Transforming Vehicle Sales, Ownership
The COVID-19 pandemic transformed the automotive industry at every level. Among the first to be affected were dealerships, as lockdowns shut down show rooms and in-person sales for months. Although these have since reopened, the temporary shift of all vehicle sales to the online realm transformed the digitalization of the industry, client expectations and ways to meet them, as well as vehicle uses and returns on investment.
For starters, users are not buying as many vehicles. Rideshare platforms such as Uber, Lyft and DiDi, among others, are transforming public preferences for commuting. A study of mobility in Mexico City found that unless its habitants are traveling over 32 km a day (14 km more than the daily national average), it is a better economic decision to use DiDi’s services, said Richard Farr, General Manager, DiDi Mexico.
Furthermore, those who own cars can find new ways to create revenue through their vehicles, even if they do not want to drive for a ride sharing app. Vehicle owners can rent out their fleets to DiDi drivers for MX$2,500 (US$124) a week, increasing the amount of DiDi vehicles in transit throughout the country and allowing the company to meet the growing demand. However, for this system to permeate the market, financing mentalities and processes have to transform as well.
“One of the main challenges faced in transforming the idea of vehicle purchase into an investment is the lack of financing accessibility that some people face when looking to acquire a car,” said Farr.
For this, automotive financing services are also looking to improve the customer’s experience. Financers can help users to understand the opportunity a vehicle can bring them not only as a personal investment but also as a medium through which to acquire additional services, said Karla Flores, CCO, LeasePlan. “The process of buying a vehicle has to make use of an expert’s experience. LeasePlan provides different solutions so they can support that process.”
Fleet buyers now look for more information online as purchasing processes continue being led by an omnichannel digital transformation. For this, LeasePlan’s MyFleet platform incorporates different systems through which distribution managers can access fleet information and share it with potential customers, meeting the increasing demands clients have for online purchasing processes. But the source of these demands is no longer a lack of trust, it is an increase of interest.
A study conducted by retail giant Mercado Libre found that 20 percent of vehicle purchasers are now comfortable buying vehicles through a completely digital process. To help distributors provide these services, Mercado Libre has become an ally in providing digital add-on tools so they can sell “more and better,” said Iliana Vetrano, Country Head Marketplace, Vehicles, Real Estate and Services, Mercado Libre.
“Today, eight out of 10 Mexicans search for a car on the internet before deciding to buy it. This supports the relevance of omnichannel strategies for vehicle sales,” Vetrano said. Mercado Libre even developed a “Universidad Mercado Libre” program in collaboration with AMDA, Go Virtual, Google and other tech giants to better assist auto distributors through this digital transformation.
Fernando Enciso, Director, Grupo Surman, saw firsthand how the pandemic pushed distributors to adapt to technological innovations in vehicle sales, a move that had previously been strongly resisted by car salespeople who did not believe sales could also be made online. Now, “technology and information tools have become part of the backbone of the automotive business to facilitate the marketing of vehicles,” Enciso said.
The pandemic pushed the sector to transform market and customer data into useful information, according to Enciso. Now, real-time market information and maximized vehicle data are being used by distributors to help customers make the best possible decision when it comes to acquiring a new vehicle. And just as the pandemic showed vehicle owners additional ways to make revenue through auto purchasing, it showed distributors that other opportunities exist within client service. The changing usage of cars for rideshares may reduce ownership but it maximizes a fleet’s usage and creates a need for maintenance earlier on.
“Buying a car remains a highly emotional transaction due to the heavy investment it requires,” said Rubén Hoyo, Country Manager, Autocosmos. Marketplaces such as Mercado Libre and Autocosmos are identifying different areas in which users need assistance to make an informed decision. Even for customers that continue to prefer buying a vehicle in-person, processes are changing and adapting to the evolving market. Before, buyers used to visit a car dealership five to six times before a purchase was finalized. Now, it can be made after just two visits.
“Digital tools are here to stay and the challenge today is that we know people use them, so the next step is to continue consolidating and create the best relations to sell a car,” said Hoyo.