A Capgemini executive explains how car makers can get their online strategy right

A Capgemini executive explains how car makers can get their online strategy right
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  • For auto OEMs, any online vehicle sales strategy must ensure the right fit between the sales channel and the OEM’s strategic and operational realities. This will help prevent demand postponement and improve sales, marketing and network cost management.
  • There are multiple online sales models given the scope of activities that can be digitalized. These should be carefully considered since each of them has its own benefits and constraints.
  • The COVID pandemic has proven no less, forcing companies to reinvent their traditional sales models, and to revisit long-standing beliefs about selling. Not just OEMs, many dealerships as well are now open to change.

The Indian auto industry is experiencing a bumpy ride. While sales were tepid before the COVID-19 pandemic, the lockdown resulted in automotive companies starting the financial year with zero domestic sales. The result? OEMs and dealerships are now saddled with large inventories and facing fixed cost challenges.

And customer sentiment isn’t helping matters! In a recent Capgemini survey, 66% respondents said that they want to buy new vehicles to avoid public transport or cabs. But due to financial and safety concerns around dealership visits, 65% of them are postponing their purchase.

In such a scenario, auto OEMs can explore various options for sales recovery. These can be a combination of targeted offers, flexible mobility enablement, sales funnel reactivation, and contactless sales. OEMs will also need to help with dealership stabilization by increasing dealer margins and careful demand sensing.
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Of all business choices, going online may be the best option for auto companies. For auto OEMs, any online vehicle sales strategy must ensure the right fit between the sales channel and the OEM’s strategic and operational realities. This will help prevent demand postponement and improve sales, marketing and network cost management.

Drive your online strategy right

There are multiple online sales models given the scope of activities that can be digitalized. These should be carefully considered since each of them has its own benefits and constraints. While all OEMs have enabled 360-degree imagery and test drive scheduling, some OEMs such as Hyundai and Mahindra have moved ahead by digitalizing even financing and trade-in. But no OEM has yet encompassed the complete purchase journey in a meaningful, seamless manner.

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While planning their online channels, OEMs and dealerships should be guided by three factors:

  • Follow the business objective: Each online model is suited for a specific business context and objective. A model that may be apt for a large, established OEM with an extensive reach might not be suitable for a smaller OEM focused on expanding reach.
The model should also fit in with the OEM’s branding and positioning. In Germany, Mercedes-Benz is enhancing its online presence with live shows from select dealerships. Collaboration with dealers is underway to build virtual reality showrooms.

  • Complement, and not replace, offline: For most OEMs, the ideal sales model is an optimal mix of online and offline touchpoints. Seamless, meaningful integration of these touchpoints is a key aspect of the customer and dealer journey.
Offline touchpoints are most effective when they have the right formats based upon location demographics. The entire sales model should be aligned with the redefined role of dealerships and the OEM’s sales, marketing and aftersales operating model.

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  • Handhold the consumer … virtually: For many Indian customers, online vehicle purchase entails a significant behavioral change, resulting in doubts and uncertainties. Absence of a dealer salesperson aggravates this condition. This can be resolved through focused CX and a 360-degree process design education.
For example, online concierges and direct connect with online customer support will help reassure customers and give them confidence that they are being handheld at least in the initial phase of their purchase experience. With that objective, VW (FAW) held a 3-day webinar in China, in partnership with Taobao University, for 50,000 salespeople from dealerships in the area of digital tools and contactless customer experience.

Time to reinvent the wheel

It usually takes a structural upheaval for companies to change their mode of operation. The COVID pandemic has proven no less, forcing companies to reinvent their traditional sales models, and to revisit long-standing beliefs about selling. Not just OEMs, many dealerships as well are now open to change.

Transforming to a contactless way of selling cars, be it online or through a smart mix of technology-enabled distancing, can help dealers address the challenges on the cost and working capital side. By adopting new sales methods, OEMs and dealers can mitigate some of the business pain caused by this pandemic.
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And this may just be what the industry needs to start revving up again!

(This article is written by Ashish Sharma. Ashish works with Capgemini Invent and is responsible for leading the Automotive sector Consulting work in India.)

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