New Delhi: Research. Scroll. Compare. Test. Experience. Select. Book. Delivered. When did you start buying your most aspirational mobility – your car- like that? From the year 2020 onwards!
The current pandemic has undoubtedly crippled the entire automotive business, starting from the drop in sales, tampering supply chains and ending up in curbing the demand all across the globe.
“No one knows what is going to be the next normal. At least for the next three to six months, we can expect that a dealership’s physical structure will be required only for delivery,” said Vinkesh Gulati, Vice President, FADA at a recent panel discussion on ETAuto.
We must note that car is a discretionary item and even if the country-wide lockdown is lifted, the resumption and normal functioning of auto dealerships largely depend on consumer behaviour. Casual strolling into a car showroom to take a look and feel the touch of the ambitious ride now seems like a dream more than reality.
Starting from enquiry to delivery, almost 21 out of the 28 dealership touchpoints for consumers are digital nowShashank Srivastava, MSIL
Experts opine that there needs to be a mammoth change in car selling process with reinvention of online tools and technologies to survive the market. Even though the digital norms are not new to the industry, its need has become a preliminary requirement in the current scenario for reaching out to customers and converting leads into actual sales.
But the question arises how well equipped is the auto industry for crisis management amidst the imperative changes and sudden acceleration in the customer behaviour.
Rakesh Batra, an industry expert believes that it is difficult to bring in a change while the ship is moving. And rarely do we get a situation where everything is shut down. So this is almost like a startup operation where you have a chance to change and an opportunity to redefine the future’s operating model.
Why take the digital route?
Due to the prolonged slowdown in the industry and the economy, car dealer business was already in heavy jeopardy with about 300 dealerships shutting down last year itself. The current pandemic and the national lockdown has left over 25,000 retail businesses selling two-wheelers to tractor-trailers, under severe pressure.
Considering that dealerships are capital intensive businesses, its operations and maintenance can cost as high as Rs 35 crore. A brick and mortar dealership invests in real estate, manpower, inventory, demo cars, interior design, furniture, branding and setting up the workshop.
This is almost like a startup operation where you have a chance to change and an opportunity to redefine the future’s operating modelRakesh Batra, Industry Expert
Industry experts believe that almost five-percent of the total dealerships in the business might not be able to withstand the fiscal shock and eventually close down in the near-future.
Some of the dealers that ETAuto talked to feel that the rising cost of new adherence to social distancing norms and safer working conditions will add to the already dwindling profits.
“We are happy to take care of our employees. But when you look at the heavy rentals, employee salary, regular screening & monitoring, containment plans, masks, PPE kits, it is obvious that the operating overhead costs will increase tremendously,” explained a dealer from the North. “And even after this, the risk remains,” he added.
According to an Ernst & Young (EY) report titled, ‘The Invisible Car Salesman’, there is a segment of consumers who prefer ‘contactless’ digital touchpoints in their purchase journey for the purpose of comparison, consultation, selection and booking. “An integrated ‘phygital’ platform with a digitally enabled agile salesforce will become a critical criterion for consumer satisfaction and sales conversion,” the report said.
Another reason is that globally, India is the cheapest country when it comes to data pricing. “Today we are using almost 10 GB per person per month,” stated Nikhil Bansal, Automotive Industry Head, Google.
Shashank Srivastava, Executive Director, Marketing and Sales at Maruti Suzuki India Limited also told, “Starting from enquiry to delivery, almost 21 out of the 28 dealership touchpoints for consumers are digital now.” He expects that the time spent by an average consumer from the stage of enquiry to retail will increase predominantly.
Thus, digitally generated leads, online bookings, virtual and augmented reality test drives and heavily sanitised cars are expected to be the new normal.
The ones who are technologically enabled and prepping up with their digital initiatives will survive the long run. Many of who are still inclined to the traditional ways of automotive retail will bear the pinch, said one of the dealers from the North. Again, the transition also depends on the balance sheets of the dealer partners.
How can auto dealers start their prep?
Maruti Suzuki’s Srivastava believes that almost 84 percent of potential customers come with preliminary online research.
The role of the dealer will change as the consumers will already be informed about the ongoing offers, product features, testimonials, reviews, stock availability and product finder tools. So the job of an auto dealer will be to make this experience lively, with a two-way flow of conversation, said a senior executive.
This may be done with 24×7 assistance of specialised online technical experts, chatbots and live messaging to address the their queries and help them make the right decision, he added.
Tools like car configurator, finance calculator, AR and VR experience shall add value to the digital car buying experience by helping them customise their purchase.
Meanwhile, one may argue that practical car purchases also involve ID checks, signatures, credit scores, insurance process, loan disbursement and above all, the negotiation process as deal negotiation is very critical in the Indian context. To add to that, vehicle buying process in India has been a family celebration at the dealership, since ages.
Yet, experts are quick to respond that chat windows, voice calls and video conferences are a solution to our dependency on physical procedures. “Habits and mindset change comes with time.”
The final delivery of the vehicle may be a customer pick up or home delivery by the dealership.
However, despite the increased need for digitalization, the role of dealerships will not get diluted as customers would still visit them for test drives or final purchase. Consumer mindset will go a long way in dealerships continuing to remain the link between OEMs and customers, opined an industry veteran.
What is the responsibility of OEMs?
Experts see that OEMs and dealers need to plan their strategy in stages for a seamless transformation. This may be done by building an omni-channel retail experience, where customers can seamlessly move between online and offline channels.
Maruti Suzuki’s Shashank Srivastava opined that OEMs will have to make a robust system for dealer profitability. This can be done by focusing on all the aspects of revenue generation including workshop, financing, aftermarket, accessories, and not just sales.
Automakers need to build strategies for a successful and engaging pre-sales process. “A potential customer’s interest to purchase a car can be gauged right from the time that they start their online/website search. Social media tracking can also be used as an avenue to identify sentiment of potential buyers,” remarked Nikhil Bansal of Google.
Underpinning the importance of digital sales will eventually open new avenues for the role of online marketing experts and data analytics. “Media plan for marketing aspect will also have a sea change from what it was earlier,” Srivastava added, as 35 percent of the total marketing budget goes on digital now.
To give the customers a renewed digital experience and offer greater convenience, re-aligning the existing staff to new roles will be necessary.
A structure around sales, marketing and CRM will have to be built encompassing all channelsEY
As per the EY report, “The role of a typical sales person may no longer exist. On the online front, the role of a virtual technical specialist will become crucial to carry out intelligent technical conversations and engaging interactions with the customers. A structure around sales, marketing and customer relationship management (CRM) will have to be built encompassing all channels.”
New non-traditional showroom formats like smaller digital showrooms, dedicated test drive centers, mobile pop-up stores and [email protected] are good options, wherein all the operations can be carried out by a dealer representative at the customer’s home or office. This will help OEMs increase their geographical reach, while maintaining extremely lean operations, the EY report added.
We must note that Mahindra & Mahindra in 2018, invested in digital showrooms across India, with smaller showroom formats of approximately 100- 300 sq. ft. as opposed to a traditional showroom of 2000-5000 sq. ft.
While Tata Motors is also planning to come up with one, Maruti Suzuki introduced the similar concept for its premium dealership network, NEXA.
Further saving on real estate costs and salaries, carmakers like Hyundai Motor India, Tata Motors, Mercedes-Benz India, Honda Cars India, Volkswagen India have recently announced the launch of their online car selling platforms, namely ‘Click to Buy’, ‘Click to Drive’ and ‘Merc from Home’. BMW India has also launched a campaign on ‘contactless’ purchase.
Meanwhile, SAIC-owned MG Motor India announced its first digital car-less showroom last year. It has also partnered with online portal Myles to facilitate online purchase of Hector, available on subscription.
Globally, OEMs like BMW, Peugeot, Hyundai and Volvo have successfully deployed almost contactless online sales.