13 Apr 2020
Posted in Automotive
Covid-19 compelled auto dealers in India to explore digital sales, says GlobalData
Following the news that Hyundai Motor India has expanded the coverage of its recently introduced online sales platform ‘Click to Buy’ to pan-India level;
Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:
“Coronavirus (Covid-19) has significantly impacted auto sales volumes in India. The dealerships witnessed significant decline in footfalls in early March and with the 21-day lockdown coming into effect from 25th March, the footfalls completely stopped. As a result, March sales of market leaders Maruti Suzuki and Hyundai declined by 47% on year-on-year basis. The outlook for April sales also remains pessimistic as the lockdown is likely to get extended. The lockdown, though completely justified, has created an added pressure for dealers.
“For starters, several dealers are left with a large BSIV inventory, especially in case of two-wheelers. The sales of BSVI vehicles are also getting impacted as dealerships are closed and customers are not allowed to step out. Though a desperate measure, dealers are now compelled to explore digital sales and transformation, which is a positive development and right step towards the future. More than ever, auto dealers are now in an immediate need to adopt digital ways to sell vehicles. Even when the crisis is over, some customers are likely to be cautious and may prefer to stay away from dealerships to avoid human contact.
“Hyundai has become the pioneer in digital vehicle sales in India through the launch of its end-to-end vehicle sales platform ‘Click to Buy’, which integrates more than 500 dealers across the country. Customers can opt to pick a vehicle or get it home-delivered from the nearest dealer. Growing young population as well as increasing smartphone penetration are driving the growth of online sales platforms. Customers can easily access features, get pricing details, compare models, book a test drive and view vehicle finance options.
“However, vehicle sales process is not as straightforward as selling other products. Vehicles are expensive and the process requires negotiation of sales agreements. Moreover, in markets like India where potential customers look to experience before they purchase, a complete ‘faceless’ vehicle purchase process is unlikely to witness noticeable penetration in the short to medium term. At this stage, its effectiveness will be largely limited to reducing the number of dealership visits involved in a typical vehicle sale process and it can help in streamlining the activities.
“For online vehicle sales to become an effective channel, OEMs and dealers will have to be creative. Virtual tours, online negotiations over video calls are some techniques that are being used in other countries and can help in customers accepting online vehicle sales as the new normal. Digital vehicle sale is more than just a potential option during Covid-19 crisis as it offers long-term opportunity to OEMs in India.”