car and actually makes the whole buying process so much easier and all those apps are being regularly util air utilized it today the challenge for financial services and fleet companies is how we integrate and interlink into that completely new sales process and and I guess I guess the click onto that we have talked about mayor Hopi wfs are doing exactly that the strategy for us as split up into three areas so we call it browse by and bond the Browse section is where is where the customer regardless of whether they're sat at home can figure in their car and their finance agreement doing it within the dealership or even doing it on their way to work on the bus of the Train we browse in as well as making sure that customers can access the information they'd have with us through the integrated sales process and almost anything any single occasion it's human driven configurators Marist with online course and even credit checks as people are on the move the buying section is pretty simplest we believe that customers should be able to purchase their cars either online or I guess in store from accepting their credit through the car being delivered and we will integrate our unintegrated in our whole sales process linked into our Volkswagen Group brands and it's like that way and the bond piece is just making it easy for people to access the information about that I count with us any particular time in any particular way that they want so a specific thing for them so it's about providing tools about how they manage their accounts and and actory it's I guess a higher level of brand loyalty and dependency on the process as we've done that and put things together like the equity calculator on rain and the CRMs processes or in Lane and allowing people access to their account we've seen surface air for us for a Volkswagen over the course of this year and a federal those I'm some of my competitors you'll you'll understand some of these numbers we've seen customer loyalty a customer renewal increased to 47% so will all the finance agreements come to an end for Volkswagen we're renewing almost we're one and two of them because they're buying into this whole relationship process through the developments that were taken with their account and so we made some good progress on this we have linking together and put all those things in place I said those tick boxes are even today out of date we've got the the equity calculate and the CRM systems now online and and frankly we are investing millions of pounds and some of some of the people within this room when investing millions of homes to bring that horse or air sales process the way the I guess the point is that we've positioned ourselves that were the threat of the threat of the the bank's the threat of the changes in the way that people are buying we want to be leaving to enter be our whole source sales processes and customer management processes completely with our manufacturers and their retailers that's how we're gonna compete with the I guess the merchants of doom who are talking about retailing what ultimate of retail and dying it's simply not the case it's gonna be much more of a a merge between both digital and physical and it won't be a case of either/or I guess the point for is that we want to make it easy for customers to just flip backwards and forwards on the whatever suit whatever they want to take to get there to speak to us or buy from us and if you can have that ability to flip our allow their customers to flip back and forwards what will it be we're going to be left we're going to be left behind so that's where we are investing majority of our time and effort just now in terms of building the proposition to the Kosmos and actually just make it easy for customers to deal with us and every single way that the customers specifically once so I think I'm about done I guess is a family assist that yeah the world's changing you can probably tell from from my my age profile balding hair balding head and hair color that I'm probably not the best person to be speaking about the changes in the digital world like like the hair from Keith le Ron my daughter's 24 she's lived with a mobile telephone in her hand for most of our life as well and she's often telling me how old and decrepit I am and say I'm the ho technology's going a challenge for all of us because I look around the room a lot of people just have some relief to myself we either have to keep up or I'll get out and in terms of our there are technology providers that are in this room the real challenge for a big company for you guys in our industry is we have because things are moving so quickly from a technology point of view we have to make some decisions are said to be buy from you or did we do it ourselves because what you're doing is all competing against each other and to provide us with this edge different bespoke solutions and frankly we don't at the time to try and work out what you've got so there's a bit of a challenge to you guys it says actually you're going to have to I guess make if it helped us to become faster more efficient and she put into market because if you can then actually the problem that the challenge for companies like Volkswagen financial services as maybe we have to start doing the whole thing until charge of ourselves because at the moment we are going to slow best on the current processes we've currently got and that was my talk about digital meets physical if you want to see an action go to West London OD and go and have a look at how the brazils process works within West London OD or even the digital showroom within the city centre opposite opposite that there the retz you'll get the real experience in the of how customers are really buying cars nowadays which I Drive in 50% additional car sales that was it for me Graeme thank you thank you great indeed time for a question mr. Beth Lee I didn't find this when David because I grown us excellent presentation as always so I think you talked about a very traditional model where people are sort of buying and owning the cars and bringing them back after two or three years and changing but how would you find this sort of growing trend for people wanting to drive more than one car so you know we're struggling with in a number of markets where you know particularly the higher end customers which some of your already customers they they're not satisfied with only in that car for two or three years they'd like to be able to always drive an Audi Bert Drive different models and and what you know what what sort of technology solutions have you got to to deliver that well I'm not sure if technology solutions are there and sort of and I think that people looking as fast as people have to get access to the cars and one I think one of the issues that that we're looking at is we're looking at moving towards much more of a lifestyle agreement rather than individual finance agreement for cars but to be able to make it easy for customers to step i1 current in another car at any particular point and the life cycle you've got to have access to huge range of cars that are lying around and that's where I think the bigger companies are looking to move at they're bigger financial services companies and fleet companies are probably thinking about expanding their operations into more micro rental and short-term rental products and I think and I certainly both swagging the financial services are doing exactly exactly that we're looking to expand their operations from we were offering fine a finance in leases for up to five years we from our guest room about twelve months or less we all know the consider then it's a expand our product range into much shorter term life cycle stuff like micro rental and cars and car shooting and and daily rental business through our retailers we get that bet right then actually what you can then do is exactly what you've said there's a lot of customers to step out and step in of the cars that they want to drive because not everybody wants to drive the same car all the time as you as you said once you get that but once you get there logistics right a bit of customers been able to step in and step over cars then it's at knowledgeable but they have to provide the solution actually already they've got this and I've seen I've seen examples in Turkey and then China through through our sister companies and Volkswagen Financial Services where they've got they've got an app and they can just do the same thing as you can do in London you go and find the car you click the box and you actually go and get your car and deliver to them and all that technologies they are and the UK it's about logistics to be able to support the swapping in the swapping out of cars are the first point Graham thank you thank you I'm gonna wrap up this session now if you want to ask Graham or questions there's another few minutes break now in which you can do so but once again a grand wheeler thank you very much indeed