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The way cars are being sold has changed dramatically in recent years, with online now being a key part of the sales process. But how are physical showrooms developing in response?

While pure plays have clearly disrupted the industry, many car buyers still want to see and drive their car before they purchase it. Research by CitNOW found that almost half of respondents still prefer to visit a retailer in person, and this will increase for luxury models.

According to Deloitte's 2022 Global Automotive Consumer Study, Gen Y consumers (those born between 1977 and 1994) value the customer experience three times as much as vehicle design when making purchasing decisions. While the younger generation is more likely to buy a car online, the importance of physically touching and trying the car is still crucial, indicating that a successful showroom and brand experience creates value and convenience across the entire customer journey.

Experience centres
Experiential lifestyle centres are a relatively new format for car showrooms, created by luxury car brands to offer high-net-worth consumers a sophisticated experience.

These centres are usually located in exclusive areas and designed to communicate the brand's core values. For example, the BMW Brand Experience Centre in Shanghai World Expo Park, is a highly sought-after tourist destination in China. Spanning across 4,000 square meters, the centre has a two-storey exhibition area, as well as a rooftop track for test drives. The retail at the venue also offers exclusive BMW merchandise and accessories as well as an opportunity to test drive the latest BMW models.

Shopping centres
Shopping centres offer high levels of footfall and an opportunity to raise the brand's profile. For example, the Hyundai showroom at Bluewater in London generated more footfall - with 260,000 visits since it opened - than the entire network of 158 Hyundai showrooms across the UK.

New electric vehicle (EV) brands and more traditional brands are using shopping centres to build brand awareness and sell cars. Genesis, a Korean luxury EV car brand, launched its second studio in Battersea Power Station in September 2022 (seen above), and plans a third in Edinburgh. Polestar is showcasing the brand's hybrid GT and electric performance fastback at Westfield London and Battersea Power Station. Tesla also owns a showroom in Westfield London.

These showrooms are obviously much smaller than traditional car showrooms because of space limitations and can only showcase a limited number of models. They tend to choose top-tier shopping malls in prime areas to maximise their brand exposure. Partnerships between dealerships and shopping malls can yield cross-marketing opportunities, as the primary purpose of leasing the area is usually not for direct sales but to offer a more informal platform to convey brand values to customers and secure test drives.

Mixed-use developments
Mixed use developments offer a broader range of visitors. For example, The Mercedes Me Centre situated in the Bund Financial Centre is a prime business district mixed-use development in Shanghai, enables the brand to reach high-net-worth individuals, affluent residents, businesspeople and city visitors. The centres offer premium retail experiences, such as luxurious restaurants, cafes, high-end lounges, physical and digital art programmes, 3D haptic configuration, and typical VIP privileges for exclusive new models.

Another notable example is the new EV car brand NIO, which has opened its own brand experience centre called NIO House. Located in the HKRI Centre, a mixed-use development in the JingAn Prime A business district of Shanghai, the centre caters to office workers and local residents. With a modern and futuristic design spanning approximately 1,000 square meters, NIO House offers visitors a comprehensive and immersive experience of the NIO brand, showcasing its electric vehicles and latest technologies. The centre also features a café, a children's play area, and a retail space where visitors can purchase NIO merchandise and accessories.

Future trends
Technological advancements are enabling automotive brands to showcase their cars and products in more innovative ways. As shopping centres evolve into destinations, "placemaking" strategies are becoming more prominent for brands, allowing consumers to explore unique brand values with each visit. Experiential centres, on the other hand, elevate the customer experience to another level by offering both new and VIP consumers a luxurious lifestyle shopping experience that extends beyond just car purchasing. We also observe significant potential for car showrooms to appear in mixed-use developments, given the wider range of audiences they can attract, including high-net-worth individuals, affluent residents, businesspeople, and city visitors.

In addition to these in-person experiences, automotive brands are also leveraging their online tools to offer a seamless shopping journey that allows customers to check inventory, build their own cars, and make purchases seamlessly. While it's unlikely that online showrooms will completely replace the role of traditional brick-and-mortar showrooms due to the importance of test driving and customer service, an omnichannel strategy is crucial for reaching customers effectively since there is a ceiling in merely selling online or offline. Ultimately, we believe that investing in a tangible showroom remains a sensible choice for car retailers to connect with customers and build their brand credentials, rather than relying solely on online channels for sales.

Emily Lin