Stay home, stay safe. That is the rallying cry of the month, if not the year, as we embrace social distancing and travel restrictions to flatten the infection curve of the COVID-19 pandemic.
The longer these restrictions remain, however, the more pressure Southeast Asia’s automotive market faces. Consumer sentiment is weaker, with rating agencies revising their forecast numbers for vehicle salesin the region downwards.
As the pandemic continues, the burden on car dealerships is expected to increase. In Malaysia, some 50,000 members of the car dealer and importer workforce may lose their jobs if the crisis continues beyond two months. However, the common consensus is that COVID-19 is here to stay for at least the next year or so, as doctors and scientists rush to find a suitable vaccine or cure.
Demand for personal vehicles may slow down, but it will not cease. Commuters still depend on cars for transport, especially with transmission fears resulting in plunging public transportation ridership numbers around the world. COVID-19 has challenged dealerships to rethink the way they market their automotive offerings, reach their customers and find niches they can fill in this time of limited mobility.
As with many other industries, the answer lies in leveraging technology, and digitally native startups that can help traditional dealerships overcome this physical divide will herald this transformation.
The digitalisation of dealerships
Government lockdowns and movement control orders across the region are keeping people at home and forcing non-essential businesses to close until the situation improves. This has had a major impact on dealerships as footfall traffic is proven to correlate significantly to vehicle sales. In the absence of walk-in buyers, dealers must now turn to the digital marketplace instead.
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Prior to the pandemic, the adoption of digital sales platforms was poor in the automotive industry. Cars are big-ticket items and consumers prefer the security of in-person inspections and test drives.
However, the fast-growing online commerce community in the region is seeing a surge of activity from a combination of businesses shifting their operations online and an increase in consumer Internet usage, which makes a strong case for dealers to invest in leveraging these digital channels to reach their customers.
Leading car companies in Asia are already paving the way with innovative solutions. Geely delivers car keys by drone to its customers as part of its fully contactless vehicle sales in China. BMW Asia’s digital showrooms allow customers to browse model ranges and schedule doorstep test drives.
Kia agent Cycle & Carriage launched a flash warehouse sale online with discounts and fully digital consultations. More dealerships are also investing in online sales portals and digital order bookings.
Understandably, customers may be more reluctant to make big purchases completely sight unseen, especially as buying a car is a very personal decision. In the short term, ‘halfway house’ solutions may be more prevalent in automotive sales as the industry and market take time to adjust.
Virtual reality car showrooms, 3D virtual car tours and price negotiations through videoconferencing have the potential to set the stage for the eventual complete digitalisation of the car buying experience.
Data-driven approach
Maximising operational resources is vital to a business’s survival – especially in crises – and this can be achieved through data insights. It is said that 95 per cent of vehicle buyers search for information on vehicles online, with almost twice as many starting their research online instead of at the dealers.
On a basic level, this makes it imperative for both car manufacturers and dealers to have a robust online presence for customers to reach them easily and to stay top-of-mind.
By investing in the correct data management and analysis tools – or working with digital native startups specialising in this area – dealers can drill down further into this consumer behaviour data for better insight into customer search terms and patterns, as well as the sites they are browsing.
It can even be compiled to reveal emerging trends in car shopping behaviour.
Concurrently, this shift shows that relationships are moving from the ‘one-to-many’ to ‘many-to-many’ business models. Which means instead of one model where one company invests and builds an e-platform for many suppliers, more industry networks are trading products and forming public marketplaces for on-the-spot purchasing.
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This is important as when it comes to the exchanging of cars, individuals can pretty much sell on any platform. But in the past, dealerships or corporate customers remained hesitant due to their preference for traditional norms. Yet, as more businesses buy online, B2C-type open public networks – driven by sellers – can provide quality ‘foot-traffic’ to vendors.
Want to thrive? Then digitalise
New car technologies are being developed every day, yet the purchasing process itself has changed little from both a customer and dealer standpoint. While it is true that COVID-19 has placed a lot of unexpected pressure on car dealers, it can be argued that the pandemic has simply forced long-time operational and engagement deficiencies into the light. It has also highlighted the need for transformation as our dependence on digital technologies grows.
The current situation has already launched a global push for industries to digitalise to survive, and it is imperative that the automotive sector is not left behind. While this is not an overnight change, car dealerships must ramp up their digitalisation efforts to future-proof their operations.
On this front, working with the right digital startups like Carro can help to accelerate that change. The benefits of foresight now will carry well into the future, and dealerships that are first to adapt will blaze the trail for the new normal of the automotive industry.
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