Is online placing India’s car showrooms on death row?

Monday 29th, February 2016
rusting cars photo

Photo by dok1 

For a long while, I used to wonder when big-ticket items such as automobiles and realty would move online. That trend has picked up momentum in the last couple of years. We’re now seeing more and more brands begin to experiment with the space.

The logic used to be, why would a customer want to buy a home or a new car without first going into the details. A home is typically the single-largest purchase one will make in a lifetime. Likewise, a car is in most cases a purchase that is expected to be around for several years. In India, both products are typically subject to a long process of evaluation with each member of the family weighing in with his or her opinions!

Let the changing times roll

A few months ago, General Motors released an ad for its new Chevrolet Trailblazer SUV. Together with Amazon, the company opened online pre-bookings.

Around the same time Renault also released an app for its small car, Kwid which allowed customers to book the car for Rs. 5,000. Since then, the trend has only gathered momentum. Mahindra introduced two new SUVs in recent months, the TUV300 and the KUV100 and both vehicles were available for booking online.

Of the lot, the Kwid appears to have been the most successful. This was to be expected though since the car was introduced in the small car category which is India’s biggest car category and is dominated by Maruti and Hyundai. There are some media reports which have placed the number of bookings till date at over a 100,000 although it is not known just how many of these bookings were done online.

Why online is upending car marketing

There is an increasing trend of customers researching all available options on various company and comparison websites before they take the decision to buy.

This has important consequences for marketers. First, the role of the car salesman is declining in importance. Urban customers in particular have already figured out the variant, the engine displacement, the accessories and the end-configuration even before they step into the showroom. In earlier years, the trend was on adding discounts and other offers at the showroom to convince a customer or close a deal. This trend is declining in importance.

Second, the role of the brand is becoming more important than ever. The small car category in particular is extremely crowded. While Maruti was and continues to be the leader, a new generation of car-buyers are showing a willingness to experiment with newer brands and product offerings. Which means that manufacturers are having to tone up their product segmentation and brand communications to resonate best with customers. If a decision to buy is being driven by comparison sites, by reviews and word-of-mouth, the role of the sales channel is significantly less in the process.

Third, there is a degree of parity as far as features and technical specs are concerned. Most customers by now are fairly clear about engine displacements, sizes and features to be expected across a particular segment. As such, the need to understand these in depth is decreasing. Design and other emotional cues are beginning to sway decision-making. Younger customers are also receptive to brands and models that are able to create a buzz of excitement; in recent times, the Hyundai Creta, the Renault Kwid and the Mahindra KUV100 have all managed to stir the pot very effectively.

Why building relationships is more important now

Everybody has a favourite horror story to share about their first experience with a new dealer or showroom. By now, most manufacturers have generally got it right when it comes to new car purchase and delivery. Service though is another issue and this is where most customers are pained by the non-availability of spares, of shoddy service, not adhering to deadlines and more.

What manufacturers and dealers alike need to focus on increasingly is in learning how to deliver a superior customer experience. Not only that, most car dealers have no experience of managing a database and going back to their existing customers to explore cross-sell and up-sell opportunities.

This is critical if manufacturers are going to have to learn how to handle increasing fragmentation. Large portfolio manufacturers such as Maruti, Hyundai, Tata etc with multiple products at different price points need to take up marketing automation in earnest. Many households are increasingly changing or upgrading their cars with greater frequency. The lure of a new brand or model is very hard to resist for a younger generation of customers in particular.

If car dealers and showrooms do not pay attention to the changes that are blowing in, they run the very real risk of going out of business soon!

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