Automakers Evaluating If Lockdown-Spurred Online Car Sales Are A Fad

As dealerships remained shut for nearly two months during the lockdown, some automakers sold vehicles online. But it didn’t amount to much for an industry that sells nearly 3 million cars a year. And while companies are trying, the online transition won’t be easy.Maruti Suzuki India Ltd., India’s largest carmaker, said it received nearly half of its total number of inquiries from April till mid-May online. Tata Motors Ltd., and Hyundai Motor India Ltd., too, are seeing increased traction through the digital channel.VST Tillers Tractors Ltd. said sales rose by almost threefold over the previous year to 761 units of power tillers—used for cultivation in wet soil—in April. Antony Cherukara, the company’s chief executive officer, attributed it to online bookings. “During April, the company undertook home delivery of tillers to consumers.”A study by software services firm Capgemini SE in May stated that nearly 57% of Indians would prefer to buy cars online.“I think digital sales is picking up pace and the Covid-19 incident has made it imperative that pace be quickened on this front,” Shashank Srivastava, executive director of marketing and sales at Maruti Suzuki, told BloombergQuint. SS Kim, managing director and chief executive officer of Hyundai India, and Veejay Nakra, chief executive officer of automotive division at Mahindra & Mahindra Ltd., agreed.To be sure, automakers have over the past few years introduced smaller-sized digital dealerships—equipped with touchscreens and other studio equipment to help replicate the touch-and-feel of the actual product. And there was a renewed focus on building such low-cost touch points as the auto industry grappled with its worst slump in more than two decades even before the Covid-19 outbreak.Yet, the biggest fear is that this digital transition may fade away or slow down once economic activity resumes fully and dealerships are fully operational.One of the primary differences between selling automobiles online compared to any other product is that it involves the touch-and-feel elements of the vehicle, Vivek Srivatsa, head of marketing at passenger vehicle business unit in Tata Motors, told BloombergQuint.According to Kim of Hyundai India, car buying in India holds an emotional quotient for many buyers, and for this they like to touch and feel the product.The timeline for purchase is another challenge, according to Srivatsa. “A customer starts searching for a product six months before he/she actually purchases it, thereby making the overall process last longer as compared to the previous process’ timeline, which is three weeks,” he said.But that hasn’t deterred automakers from trying..Lifelike DemosSrivatsa said Tata Motors is adding digital demos to help make product exploration as real as possible. The company said its platform, Click to Drive, which was launched in April, has received encouraging response from customers, while refusing to comment on specific numbers.Hyundai India has developed a similar virtual demonstration for buyers opting to experience the cars from their homes. The number of people exploring its models through its click-to-buy portal increased exponentially since March when they integrated it nationally, Kim said.Also Read: Zero Sales: Indian Carmakers Have a Month Like Never BeforeMaruti Suzuki said it has digitised 21 of its 28 touch points—or point of sales from the time of enquiry till the actual sale of the car. Processes like enquiry, comparison of specifications between products and even booking have migrated online. Financing hasn’t.

Automakers Evaluating If Lockdown-Spurred Online Car Sales Are A Fad

While product discovery and bookings have moved online, financing hasn’t.

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