70% of Indian automobiles sales to be digitally influenced by 2020; here’s why

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Published: May 12, 2017 3:12:32 AM

Almost 70% of Indian automobile sales—valued at $40 billion—will be digitally influenced by 2020, says a new report by Bain & Company and Facebook

The report collated responses from 1,551 Indian customers who had purchased a vehicle in the last 12 months and surveyed their purchase influencers. (Reuters)

Management consultancy Bain & Company and social networking giant Facebook have released a report that says almost 70% of Indian automobile sales, or $40 billion, will be digitally influenced by 2020, compared to $18 billion today.

The report ‘Changing Gears 2020: How Digital is Transforming the Face of the Automotive Industry,’ which looks at the impact of digital technologies on the automotive industry, finds that digital engineering, 3D printing, smart sensors and the Internet of Things (IoT) are poised to disrupt auto R&D, manufacturing, sales, marketing and after-sales services. “Social media will influence about 40% of sales valued at $23 billion by 2020, up from 20% of sales today,” it noted.

The report collated responses from 1,551 Indian customers who had purchased a vehicle in the last 12 months and surveyed their purchase influencers. “As digital technologies cause disruption across the value chain from manufacturing to after-sales service, rules of the game are changing, and new opportunities and threats are emerging for automakers. Players from outside the traditional auto industry are witnessing rapid growth the world over. It is important to evolve the business model to tap into shifting profit pools,” said Karan Singh, MD at Bain & Company India.

“Technology is transforming the automobile industry in unimaginable ways and the report discusses quite a few insights,” added Umang Bedi, MD, Facebook India. “Today’s ideas go from drawing board to production in months rather than decades. All this advancement and focus on digital will deepen relationships between customers and auto manufacturers.”

The findings point to the changing role of the automotive dealer, with almost 72% of customers selecting a vehicle brand and 49% choosing the vehicle model before stepping into a dealership. As a result, the dealer contribution is often limited to influencing the variant of the vehicle purchased. Though dealers have started to shift towards better digital engagement with their customers, more than 85% of the dealers surveyed say they still use bulk SMS and database calling as their customer-targeting process.

Lastly, most Indian automobile OEMs are behind the curve in digital investments, spending 10-11% of their marketing spend on digital mediums in 2016. The report suggests automotive OEMs should redefine their marketing and customer engagement efforts to reflect the current behaviour and usage patterns of automobile buyers.
(The full report is available for download at https://we.tl/iwFIhoPtVw).

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