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Digital Dealership: Auto Sales Industry Transformation

The impact of digital transformation can be felt in almost every industry. The most monumental shift can be seen in the purchasing experience of cars. Automobile brands used to rely heavily on the showroom experience for clocking in higher sales targets, but this scenario has changed recently.

The Automobile industry has experienced changes in the buying journeys of their customers, so much so that 59% of them spend their time researching automobiles online instead of relying on salespeople.

Auto showrooms have shrunk both in size and volume and are going virtual.  With burgeoning real estate costs and salaries, automakers and dealers are constantly on the lookout for smart workarounds. Opening a conventional dealership in a metro city could cost more than Rs 40 crore, inclusive of the interior design, inventory, demo cars, furniture, branding, and workshop set up. This high cost made the business margins extremely low making it an unviable opportunity especially when the economy is weak. Some dealerships have had to shut nearly 300 showrooms in the past two years- even before the pandemic happened.

Since the automotive consumer journey, one of the most complex to keep track of among all industries, had started shifting to digital, the dealerships found it more profitable to adapt to this change. Although customers still purchase their vehicles at dealerships, most of the decision-making is influenced by online content and forums.

As per Google’s reports, 95% of vehicle buyers use digital as a source of information. The majority of the buyers research online as opposed to getting their information directly from a dealer. In fact, by the time they make it to a dealership, they most likely already know the vehicle they want to purchase.

The most popular source of their knowledge can be attributed to online video content. Views on Youtube of test drives and walkthroughs have skyrocketed in the past few years.

With the pandemic reducing footfalls drastically to the car dealerships, the brands have now moved on to sell cars through their digital portals.

Expecting more potential customers to use e-commerce or digital platforms to purchase high investment items like cars, in the coming months, India’s second-largest passenger vehicle manufacturer, Hyundai Motor India Ltd, was the first to introduce its Click-To-Buy platform in March, when the crisis started. Honda Cars India, also launched its own digital platform ‘Honda from Home’  to give people the option of placing vehicle enquiries and purchases from the comfort of their own home.

Digital car dealerships are well on their way to becoming the next big thing in the landscape of the automobile market. So next time you begin your journey of buying your car, take full advantage of all the digital resources available to you to enrich your decision making process.

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