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Covid-19 compelled auto dealers in India to explore digital sales, says GlobalData

Following the news that
Hyundai Motor India has expanded the coverage of its recently introduced online
sales platform ‘Click to Buy’ to pan-India level;

Animesh Kumar, Director of Automotive
Consulting at GlobalData, a leading research and consulting company, offers his
view:

“Coronavirus (Covid-19)
has significantly impacted auto sales volumes in India. The dealerships
witnessed significant decline in footfalls in early March and with the 21-day
lockdown coming into effect from 25th March, the footfalls completely stopped. As
a result, March sales of market leaders Maruti Suzuki and Hyundai declined by
47% on year-on-year basis. The outlook for April sales also remains pessimistic
as the lockdown is likely to get extended. The lockdown, though completely
justified, has created an added pressure for dealers.

“For starters,
several dealers are left with a large BSIV inventory, especially in case of
two-wheelers. The sales of BSVI vehicles are also getting impacted as
dealerships are closed and customers are not allowed to step out. Though a
desperate measure, dealers are now compelled to explore digital sales and
transformation, which is a positive development and right step towards the
future. More than ever, auto dealers are now in an immediate need to adopt digital
ways to sell vehicles. Even when the crisis is over, some customers are likely
to be cautious and may prefer to stay away from dealerships to avoid human
contact.

“Hyundai has
become the pioneer in digital vehicle sales in India through the launch of its
end-to-end vehicle sales platform ‘Click to Buy’, which integrates more than
500 dealers across the country. Customers can opt to pick a vehicle or get it home-delivered
from the nearest dealer. Growing young population as well as increasing
smartphone penetration are driving the growth of online sales platforms. Customers
can easily access features, get pricing details, compare models, book a test drive
and view vehicle finance options.

“However, vehicle
sales process is not as straightforward as selling other products. Vehicles are
expensive and the process requires negotiation of sales agreements. Moreover, in
markets like India where potential customers look to experience before they
purchase, a complete ‘faceless’ vehicle purchase process is unlikely to witness
noticeable penetration in the short to medium term. At this stage, its
effectiveness will be largely limited to reducing the number of dealership
visits involved in a typical vehicle sale process and it can help in streamlining
the activities.

“For online
vehicle sales to become an effective channel, OEMs and dealers will have to be
creative. Virtual tours, online negotiations over video calls are some
techniques that are being used in other countries and can help in customers
accepting online vehicle sales as the new normal. Digital vehicle sale is more
than just a potential option during Covid-19 crisis as it offers long-term
opportunity to OEMs in India.”

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