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Adaptability is Crucial for Vehicle Sales: Surman

By Antonio Gozain | Thu, 04/21/2022 - 10:00

Q: How has Surman maintained its business even as vehicle production has hit historic lows?

A: Crises usually have positive and negative sides. Before the pandemic, Surman was already working to improve its efficiency. The pandemic accelerated the implementation of these new processes because the team was less resistant to change.

Early in the pandemic, we started reducing the weight of new vehicle sales in the group’s general profits. We carried out a strategy to grow other business segments, such as insurance, auto parts and second-hand vehicle sales.

Q: How has this crisis impacted the different brands sold by Surman?

A: In general terms, the crisis impacted all brands similarly, with some variations. Suddenly, some carmakers were producing while others stopped and vice versa, altering market shares in the country.

We have noticed that demand is not necessarily reflected in sales. For example, the same client will be looking for a vehicle from five different brands to see which one has something available. This makes it appear the market is larger than it really is. The dealership that can deliver the car with the specified characteristics will sell the most. Loyalty to a brand is no longer the most important factor.

Q: How has Surman's second-hand vehicle market grown in the last year?

A: As part of its diversification strategies, Surman developed the second-hand vehicle segment, strengthening and growing our acquisition areas. Dealerships must operate with the understanding that second-hand vehicles must look, smell and be presented as new. With the introduction of specialized companies in the segment, purchasing and sales rules have changed. The key is to continue adapting to the market.

Q: How has the hybrid and electric vehicle (HEV) market grown in recent years?

A: The HEV market has been steadily growing thanks to environmental awareness and less fear of these technologies. HEVs have become popular within certain market segments. In addition, the hike in gasoline prices has made HEVs ideal for urban mobility and customers have noticed the benefits and savings these vehicles offer within large cities.

Q: What role does financing play in new vehicle sales?

A: Financing has always played a key role in new vehicle sales, representing about 70 percent of total sales. When the pandemic hit, we had cars but people became cautious and avoided acquiring loans because the outbreak put their jobs and the country’s economy at risk. Now that people are more willing to finance, there are fewer vehicles.

Surman represents many different brands and we align to the different financing programs each one offers. We also have our own financial arm, Time2Lease, which promotes leasing among certain customer segments.

Q: How has leasing’s popularity grown in Mexico?

A: Leasing is not as rooted in Mexico as it is in the US, where this financing option offers several tax benefits and affordable monthly payments. In Mexico, leasing varies according to specific corporate needs or is used only for luxury vehicles. Leasing is also used by companies to avoid the need to maintain their fleets so they can focus on their core businesses.

Q: How has vehicle ownership among young people changed during the pandemic?

A: Before the pandemic hit, we saw a decrease in vehicle sales to young people because they preferred to use mobility apps over owning a car. It was more practical for them to use ride-sharing applications than to deal with the responsibilities of car ownership. However, with COVID-19, this trend reversed a bit. Those using these apps can often afford to buy a car and they started to do so because they were scared of being infected.

Q: What are Surman’s priorities for the near future?

A: One of our top priorities is embracing what we have learned and continuing to evolve as a group. Once vehicle production returns to normal, we must ensure that we continue doing the work we have done during these two years. It is also crucial to keep an open mind. New brands are arriving in Mexico and the market is changing significantly. Brands that used to be in the Top 5 have been replaced by new brands that have been gaining ground in the last few years.

Surman must continue evolving and innovating. We have been developing digital tools that allow us to serve the young market niche. Young people are looking to buy their vehicles digitally and we must keep up with these trends. In addition, Surman must be prepared for the growing HEV market. Our business model will slowly shift due to the requirements of these vehicles, which are different from those related to ICE vehicles.

 

Surman is an automotive dealer group with over 100 showrooms in nine Mexican states. The group offers over 46 vehicle brands through its physical and digital shops.

Antonio Gozain Antonio Gozain Journalist and Industry Analyst