The steady increase in COVID-19 cases pan-India, recently breaching 400,000 cases, is seen to have created a huge fear in the consumer’s mind. A recent series of fortnightly surveys across 18 countries by Deloitte indicated that India ranked the highest among large economies in terms of overall anxiety levels related to the pandemic. While 76% of respondents were more concerned about the health of a family member than a month ago, 45% were worried about making upcoming payments and 63% indicated delaying large purchases.
Among consumers who are considering automotive purchases, most of them voiced a clear need for a very different, safe and touch(less) buying journey. Around 47% of consumers showed their keenness to buy a vehicle online without stepping into a dealership. Additionally, more than 60% of respondents were not happy with the currently available digital tools like dealer websites, vehicle configurators, comparison tools and used vehicle solutions.
As the Indian automotive industry limps back to normal in the next few months, the extreme cost-pressures most OEMs and dealers face combined with the strong consumer need for a superior digital experience are expected to result in fundamental changes to the operating model of the industry, of which some of the key changes are discussed below.
Gear 1: Brand experience – From physical to digital
The crisis has brought the need for relatable heroes to the forefront as a new breed of COVID-warriors has overshadowed larger than life celebrities. Broad-based mass advertising, large ATL campaigns, and celebrity endorsements may lose effectiveness to connect with customers in the post-COVID world. New marketing models may need a significant focus on influencer-driven digital marketing, brand live streaming, and community brand champions. China is already witnessing this shift with more than 560 million live streaming users as of March 20202, and digital ad spending growth to significantly outshine the traditional ad spending.
Gear 2: Product experience – Driven by cloud dealerships with a human touch
The number of walk-ins at dealerships was already on a secular decline, and COVID lockdowns exponentially accelerated this trend. In the recent Deloitte survey, 45% of consumers expressed hesitation to visit retail stores for purchases. Touch(less) purchase journeys that alleviate the anxiety of exposure is expected to be here to stay. Enter the era of cloud dealerships, which similar to cloud kitchens can disrupt existing asset-heavy dealerships. With 65 – 70% of dealership Capex spent on fixtures, equipment, interiors and infrastructure, and 45 – 50% of operating expenses spent on rentals and dealership manpower; there is significant potential for cloud dealers to operate at much lower costs and offer superlative vehicle test-drive and booking experience at the comfort of customers’ homes. Consolidation into multi-brand cloud dealerships can further drive efficiencies, and these savings could be ploughed back by OEMs and dealers into accelerating customer adoption of high-quality digital product experience solutions like virtual product presenters, online sales solutions and AR feature augmenters.
Gear 3: Usage experience – ‘Conscious mobility’, flexible and on-demand models
Multiple large organizations have announced work-from-home for the next few months and many others are actively looking to scale-down physical office setups. As these trends play out, consumers are expected to move to ‘conscious mobility’ – being choiceful about their trips, and having a greater sense of sustainability. This behaviour of conscious mobility could result in new micro-segments for OEMs. Four such segments anticipated to emerge are (a) consumers who will buy low-frills vehicles just for commuting privately, (b) consumers demanding rental/usage solutions recognizing lack of economic value in full ownership of a vehicle, (c) consumers desiring occasion-based vehicle availability for office/weekend trips and (d) consumers partaking in revenge road-trips coming out of claustrophobic lockdowns.
Gear 4: Service experience – Predictive and convenient
With high levels of anxiety around health and safety, and low expected running of vehicles, vehicle servicing is clearly expected to become a critical and less exciting moment of truth. Around 63% of the Deloitte survey respondents were planning for out of regular vehicle maintenance. Users are likely to place a high emphasis on vehicle uptime and maybe even pay a premium for optimized maintenance. Pre-defined service schedules are likely to give way to condition-based maintenance. Proactive sensing and predictive maintenance alerts are likely to become key expectations from auto brands to help consumers plan their schedules, rather than vehicle breakdowns throwing nasty surprises in these uncertain times.
Also read: How car rental could be your new safety move against COVID-19 after lockdown
Gear 5: Loyalty and retention experience – Personalized and curated
As consumers move online for most parts of the buying, usage and service journey, there will be a tremendous amount of data generated uniquely about each consumer. Combining this with powerful telematics data generated from connected vehicles, OEMs can move towards high levels of individual personalization seen in e-commerce and OTT entertainment firms. OEMs who can provide curated products, experiences and financing solutions to customers, connect them to like-minded brands and offer apt upsell/cross-sell opportunities at the right time are likely to be best placed to win in the new normal.
As automotive OEMs seek to navigate these shifts, it will be critical to focus on human connections and emotions rather than disconnected point-technology solutions. OEMs would need to identify which human experiences can drive the maximum impact and marshal digital platforms to achieve the change. Firms that experiment fast, and adapt in an agile manner are likely to be best placed to win in the new normal. The time to act is now – after all, how often do OEM competitors start on a level playing field with 0% market share just a few months back?
Authors: Karthik Vasudevan, Partner, and Gyanesh Sinha, Director, Deloitte India
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