Juan Mauel Díaz
Automotive Practice Director at Overlap Consulting Group
Overlap Consulting Group
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Insight

Digitalizing Dealerships Will Drive Sales

Sat, 09/01/2018 - 09:41

Vehicle sales channels are changing as car buyers arrive to showrooms armed with data and as information technologies provide dealerships an opportunity to respond rapidly to client requests and more effectively follow up. As the Mexican market faces depressed vehicles sales, digitalization could help these companies move more cars.
“Walk-in clients that arrive to showrooms without having done any prior research are becoming scarce,” says Juan Manuel Díaz, Automotive Practice Director at Spain-based consulting firm Overlap Consulting Group. “People now arrange a meeting in a showroom to see the vehicle they have already researched.” Approximately 70 percent of the sales process will take place outside of the three or four showrooms that a potential client will visit before buying a car, according to Díaz, which means dealers face the challenge of focusing on digital channels to better capture customers.
Overlap Consulting Group helps dealers implement business programs and train their talent to ensure sales in a changing environment. With 30 percent of its Latin American operations focused on the automotive industry, the company takes advantage of its experience to help automotive companies harness market trends including digitalization. “Distributors that do not include digital channels in their sales strategy face the risk of not selling,” says Díaz. With most of today’s car-buyers, the decision-making process happens outside the showroom and mostly online. Díaz says dealers must get involved with potential clients as they look for information on the vehicles they want before coming to the showroom.
“Distributors need to create value-added content that prompts potential customers to take action. Adopting new marketing formats, such as video and social media, will be key in this process,” says Díaz. A major area of opportunity for Mexican dealers to better capture digital leads is offering clients immediate attention through websites. “Clients that receive all the information they need right away leave with a good impression of the company, which builds trust to continue with the sales process,” says Díaz. This is an area where most dealers have their work cut out for them. However, the appearance of new apps like Sirena that enable dealers to better capture digital leads could help in this regard, sometimes boosting sales results two or threefold. “This app captures leads and sends them immediately to a company’s sales force whereby the first salesperson to answer gets to keep the lead and the potential client,” says Díaz. “This creates a 24/7 sales strategy as some salespeople will answer immediately, even in the middle of the night.”
The entrance of digital players into automotive sales in Mexico is changing the way dealers compete. Díaz says digital dealerships such as Car Fast are jumping at the opportunity to reach customers more effectively. “These new players perform a deep analysis of clients and offer them a range of vehicle options that adapt to their needs and budget,” he says. Since digital dealerships give clients everything from financing options to test drives before the final vehicle delivery, a new challenge arises for traditional vehicle sales channels. “Even though digital platforms depend on dealers to source the vehicles, dealerships are starting to lose importance and could say goodbye to part of their profit as the owners of digital interfaces absorb the most winnings under new business models,” says Díaz.
As light-vehicle sales contract in the domestic market, the incorporation of effective sales strategies becomes a matter of life or death for dealers. Díaz forecasts further contraction of 7-8 percent in vehicle sales in 2018 to around 1.35 million units due to uncertainty regarding the 2018 federal elections. There could be a more positive scenario where sales bounce back in the second half of the year but still, growth levels will be far from the rates seen in 2015 or 2016.
However, not all clouds are charged with rain and Díaz says it is possible to harness opportunities despite the storm. “In Mexico, the A and B segments are the largest and most sensitive to changes in the country’s economic environment,” he says. Newly-arrived brands have the opportunity to strengthen their line-up and attack new market segments.