The Digital Disruption of Distribution: An Automobile Industry Perspective

1. Introduction

The digital transformation sweeping across industries has fundamentally altered the way businesses engage with customers and market their products. In no sector is this transformation more evident than in the automobile industry, where digitalization has disrupted traditional distribution methods and consumer behaviour. The swift transition towards information-centric and technology-driven cultures has led to the democratization, decentralization, and de-globalization of data, giving rise to concepts like Society 5.0 and the Fourth Industrial Revolution (Fukuyama, 2018). This paradigm shift has not only spurred the emergence of innovative business models but also posed significant challenges to traditional players, including automobile manufacturers and dealers. The various initiatives of digital transformation reshaping the world are highlighted in Figure 1.

Figure 1.

Digital transformation across the world

Source: Fukuyama (2018)

One of the ripple effects of this digitalization wave is profoundly evident in the distribution phase of the automobile value chain. Automobile dealers and manufacturers face the pressing need to increase customer lifetime value as consumer needs quickly change as a result of increased digital awareness and access to online platforms (Hanelt et al., 2015; Khan et al., 2021). This study embarks on an exploration of digital technology, as a pivotal force in innovation that is reshaping the industry (Shalender and Shanker, 2023).

The objectives of this paper are twofold: first, to comprehensively understand how digitalization has disrupted automobile distribution networks; and second, to shed light on how digital technology has empowered automobile dealers to build scalable and sustainable business models. The challenges and way forward for digitalization in automobile distribution have also been discussed. To achieve these objectives, the paper examines the impact of digitalization across three crucial dimensions: customer acquisition, retail customer experience, and customer life-cycle management, as illustrated in Figure 2.

Figure 2.

Dimensions of digitalization in automobile distribution

2. Literature Review

A systematic literature review was conducted to identify the broad impact of digitalization on the Automobile industry, in reference to the dimensions of customer acquisition, retail customer experience, and customer life-cycle management. The review results were classified broadly in the dimensions as shown in Figure 3.

Figure 3.

Dimensions of digitalization