Online car sales may gain traction post-COVID-19 due to fears of infection; auto retail needs to become virtual: EY
Indian OEMs and car aggregators can take a cue from global players and gradually develop their capabilities to support this transformation
New Delhi: Post the COVID-19 crisis, online car sales are likely to gain traction as customers would lean further towards contactless modes of purchasing, according to a report by consultancy firm EY.
With the fear of infection and lack of hygiene likely to move people's preference back to personal mobility, which in turn is likely to reverse the trend of declining car sales, EY said automotive retail needs to become virtual, lean and flexible to align to the sudden accelerated change in consumer behaviour.
"Post the COVID-19 crisis, there is no denying that customers would lean further towards online and contactless modes of purchasing. Vehicles may very well fall in the same category too. While Indians are already more inclined towards researching online while buying cars, online sales are rare due to limited awareness, options and flexibility," the report said.
Citing a recent study conducted in China, which confirmed that fear of infection and lack of hygiene will move people's preference back to personal mobility, EY said, "One of the many fallouts of the COVID-19 crisis is likely to be people's proclivity to own and travel in a personal vehicle rather than use shared mobility or public transport."
"This is likely to reverse the trend of declining car sales. Consistent with this consumer sentiment, combined with better online experiences, we anticipate an uptick in online car sales," it added.
EY India Partner and Automotive Sector Leader Vinay Raghunath said, "In a post COVID-19 world, we do expect continued adherence to social distancing norms. The path to purchase will continue to be influenced by digital enablers with some customer segments preferring a virtual path from awareness to closure."
He further said, "A contactless purchase journey could be a win-win situation for customers, OEMs and dealers. Digital heavy processes offering flexibility in consumer connect supported by lean dealer operations is bound to become the new normal in the near future. Every player in the auto industry must invest ahead of the curve to keep pace with changing consumer dynamics."
Stating that this raises the question of how well-equipped original equipment manufacturers (OEMs) and dealerships are in managing this sudden accelerated change in consumer behaviour, the report said, "Automotive retail needs to become virtual, lean and flexible, while the existing sales channels need to become more efficient to accommodate these changes...Now is the perfect time to have our contactless Invisible Salesman 'Anytime, Anywhere'."
The Indian customer's views and behaviour towards an online car purchase platform is only going to evolve. Indian OEMs and car aggregators can take a cue from global players and gradually develop their capabilities to support this transformation. Globally, OEMs like BMW, Peugeot, Hyundai and Volvo have successfully deployed almost contactless online sales, it added.
"However, despite the increased need for digitalisation, the role of dealerships will not get diluted as some customers would still visit them for test drives or final purchase," the report said.
Dealerships will continue to connect OEMs with customers. An integrated 'phygital' platform with a digitally-enabled agile salesforce will become a critical success criterion to tap into select consumer segments, according to EY.
"OEMs and dealers can plan their retail strategy in a phased manner for a seamless transformation. The invisible salesman can become a reality in India if all players in the automobile ecosystem work towards redefining the sector's retail journey. While for the customer, it will be yet another product that they can buy online anytime, anywhere," the report added.
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