internet is fast changing the way business is conducted globally, even in traditional industries such as automotive.
07 Feb 2014 | 3040 Views | By Autocar Pro News Desk
The internet is fast changing the way business is conducted globally, even in traditional industries such as automotive. High real-estate costs, expensive resources, and need for innovation have compelled many automotive dealerships, particularly in developed countries, to shrink store space by about 20 percent and resort to digitisation for interactivity ...
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The internet is fast changing the way business is conducted globally, even in traditional industries such as automotive. High real-estate costs, expensive resources, and need for innovation have compelled many automotive dealerships, particularly in developed countries, to shrink store space by about 20 percent and resort to digitisation for interactivity with the customer.
As the bricks-and-mortar model gives way to a bricks-and-clicks sales model, European OEMs are pushing for standalone digital formats while North America seems to prefer digitisation within existing franchise models.
A Frost & Sullivan study – The Advent of Digital Retailing and its Impact on Car Dealership Structures – finds that global passenger car companies are keen to innovate and adopt a new retail model to the next generation of young car buyers (the so-called generation Y), who engage through collaborative consumption and targeted digital marketing campaigns. Frost & Sullivan expects that by 2020, 60-70 percent of new car sales leads are likely to be generated by a digital platform, be it websites, mobile sites, social media or apps.
Automotive major Audi is at the frontline of this change in retail network. Its digital showroom (Audi City), in an upscale shopping zone in London, presents the entire line-up of 40 models virtually. It encourages visitors to configure their dream cars on multi-touch tables, investigating all the possible options by themselves.
“The halo effect of the digital showroom in the heart of the city is expected to drive sales to outer stores and potentially affect dealership network setups, both in terms of size and total number of traditional dealerships,” said a Frost & Sullivan analyst.
The advent of digitization in car retailing has led to the development of new and additional performance indicators. It has seen the introduction of innovative sales strategies, and both cost reductions and additions in upfront investments. New KPIs such as brand awareness, digital engagement of customers, customer age, lead response time, and vehicle configurability satisfaction will be of increasing importance in future digital retail formats.
“Better quality leads and easier follow-ups through integrated social media strategy define the success of digital showrooms,” says the analyst. “By 2016, automakers are expected to open more than 100 digital showroom/lifestyle stores globally, specifically aimed at enhancing both the retail and brand experience with limited on-floor physical inventory.”
With European and North American OEMs expected to invest between $500 million (Rs 3,138 crore) and $5 billion (Rs 31,380 crore) in updating store technology, training staff, and digitally integrating various aspects of the car retailing process, soft digitisation technologies such as digital tools, signage and kiosks are anticipated to grow strongly in the short term.
In India too, with over 125 million Internet users in India, the web is playing a major role in influencing car-buying decisions. An offline study conducted in 2012 by Nielsen on behalf of Google India at car showrooms of leading carmakers in top eight metros (NCR, Mumbai, Pune, Chennai, Bangalore, Kolkata, Ahmedabad and Kochi) revealed that one in two car buyers had conducted research online before arriving at the dealership. The survey also revealed that of those who had researched their purchase online, over 50 percent changed their choice of car brands after uncovering new information on the web.