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Photo: Ramesh Pathania/Mint
Photo: Ramesh Pathania/Mint

Small auto makers may benefit from digital push in vehicle sales process

  • The move towards digital platform will help smaller manufactures save cost and create a level playing field with leaders like Maruti Suzuki India Ltd and Hyundai Motor India Ltd

NEW DELHI: As auto manufacturers plan to push significant part of their sales process through respective digital platforms, in the aftermath of the covid-19 pandemic, smaller players might benefit from this practice in the longer term.

The move towards digital platform will help smaller manufactures save cost and create a level playing field with leaders like Maruti Suzuki India Ltd and Hyundai Motor India Ltd.

According to industry experts, most of the smaller manufacturers have struggled in the Indian market since they don’t have dealership network especially beyond the metro and tier one cities.

Fearing sharp decline in footfall at dealerships in the coming months, automobile manufacturers are focusing on selling their cars through their respective online portals. As the covid-19 pandemic hit demand starting March, vehicle sales crashed causing huge losses for dealers and auto companies.

According to Som Kapoor, partner, automotive, EY, the new normal in the automobile industry will definitely be the one which breaks these old barriers of network reach with added focus on delivering an omni-channel and engaging customer experience.

“With digital push and consumer’s preference for door step service, these OEMs can look at a leaner network model that can help to reduce the time-to-market and enhance consumer reach. With parity achieved in terms of car sales, the key differentiator going forward will be how best these OEMs can manage after sales service and experience across the lifecycle," added Kapoor.

Hence, manufactures like Renault, Volkswagen, Ford and others might benefit from this trend as they will only have to invest in infrastructure for servicing the vehicles. In the long term, as most customers might expect to shift better part of the sales process to digital, these small manufacturers will not have to invest in proper dealer networks .

Also, these companies will be able to control the profitability of their dealers this way, as vehicle sales of such companies are limited and dealers will also not have to go out of their way to invest in expansion of the network and recruit employees.

“There is a lot of reliability on e-commerce platforms and people are inclined to buy high ticket items also from these platforms. Our study said 90% of the people are influenced digitally about the vehicles they want to buy and around 40% of the people are inclined to buy cars online," said Brijesh Gubbi Suresh, group head and assistant vice-president, New Business Strategy, Hyundai Motor India.


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