Mumbai: In a first for the Indian auto market, Skoda Auto India Pvt. Ltd has decided to sell at least three variants of its Fabia compact car entirely online beginning sometime this week.
Thomas Kuehl, director, sales and marketing, at Skoda Auto India said that as part of the three-month exercise—to coincide with the festive season, when big-ticket purchases are made—buyers will need to interact with the dealer only for a test drive, if needed, and at the time of delivery.
“You will get the car through the dealership, but it will be available (for booking) only online,” said Kuehl.
Flagging off: Skoda’s Fabia compact car. While online showrooms have been part of the marketing push by auto firms for several years now, no car maker in India has so far attempted an online sales strategy. Ramesh Pathania / Mint
Skoda Auto India is the Indian arm of Czech car maker Skoda Auto AS.
“We are working on something completely new for the first time for the Fabia,” Kuehl said, adding that this would cut selling costs by between 5% and 10%, adding up to as much as Rs40,000-50,000 per car. Skoda, which does not offer any cash discount on the Fabia, will pass on the savings to customers, Kuehl said.
The top variant of the Fabia is available in New Delhi at an ex-showroom price of Rs6,41,082 for the petrol car and Rs7,63,274 for the diesel variant.
Kuehl conceded, however, that the “feel and touch” experience, a key element of choosing a car, necessitates complementing the online sales model with an offline one. “If it’s only online, it’s not working— both have to work hand in hand.”
In other words, even if a buyer goes to a dealership, the actual booking process will be paperless.
Kuehl said his company is joining hands with India’s largest automotive website for the initiative.
Mohit Dubey, chief executive officer of CarWale.com, confirmed that the website is working with Skoda on the online sales project and expects to sign the deal shortly.
CarWale.com specializes in the sale of new and used cars and facilitates purchases through tie-ups with manufacturers, dealers, financiers and insurance firms.
According to www.trafficestimate.com, which measures page views, CarWale.com registered an estimated 1,496,200 visits in the last 30 days, ahead of Zigwheels.com and Carazoo.com, which had 609,500 and 390,400 visits, respectively.
While online showrooms, featuring specifications and other details, have been part of the marketing push for several years now, no car maker in India has attempted an online sales strategy.
Tata Motors Ltd, which launched the world’s cheapest small car, the Nano, early this year, had tied up with CarWale.com for online bookings. The website received 10,000 enquiries for the Nano, said Dubey.
Car makers such as Maruti Suzuki India Ltd and Mahindra and Mahindra Ltd use the Internet to provide information and locate a dealer, but don’t accept online bookings.
R.C. Bhargava, chairman of India’s largest car maker Maruti Suzuki, said the dynamics of selling a car involve processes such as the pre-delivery inspection, which don’t work without a dealer being involved.
Abdul Majeed, Chennai-based partner at PricewaterhouseCoopers, said that auto makers have chosen to stay away from accepting bookings directly so they can focus on their core competency. “It does not add any value, hence, outsourcing them to dealers is preferred,” he said.
According to a Deloitte report, Accelerating Toward 2020—An Automotive Industry Transformed, released earlier this month, “a source of hope for online car sales resides in emerging markets such as Brazil and India, where the commoditization of vehicles at the entry level will reduce the need to compare and contrast or negotiate with a dealer over options and price”.
Bhargava conceded that alternative models deserve a chance. “With the cost of real estate going up, companies have to look for ways to reduce the cost of selling as somebody or the other has to pay for it.”
Skoda is fine-tuning the processes, technology and theme for online sales, said Kuehl. For processes such as payment or financing, the customer can choose between online and offline options.
The online strategy is also expected to complement Skoda Auto India’s move to set up smaller bouquet showrooms that will enhance reach while keeping a check on the high rentals associated with dealerships that require a larger space.