Driving on the ethernet highway

Who would have thought that in a few years from ordering books and groceries online, one would be able to buy cars with the click of a button? But in the wake of the Covid-19 pandemic, this has become a new reality, pushing carmakers to escalate the process of digitising their operations.

The lockdown precipitated a sharp decline in footfall at dealerships and showrooms. According to data from the Federation of Automobile Dealers Association, showrooms across the nation saw a 45% drop in footfall in March. Manufacturers had no option but to go digital, with Hyundai Motor India being one of the earliest to do so. Ever since, almost all major automakers have adopted virtual launches and digital showrooms in a desperate bid to combat declining sales and push up demand.

According to a recent study by Google India and Kantar, ever since the pandemic struck, ‘buy car online’ has emerged as a popular search engine term. It indicates a shift in the way consumers are using the Internet to fulfil their automobile demands. According to Shailendra Gupta, executive vice president, Kantar, for both carmakers and consumers, digitisation has emerged as a leading pathway to satisfy demand. “Digitisation would give better control in the hands of original equipment manufacturers so that consistent customer experience can be given, across touch points and across a large number of dealer networks. It would also empower customers to navigate through their offline and online purchase journeys seamlessly,” says Gupta.

While the transition to digital stores was always in the offing, the pandemic only hastened it. “Right from the government to sectoral events, everything has shifted to the digital platform. Digital media has always been an integral part of the communication strategy. However, the pandemic has further accelerated the trend,” says Rajesh Goel, senior vice president and director, sales and marketing, Honda Cars India.

Honda, for instance, launched its fifth-generation Honda City virtually on social media. It also started a campaign which allowed customers to book their vehicles from the comfort of their homes. Goel points out that digital platforms have enabled companies to engage with their customers with no physical constraints and Honda’s decision to go digital was met with a lot of consumer enthusiasm.

Recent entrants to India, like South Korea’s Kia Motors, had put in place a digital sales process before setting up shop here. When the pandemic hit, Kia was in good shape. Its recent product—the Sonet—was launched virtually via a live stream and garnered 1.5 million views. By September 2020, it was already a bestseller for the company.

Manohar Bhat, Kia’s vice president and head of sales and marketing, says customers are happy to opt for the online buying option, which lets them customise their car without stepping an inch from their homes, and they are excited to receive their car at the desired location.

However, for automakers, the digital world is still an uncharted realm. While it may have offered a pathway to shore up sales during the pandemic, it is still unclear what the long-term sales strategy would look like, and whether the industry could sustain only through digitalisation. And recent history can offer us clues.

A few years ago, two-wheeler manufacturers wanted to ride the e-commerce wave. Hero MotoCorp and Snapdeal, for instance, tied up in 2017 to sell two-wheelers online. While it generated a lot of buzz initially, the wave died down because consumers were still tethered to the ‘touch and feel’ of the product before buying.

Carmakers say the current trend of going digital might not necessarily mean the decline of the dealership model, but would rather point to a new role for digital marketing.

“The online model won’t completely replace the traditional way of purchasing. Some consumers still prefer the touch-and-feel experience. However, this will help minimise the amount of physical contact that the traditional model requires,” says Vivek Srivatsa, head-marketing, passenger vehicles business unit, Tata Motors.

The industry asserts that at the end of the day, both the digital and the traditional means of purchasing a car would coexist. “While we will see a rise in sales queries through online platforms, we will still see customers visiting the showrooms for some part of their buying journey,” Bhat says.

However, in the post-Covid world, he adds, customers might still hesitate to visit showrooms. Virtual dealerships, then, would help circumvent this problem altogether.