Will Digital and Autonomous Advances Put the Distribution a Rack?Fri, 09/01/2017 - 10:49
Distribution groups keep opening new dealerships but instead of visiting them, many clients only go there to finalize their purchasing process. Online research has become the new normal in the industry and gradually, companies are realizing the importance of a strong digital presence to attract new customers. Used vehicle sales have already moved from the classifieds in newspapers to a digital world and although Mexico is still a young country in terms of e-commerce, new vehicle sales could one day leap to the internet. At the same time, the evolution of autonomy and the sharing economy opens the question of how much vehicle sales could grow when ownership is no longer a priority
We might be near the end of the dealership business as we know it and yet we continue inaugurating dealerships every year. We only hope we have the talent and strength to continue listening to our customers. People will always need mobility solutions. However, new developments such as the evolution of electric and self-driving platforms will transform our business. Only one of these technological developments could radically impact how we see our business today; yet they are all coming at the same time in a “technological tornado.” All industry participants need to start planning ahead, redefining what the new distribution model will look like into the future and developing solutions that will solve our customers’ mobility needs going forward.
As the industry evolves, Mexico faces an imminent challenge in distribution and manufacturing. Our whole industry is based on a product that in 10 or 15 years will cease to be relevant. We must prepare for when that happens. Global trends now dictate that cars must emit zero emissions and aim for zero accidents, while reducing ownership. Although we still do not know when it will happen, we can be sure that just as vehicles are now transforming, so will the role of dealerships. I do not think they will disappear, however. Their activities might become more digitally oriented but there will always be a need to have a point of contact between the OEM and the consumer.
Digital marketing and social network presence will become a priority for all distributors. However, I do not think clients will ever stop shopping at dealerships. Cars will not be sold online, at least in the short term. There will be a need for a strong community managing strategy that translates leads generated online into actual sales in the dealership but this will be a complementary process rather than a transformation strategy. Shared economy will not destroy the dealership business model either. People that own a car will be able to share it, just like people that do not own a place at the beach can now access one through an internet application. Global forecasts predict technology will decrease new vehicle sales but I do not see that happening. Mobility needs keep growing and services like Uber create a new market segment.
The industry is still in a development phase and we need to see these innovations as an opportunity rather than a threat. Many things need to improve and even our dealerships are worried about how technology will impact their business. Retail will change to incorporate digital outlets but physical presence will always be necessary to offer maintenance and repair services, so I do not fear the destruction of the distribution model. On the contrary, shared economy will become the new normal, boosting industry growth in a different way
Technology adoption deadlines have narrowed immensely. No dealership group knows exactly how social media works, yet it is probably the most cost-efficient way to position the brand in the market and generate new leads. I see both dealerships and digital sales platforms as complementary rather and opposing forces. Even though companies like Amazon have had success in clothing sales, department stores have not yet disappeared. Therefore, we are working with a company in Silicon Valley to help us understand how the digital world will evolve and which new virtual tools and strategies we will have to put in place in the future.
There has been a noticeable decrease in traffic to showrooms. Right now, buyers who visit dealerships have already decided to make a purchase, since they have researched what they want and the terms of their purchase. For that reason, our main strategy is to grab this opportunity by not letting anyone leave our showrooms without a sale. Dealerships will keep running but the high rental prices of real estate and local maintenance make it more difficult for car distributors to survive in metropolitan areas. Bigger facilities are no longer sustainable and the model is beginning to adjust.
Carlos López de Nava
Almost 69 percent of the used-vehicle market exists online and one day, people will buy new cars online. Clients will still have to receive maintenance and repair services every six to eight months at dealerships so our responsibility will become offering excellent service, first and foremost. Even though our support represents a cost for automakers, we also help them solve many problems and deal with the client directly. People have been predicting the death of the dealership for 60 years but it has not happened yet and dealerships will not disappear even if platforms like Amazon enter the business. When autonomous cars become a reality, we will shift our focus toward them just as we have done with all innovations entering the market.