A recent joint research report ‘Changing Gears 2020: How Digital is Transforming the Face of the Automotive Industry in India’ released by Facebook and leading management consulting firm Bain & Company, sheds light on how digital is revolutionizing the Indian automotive industry.
07 Sep 2017 | 8150 Views | By Autocar Pro News Desk
While many people are still grappling with the idea of ‘Digital India’, digital is already transforming the way businesses are run in the country. Millions of people too are utilizing the power of internet and its increased accessibility to make day-to-day decisions. How is this affecting some of the business ...
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While many people are still grappling with the idea of ‘Digital India’, digital is already transforming the way businesses are run in the country. Millions of people too are utilizing the power of internet and its increased accessibility to make day-to-day decisions. How is this affecting some of the business sectors in India that are traditionally lagging behind such as the automobile industry?
A recent joint research report ‘Changing Gears 2020: How Digital is Transforming the Face of the Automotive Industry in India’ released by Facebook and leading management consulting firm Bain & Company, sheds light on how digital is revolutionizing the Indian automotive industry. The report states that by 2020, close to 70 percent of annual auto sales (approximately 19 million sales units or more than $40 billion in worth) will be influenced by digital. The report further states that the social media will influence close to 40 percent of sales by 2020 and mobile phones are the key drivers of pre-purchase considerations for most people.
Source: Facebook Business
The report provides the following few key insights:
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1. Approximately 70 percent of automobile sales will be influenced by digital by 2020 |
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2. Social media will influence about 40 percent sales |
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3. Mobile is the dominant device of choice where 80 percent of pre-purchase phase time is spent for making purchase considerations |
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4.Though 50 percent of automobile sales are being influenced due to digital platforms, auto original equipment manufacturers (OEMs) allocate only 10-11 percent of their advertising spends on digital platforms |
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5. About 72 percent of the people decide on the brand while close to 50 percent even decide on the model before they visit an auto dealership, and |
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6. Approximately 40 percent of consumers will use digital channel for booking vehicle services by 2020. |
From the report, it can be seen that digital is already playing and will continue to play a key role in the customer's purchase decisions with a significant number of people using digital platforms and mobile devices to decide the brand and model to buy even before going to the auto dealer. Not only sales, but post sales too will see digital making its presence. According to the report, about 30 percent of purchase of accessories and spare parts as well as vehicle service bookings will be influenced by digital by 2020.
You can read the entire report here
From the report, it can be seen that digital is already playing and will continue to play a key role in the customer's purchase decisions with a significant number of people using digital platforms and mobile devices to decide the brand and model to buy even before going to the auto dealer. Not only sales, but post sales too will see digital making its presence. According to the report, about 30% of purchase of accessories and spare parts as well as vehicle service bookings will be influenced by digital by 2020.
The report acts as a wake-up call for OEMs, given the potential of digital influence automobile sales in the future and the abysmal investment in digital by OEMs compared to those of China and Mexico, to change their traditional investment mindset, shift their strategies towards digital platforms and develop a growth strategy to follow customers, enable deeper customer relationships and tap into shifting profit pools.
The report suggests five imperatives for the automobile OEMs to consider in this evolving landscape:
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1. Radically change the investment mix to focus more on investing in digital in order to follow the customer online. |
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2. Explore newer formats of dealership to differentiate online and offline brand experience to customers that helps build the dealership of the future. |
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3. Enable digitization to enable customer relationship at a deeper and ongoing level. |
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4. Move away from traditional models and evolve business models that help tap into shifting profit pools, and |
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5. Invest in building a strong backbone that is based on data and analytics. |
Facebook is a key player which is at the forefront of this digital revolution. It allows automobile OEMs to target and personalize their marketing efforts at scale, at a fraction of the cost of traditional advertising. It has provided successful business outcomes for both online and offline brands. The Facebook family of apps and services have been built with the mobile audience in mind, giving automobile manufacturers the key to unlock the future.