Coronavirus Crisis: Is Online Buying The Future of Auto Sales?

There is no doubt that the Coronavirus crisis has hit the Indian economy hard. Most manufacturers have shut down their production facilities and even the dealerships are closed. At least till the lockdown lifts on April 14, 2020. Dealerships across India have a combined total of unsold BS4 vehicles worth ₹ 6,400 crore. The Federation of Automobile Dealers Association (FADA) says that there are a total of 7 lakh units of unsold BS4 two-wheelers along with 12,000 BS4 passenger car units and 7,000 BS4 commercial vehicles units.

(Customers can book the cars online on Tata’s website for a token amount which starts from ₹ 5000 for Tiago)

The footfalls at dealerships have come to a grinding halt and the view is that once the lockdown is lifted, people are not going line up at dealerships to buy vehicles either. The middle-class stratum is expected to hold on to big ticket expenses until things are back to normal, which could take up to 5-6 months. And while customer traffic at dealership will still take some time to reach normal levels; this does present an opportunity for vehicle manufacturing companies to bolster its online sales, or sales through their website.

(Volvo’s parent company Geely starts online sales in China as Coronavirus keeps buyers at home)

Two-wheeler companies like Hero MotoCorp and Honda Motorcycle & Scooter India already have that provision on their websites. In fact, Hero began online sales and home delivery of its motorcycles since August 2019 and that too for a very nominal price of ₹ 349 only. Hero offers this service in 25 cities of India. Similarly, Tata Motors and Hyundai Motor India too have a microsite where interested customers can buy vehicles online. Tata Motors too offers the choice of getting its cars home delivered to its customers.

Interested customers just need to visit the company’s official website, select the car, the locality and preferred dealer and book it online. Once the booking is made, the preferred dealer will call you to begin the buying process. The sales consultant will guide you through best offers, price quotation, financing option, and even give you an estimate on an old car if you have a car to exchange. And everything will happen online over emails and video calls.

As far as premium brands are concerned, Mercedes-Benz is betting big on online sales as well. In fact, Mercedes-Benz has a target of having one-fourth of its total sales through online medium by 2025. This is what Martin Schwenk, MD & CEO, Mercedes-Benz India had to say on the topic.

“At Mercedes-Benz, we have been using e-commerce platform to support our growing tech-savvy, restless customers to purchase their cherished Three Pointed Star online. The customers can visit our online store to book their car with home delivery option. The platform is an extremely user friendly one and makes booking of a car online simple and hassle free. It allows transparency of pricing and large offer of available cars – ensuring complete online buying experience from the comfort of home. Since the inception of our platform, we have been experiencing a positive momentum. All the car-buying formalities are assisted by the nearby Mercedes-Benz dealerships. Off late, there is certainly an increase in inquiries, as customers now have the time to go through our offerings in detail from the comfort of their home. We believe that ordering a car should be as easy as ordering food online – a significant part of our total sales by 2025, will be online.”

But there are opposing views to this as well. Shamsher Dewan, Vice President, ICRA, believes that the regular brick and mortar establishments are still going to bring in bulk of auto sales.

“The situation is bleak, considering the ongoing lockdown it is highly improbable that online vehicle sales will gain prominence. India is still a country where people like to visit brick and mortar sites for vehicle purchase. At present online sales consists of a very small percentage of total sales. Going forward, there may a growth in online sales, since the base is very low, but the Indian auto market will continue to draw automotive sales from dealerships,” he says.

It is all about options! In the current situation, not only is everything shut but the market sentiment isn’t that great either. Most people will still prefer to go to a showroom, get a ‘feel’ of the vehicle they want to purchase and buy the vehicle. But they will still welcome the option to purchase a vehicle online. But it remains to be seen whether the online sale of vehicles actually becomes a substantial figure or not!

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