How Augmented Reality Increases Sales for Car Dealerships

The adoption of augmented reality (AR) in various industries has been rapidly increasing, and the automotive sector is no exception. Car dealerships are looking for innovative ways to attract customers and stand out in the competitive market and AR has emerged as a valuable tool in achieving this.

The technology offers a multitude of benefits, such as enhancing the customer experience, streamlining the sales process, and showcasing various customisation options in a cost-effective manner.

One of the primary benefits of AR for car dealerships is the ability to provide an immersive and personalised experience for potential customers. Through AR applications, customers can visualise customisations in real-time, such as exploring different paint colours, wheel designs, and interior options virtually. This not only saves time but also allows customers to make more informed decisions about their purchases, which in turn leads to higher sales conversions.

Furthermore, AR enables car dealerships to showcase a wide variety of models and configurations without the need for physical space. Traditional showrooms are limited by their floor space, but with AR, dealers can essentially have an unlimited inventory on display, offering a more convenient and efficient way to browse options. This technology not only enhances the customer experience, but also helps car dealerships to reduce operational costs, ultimately leading to increased profitability.

The Impact of Augmented Reality on Car Sales

Enhanced Customer Engagement

Augmented Reality (AR) is playing a significant role in driving change at car dealerships by enhancing customer engagement. As consumer behaviour and demographics change, it is crucial for car dealerships to create innovative spaces that engage potential customers.

AR technology allows customers to interact with vehicles through 3D visualisations, offering them a chance to experience different car models, customisation options, and features virtually before making a purchase decision. This immersive experience not only captures the attention of potential buyers but also increases the likelihood of them making a purchase.

Interactive Vehicle Demonstrations

AR technology has proven to be particularly valuable in providing interactive vehicle demonstrations. Car manufacturers such as BMW and Audi utilise AR to offer true-to-scale, three-dimensional visual representations of car models, which customers can customise with different paint colours, trim options, and other features. This interactive approach allows potential buyers to:

  • Visualise their dream car with preferred customisations
  • Compare different models side by side in a real-world setting
  • Learn about the unique selling points and features of each model

In turn, these capabilities help accelerate the sales process while providing a memorable experience for customers2. Implementing interactive AR demonstrations in car dealerships ultimately leads to higher customer satisfaction and increased sales across the board.

Technological Advancements in Augmented Reality

AR Showroom Experiences

The automotive industry has benefitted greatly from the rapid development of augmented reality (AR) technology. One such example is the emergence of AR Showroom Experiences, which enable potential car buyers to view and interact with vehicles in a digital space.

This technology provides a highly immersive and realistic experience, allowing customers to explore car features, customise colours and accessories, and gain a detailed understanding of the vehicle without needing to physically visit a showroom.

Virtual Test Drives

Another innovative application of AR in the automotive industry is Virtual Test Drives. This technology allows customers to take a virtual test drive of a car from the comfort of their homes. By using a combination of AR and virtual reality (VR), potential car buyers can experience the feel and handling of a vehicle, test out the various in-car functionalities, and even take a driving tour in different terrains and road conditions. This not only improves customer satisfaction but also helps dealerships to stand out in a competitive market.

Augmented Reality Applications and Platforms

The growing use of AR technology is backed by the development of various applications and platforms that enhance the car-buying experience. These software solutions provide a seamless user experience, integrating AR capabilities into websites or mobile applications to facilitate virtual interactions with vehicles. Such tools offer a convenient means of browsing, comparing, and customising cars, ultimately contributing to the increase in sales for car dealerships.

Moreover, the ongoing research and development in AR technology promise to further improve and refine these innovative services in the future, offering even greater benefits to both customers and dealerships alike.

Benefits for Car Dealerships

Increased Conversion Rates

Augmented reality (AR) is a game-changer for car dealerships by providing a more immersive and engaging experience for potential buyers. It allows customers to interact with digitally generated, life-sized 3D models of vehicles, leading to higher conversion rates. The buyer can explore the car’s features, open and close doors, and even turn on the headlights—without visiting a showroom.

This technology has proven to be particularly helpful for online car shopping. Dealerships can efficiently reach a wide audience of potential buyers, thanks to the accessibility of AR on smartphones and other devices. The virtual experience can be enjoyed anywhere and anytime, bringing the cars to the potential customers.

Upselling Opportunities

In addition to the increased conversion rates, AR also brings upselling opportunities by allowing dealership salespeople to showcase optional extras and accessories in a more tangible way. For instance, AR can make it easy for buyers to visualise a car in a specific colour, or see how alloy wheel options would look on the vehicle.

  • Exterior upgrades: Buyers can instantly view different paint colours, rims, side mirrors, and more.
  • Interior options: AR enables users to try out different upholstery materials, dashboard designs, and other interior features.
  • Accessories: From roof racks to tow bars, AR helps potential customers visualise various add-ons for their preferred car model.

The immersive nature of augmented reality helps potential buyers become emotionally attached to the car, increasing the likelihood of them opting for higher-priced models with additional features. Ultimately, this leads to higher average order values for the dealership, driving profitability and success.

Implementation Strategies for Car Dealerships

Staff Training and Onboarding

To successfully implement augmented reality (AR) technologies in a car dealership, it is essential to invest in staff training and onboarding. Employees must be educated on AR devices and applications to assist potential buyers in utilising this immersive technology.

Interactive training sessions and workshops can help staff understand the benefits and functionality of AR in the automotive industry. By confidently demonstrating AR features to customers, they can provide a knowledgeable and clear understanding of the technology, enhancing the overall customer experience.

Integrating AR with Current Sales Processes

Seamlessly incorporating AR into existing sales processes enables car dealerships to maintain an edge in the competitive market. One approach is to utilise AR for visualising new car models, allowing customers to overlay digital car models onto their driveway or garage area. This integration enables buyers to view car interiors and exteriors, providing a closer look at features such as bumpers, windows, tyres and dashboards.

Another implementation strategy focuses on a digital showroom concept. By incorporating AR features, dealerships can minimise physical inventory and maximise showroom space usage. Customers can virtually explore various colour options, customisations and configurations, streamlining the decision-making process.

It is crucial to maintain ongoing collaboration between marketing, sales and technical teams to ensure the AR implementation enhances and complements current sales processes, rather than replacing or complicating them. By embracing AR technology and integrating it smoothly, car dealerships can offer an innovative, immersive experience, ultimately increasing sales and customer satisfaction.

Customer Perceptions and Expectations

Changing Consumer Behaviour

The automotive industry is experiencing a significant shift in consumer behaviour, as more customers move towards researching and purchasing cars online. A Deloitte report found that 84% of potential buyers research cars on their mobile phones. Companies like Tesla and NIO are capitalising on this trend by providing direct online sales platforms with a simplified range of models and no price haggling.

To cater to these evolving preferences, car dealerships must adapt, offering seamless digital experiences alongside traditional showroom visits.

Demand for Immersive Experiences

One key development that has emerged to meet customer expectations is augmented reality (AR), which has the potential to transform car dealerships. AR lets buyers interact with a car model in a highly immersive way, allowing them to turn lights on and off, open and close doors, and move cars forwards or backwards as though they were physically present in a showroom. These experiences can be brought to smartphone users anytime and anywhere, as highlighted by Audax Labs.

In addition to augmented reality, there is a growing interest in virtual reality (VR) as a means of enhancing the car sales experience. It is predicted that 100 million consumers will use AR and VR technologies to shop in the near future. Automotive retail can tap into this disruptive technology to create more engaging experiences for customers.

Integrating sensory marketing with digital elements allows dealerships to create immersive hubs for pre-ownership experiences, as described by Mood Media. These hubs provide unique interactions that cater to the changing demands of customers, ultimately driving sales for car dealerships.

In conclusion, augmented reality and virtual reality technologies are shaping customer perceptions and expectations in the automotive industry. By incorporating these immersive experiences, car dealerships can remain competitive and increase sales in a rapidly changing market.

Challenges and Considerations

Technological Barriers

One of the main challenges faced by car dealerships in implementing augmented reality technology is the technological barriers. It is essential for the dealerships to have compatible hardware and software infrastructure to support the AR solutions. Furthermore, the development of high-quality AR content requires expertise in 3D modelling and animation, which may not be readily available in-house.

Additionally, potential buyers need access to high-speed internet and smartphones with AR capabilities to make full use of the technology.

While AR transforms static objects into interactive, animated three-dimensional objects, achieving this level of interactivity can be challenging. Ensuring that the AR experience is seamless and glitch-free requires continuous updates and maintenance. Data privacy and security also pose challenges, as customers’ personal information is often collected during the AR experience.

Cost Factors

Another challenge is the cost involved in adopting and implementing augmented reality technology in car dealerships. The investment in AR devices, software, and content development can be substantial, especially for small and medium-sized dealerships with limited budgets. However, the global augmented reality (AR) in automotive market size was USD 3.97 billion in 2020, indicating the growing interest in AR solutions for the automotive industry.

Maintenance and updates of AR systems are also cost factors to consider, as well as training staff to support and manage the technology. Although investing in AR technology has potential long-term benefits, such as enhancing the customer experience and boosting sales, dealerships must carefully consider the initial and ongoing cost implications.

Future Trends in AR for Automotive Sales

The automotive industry is witnessing a remarkable transformation driven by technological advancements and changing customer preferences. One such trend that’s revolutionising car dealerships’ sales is the integration of augmented reality (AR) technologies. In the coming years, AR will play a vital role in enhancing the customer experience and streamlining the sales process.

AR Showrooms: The traditional brick-and-mortar showrooms will soon be replaced by virtual AR showrooms that enable potential buyers to explore a variety of car models in a more immersive and personalised way. Through AR showrooms, customers can view and customise vehicle features such as colours, wheels, and interiors without stepping foot in a physical dealership, thus saving time and resources for both dealers and customers.

Test Drives with AR: AR test drives will enable car buyers to experience a realistic simulation of driving a specific vehicle without leaving their homes. Through the use of AR devices such as smart glasses or smartphones, potential buyers can access valuable information about the vehicle displayed in real-time, ultimately helping them make informed purchase decisions.

AR for Maintenance and Repairs: One of the most significant benefits of AR in the automotive industry is its potential to assist users with the maintenance and repairs of vehicles post-purchase. Tools such as AR manuals can provide step-by-step instructions and visual aids to car owners while they perform necessary maintenance- ultimately reducing costs, boosting customer satisfaction and fostering brand loyalty.

AR-assisted Manufacturing: Another aspect where AR is expected to make its mark in the automotive sales journey is during the production process. The technology will allow designers and engineers to collaborate remotely and detect potential issues throughout the manufacturing process. As a result, the automotive market is predicted to grow at a CAGR of 18.1% between 2021 and 2028.

In conclusion, AR in automotive sales is poised to reshape how customers select, purchase, and maintain their vehicles. By embracing these emerging trends, car dealerships can enhance customer experiences, streamline their processes and ultimately stay ahead in the highly competitive automotive market.

Picture of Phil


I’m the resident head of comms and partnerships here at Draw & Code. I work on strategy, sales, marketing and other vital areas at a studio that was founded on a dream and has spent the intervening decade trying to make that dream come true. I believe that immersive and interactive technologies are impacting on our lives and being in the epicentre of this industry makes every day a thrill.

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