Car Sellers Must Digitize to Compete with Smaller Players

October 12, 2020

Carro Founder and CEO Aaron Tan says that in the future, the car market will have plenty of competition from smaller dealerships with a heavy emphasis on selling direct to consumers digitally and argues that incumbents cannot afford to be slow to jump on the wagon…

By Aaron Tan

At the height of the COVID-19 pandemic in Singapore, interest in car buying was up due to fears of contagion on public transport. We received triple the number of our regular sales calls on the eve of the circuit breaker itself.

Despite this, once the circuit breaker began and showroom visits and test drives were banned, actual automotive sales in Singapore saw drastic drops of 88 percent in April and 97 percent in May alone.

Without an assurance alternative to the hands-on experience, customers were not confident enough to commit to a purchase. The automotive industry’s value proposition needs to evolve beyond the ‘best price’ model – especially for the used car sector.

Digitalisation can bridge the trust gap by empowering the customer with data and allowing dealers to be more transparent. With value, assurance, safety and efficiency now top-of-mind in the purchasing experience, adopting a digital-first approach is crucial for dealers to keep pace with consumers.

The contactless sale

COVID-19 sparked demand for revised standard operating procedures for selling cars that minimize human contact – which is made possible by technology.

Instead of setting appointments with and meeting salespeople in person, customers may now make digital appointments to view cars.
They can then pick up the cars themselves from appointed showrooms or locations with electronic key drop boxes – or have the car sent to their doorstep – instead of waiting to meet a sales personnel.

Besides enhanced health safety and reduced time investment, not having to meet salespeople also means that customers can avoid hard selling and haggling during viewings.

Customers whom prefer more personalized guidance can still have sales agents virtually ‘present’ via voice or video calls to answer
questions, provide recommendations and discuss prices.

Some manufacturers and dealers even provide ‘digital walk-arounds’ where salespeople give customers a virtual tour of the car via video streaming.

Technology-driven test drives

In the traditional test drive model, a customer drives the car while the sales agent rides along to enforce security and prevent car theft. The sales agent must be present to unlock and start the car for the customer.

Now, remote locking technology allows dealerships to assign car control permissions specifically to users who have registered their
interest on the dealership’s app to test drive a vehicle.

The dealer can lock and unlock the car remotely and pre-set a distance limit through the app, reducing the risk of theft and enabling the customer to get a feel of the vehicle without supervision.

To maintain a contactless process, dealerships may send directions to customers who register for a test drive through an app for them to pick up their chosen car for test driving from their nearest dealership. They may also opt to deliver the car right to the customer’s doorstep.

Showrooms that never sleep

If customers are always searching online for information on their chosen cars, why should they wait for showrooms to open to find out more? And why should their purchase window be limited to retail operating hours?

Dealers can provide comprehensive vehicle information on their website to help potential customers make informed decisions. This positions them as a source of verified information that is in touch with the customer’s needs.

Manufacturers and dealers are beginning to embrace selling cars by building and listing vehicles on their online sales platforms. With these platforms in place, they are no longer reliant on walk-ins or restricted by time to close a sale.

The 24-hour showroom concept is not new – a car company in the US built a car vending machine as early as 2013 for contactless purchases – but going digital expands the showroom’s broader accessibility in terms of both time and location.

Digital from start to finish

For a truly seamless purchase journey, the goal must be to achieve full end-to-end digitalisation. Everything from getting insurance and loans pre-approved to the final step of signing the hire-purchase agreement must be accomplished digitally to complement contactless test drives and sales.

For the used car segment, prominently displaying assurances such as comprehensive inspection reports, wear-and-tear guarantees and free test drive purchase policies on the online site provides transparency, pre-empts common consumer concerns and helps build trust right from the start.

Ultimately, automotive players must embrace digitalisation to enhance efficiency, increase productivity and – most importantly – portray a more transparent, trustworthy image among buyers.

This transformation is one that has been a long time coming. In the future, we will see more smaller, nimbler dealers who focus on online marketing and sell direct to consumers digitally. Existing players cannot afford to be slow to pivot to digital as early adopters will have a significant advantage.

Overall, the automotive sector must be sensitive to evolving customer purchase habits and needs. Digitalisation is the first, crucial step of building a customer-centric ecosystem that will help car dealers thrive in the next normal.

Ed. Featured image courtesy of Photographer Pixabay.


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