Image credits: Volkswagen of America
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Analysis

MAR21 - Sales Go Digital; Mobility More Integrated

By Alejandro Enríquez | Thu, 03/18/2021 - 06:00

Digital channels are the new normal. As the pandemic accelerated e-commerce, materializing the leap that was expected to take years, the automotive industry embraced the challenge of digital sales through diverse strategies, from partnerships with large e-commerce players and banks to extensive training programs focused on the online sales channel. Dealerships are no longer in the business of selling but are also creating content.

"Government orders to close dealerships and mobility restrictions forced the market to take a big leap into digitalization. Interestingly enough, although some companies had already adopted digital strategies, most market players transitioned toward digital sales slowly," said Guillermo Rosales, AMDA's Director General, in an interview with MBN.

 

The Challenge to Go Digital

AMDA, grouping more than 2,400 dealerships in Mexico, has taken an active role in enhancing the capabilities of leadership at the helm of sales forces through partnerships with Mercado Libre, Google and JATO Dynamics, among others. Jorge Dávila, Head of the Automotive Marketplace at Mercado Libre México, highlights that eight of every 10 people start their purchasing journey online. "Five years ago, the challenge was how to generate the first digital contact with customers, as they had to visit several websites. The challenge now for dealerships is to embrace the digital process and to take sales to the digital world," he said.

There are two key elements that play a fundamental role in digital sales, according to Mercado Libre. One is transparency and the other is immediacy. "Consumers are looking for transparency and at Mercado Libre, we always make sure there are enough pictures, videos, clear descriptions and sufficient technical information for the customer to make an informed decision. Second, people are looking for quick responses," said Dávila.

Car Fast, one of the first fully digital automotive dealerships, has successfully built a business model solely focused on digital vehicle sales. "We started with a business model where our role was that of a digital marketplace for dealerships and banks to offer their products and services. We had to have a great deal of patience to see the results that we are seeing today," said Nazareth Black, CEO of Car Fast, in an interview with MBN.

The challenge to go digital
Learn more about the key elements to go digital.

 

 

Key Elements That Play an Important Role in Digital Sales

Partners at KPMG and Deloitte highlight other important elements for a successful digital sales strategy. They agree a digital sales process should continue to focus on the customer. KPMG highlights two distinctive elements: local customers and an immersive experience.

"Sales strategies should focus on local customer needs, which cannot be compared with consumers in other countries," said Albrecht Ysenburg, Partner Leader of Automotive Industry at KPMG, to MBN. Face-to-face interaction should not be neglected either. "Dealerships and brands should balance an immersive digital experience with a final physical interaction," said Óscar Silva, Partner Leader of Global Strategy Group at KPMG.

Deloitte notes that a customer-centered focus requires personalized experience and an important research element. "Brands must understand their customers. Customization is leading the way; a general focus is not enough anymore," says Alberto Torrijos, Auto Sector Partner Leader at Deloitte. Manuel Nieblas, Manufacturing Industry Leader Partner, agrees. "The more dealerships and brands understand the customer, the faster their recovery will be," he said.

Key Elements for Digital Sales
Key Elements for Digital Sales

 

First Mexican Unicorn

Kavak was the first Mexican company to reach the “Unicorn” status, achieving a valuation above US$1 billion. The company is backed by SoftBank, a Japanese holding with major tech investments across developing economies. Kavak's busines model is based on an online platform to purchase and sell used vehicles, a segment that had been left mostly to informal transactions.

"We learned that given the informality levels of the market, there was no room for those transactions to be financed, which made it more difficult for a potential customer to sell or purchase a used vehicle. Globally, between 80 and 90 percent of used vehicles are financed. In Mexico, this figure drops to just 5 percent. There was a huge gap in the segment," Carlos García, CEO and Co-Founder of Kavak told MBN in 2020.

The company has expanded its operations to Argentina by purchasing Checkars, a similar platform in the South American country. In Mexico, the company has opened locations beyond Mexico City, in Monterrey, Guadalajara, Puebla and Queretaro, with more locations to come. The company has been only in the market for four years and since 2019 it has become a leader in its segment, bringing on board other industry leaders from the mobility sector, such as former Uber México CEO Federico Ranero.

Kavak's business model gathers all the necessary elements for a successful digital sales process. "We are obsessed with finding new alternatives for our customers under a full digital experience or through a personalized experience related to the vehicle," said García. "We work to reduce the unnecessary time our customers spend looking for a new car." The company integrates financial options and offers a unique "trial period" through which potential customers have seven days or 300km to test their vehicles, creating a transparent, immediate and fully customized experience. "We are very passionate about our customers," said García.

Kavak
Kavak became the first Mexican Unicorn

 

 

Brands Going Digital

Big players in the Mexican market have announced strategies to strengthen their digital channels, as well. Volkswagen considers the digital transformation a positive consequence of the COVID-19 pandemic and it celebrates its accomplishments in terms of its digital presence in a market that constantly demands more and more digitalization. 

Segments like luxury vehicles, however, have noted that real-life experience is essential in vehicle sales. "The pandemic has shown that offering a 100 percent digital experience is not enough. When someone buys a luxury vehicle, the contact our dealer network has with that person is still crucial," said Raúl Peñafiel, Director General of Jaguar Land Rover Mexico.

Brands Going Digital
Brands are focusing on digital strategies while addressing shared mobility needs.

 

Shared Mobility

Before the pandemic, industry leaders agreed that shared mobility had arrived to stay. However, as lockdowns and social distancing measures became stricter, this trend seemed to falter. When asked about her perspective on mobility trends, Gretta González, General Manager of Shared Rides at Uber México, said the pandemic had permanently changed people’s lives. “We are aware that the pandemic has its ups and downs. We are living in a really complex moment where we have different mobility restrictions from state to state,” she said to MBN.

Uber is Mexico’s market leader in ride-hailing and other mobility services, such as shared scooters, bikes and taxis. The company has embarked on partnerships with startups, including Kavak and Urbvan, to expand its mobility offering. With Kavak, the company aimed for potential drivers to acquire a vehicle at competitive prices. Urbvan, meanwhile, is a startup focused on inter-city travel, mostly from Mexico City areas and other neighboring states. Uber users will now have this option available.

“Our goal is to be the mobility platform that best adapts to what Mexicans need and that they can trust. Moreover, one of our commitments is to become a sustainable platform to set an example for the future,” says González. The ride-hailing giant aims to offer more integrated mobility solutions that could expand to public transportation, by bringing together all available options. “We want Uber to be the everyday platform for mobility,” said González.

Photo by:   Volkswagen of America
Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst