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The Coronavirus pandemic has created a chaos in the Auto Industry and these trying times demand Disruptive Innovation in the way business is done!
The Automobile Dealerships Fraternity is one of the worst hit business in the current times. The Business was already grappling with the economic slowdown in the previous FY and the covid 19 pandemic made the situation even worse for the automobile industry. The lockdown in India meant that the OEMs and the dealerships were completely shut during the period and both the parties faced colossal business losses. The lockdown’s impact to the automotive sector has been so severe that the industry body SIAM estimates that the auto industry would have lost ₹2,300 crore turnover every day due to the lockdown. In dealerships perspective; the losses would actually be more lethal and it is time that they take adequate steps to slowly move towards normalcy.
Let us first see how the businesses have resumed post lockdown:
Even as on date; all automobile dealerships are still not open! While the lockdown was imposed from March 23rd 2020; still many dealerships have their shutter down in India (specifically in areas where the covid spread is increasing and authorities have asked businesses to remain shut).
The dealerships which have resumed operations are facing deserted showrooms, no buyers, existing booked customers shying away from the purchases!
The drained economy has made things worse – Potential buyers have either lost money either in their businesses or the working class is just concerned about retaining their jobs. The overall sentiment isn’t very encouraging.
Fear Factor among the prospects visiting the showroom – The new norms at the dealerships include plastic wraps on steering wheels and seats, home drop-offs for test drives and personalized new-car deliveries! Still customers fear visiting the showrooms to avoid contact.
Will Test Drives cease to exist? For now, Yes! Customers are simply skipping Test Drives for now and are judging more on the knowledge gained online!
So what should the Automobile Dealerships do deal with the current situation? We strongly believe in the philosophy of ‘ADAPT TO SURVIVE‘ and the steps we recommend is as mentioned :
Safe Dealership Environment: The Dealerships resuming business have to take adequate measures to ensure the safety of its employees and the customers. This can only happen with the rigorous implementation of Social Distancing, Usage of Sanitizers, Regular Cleaning of Touchpoints and Wearing of Masks. Any glitch can jeopardize not only employee / customer health; but shall also jeopardize the business operation itself.
Effective Stock Management: Stock Carrying Costs is one of the highest expenditure for an automobile dealership and has to be immediately looked at. Dealerships should focus all efforts in liquidating the stock in hand and also get only those models/variants from the OEMs where they have a customer order. Or else stock carrying cost can drain out a significant amount of Dealerships Capital. The current stock levels at the dealerships is extremely scary (~4 times that at OEMs) –
Source: ET Auto
Strengthening Online Presence: While all the major OEMs have taken initiatives to serve the customers online; the dealerships would have to be even more proactive to approach the prospects online. We recommend that the dealerships approach natural ways to engage prospects (Ex: Dealership Website, FB/Insta/Twitter Page); rather than focusing on paid channels. This will ensure that they are able to serve the right set of customers and also enable them to strengthen their engagement on online channels. The catch here will be the faster time of response – Dealerships would have to be extremely active in terms of responding to the customer queries or they may just lose that customer!
REDUCE COSTS: This is going to the biggest mantra for now. We have explained earlier on how capital intensive automobile dealerships are – here. It is high time that the automobile dealerships review their business costs and cut the optional expenses. Also it is imperative that dealerships running multiple outlets take a call on closing down the outlets which been unprofitable since more than 12-18 months. It does not make any practical sense to drain resources on non performing outlets at this critical juncture.
Build Relationships: After a sale is commenced; generally customers are ignored. We haven’t seen a breakthrough CRM at any dealership who tracks customers important dates (like birthdays, anniversaries, etc) and take respective action to approach. However; this is the time that the dealerships value the relationship with their set of customers and INTERACT. A vehicle purchase is an emotional one and a healthy relationship between the buyer and the seller will make the entire ecosystem fruitful. Also a happy customer will always be a trustworthy source of references to improve business!
Enhance After Sales Experience: Lot of efforts should be laid on ensuring that the customers have a fuss-free and delightful vehicle service experience. These are difficult times for all – and a bad after sales experience can be detrimental to any brand or dealership!
Manpower Training: Manpower is undoubtedly the most important resource in any organisation. Automobile Dealerships consistently were facing challenges of having untrained/unprofessional manpower. They shall not get a better chance to equip their team with the right set of tools to serve customers better. A well trained manpower can definitely become a major USP in the current situation.
Unite: We have seen automobile dealerships get into petty fights to secure a customer. Many a times higher discounts are offered; or even bad mouthing of competition is done to gain a customer. The fraternity needs to value the saying – ‘United we stand; divided we fall’. The dealerships have to unite together to ensure ethics are maintained in business across the channel and maintain adherence.
Higher Margins: The Margins of Passenger Vehicle Dealers in India is among the lowest in the world! Also among all businesses; automobile dealership businesses command one of the lowest margins. It is a meager 4-5% in India; while a automobile dealer in Europe earn upto 14% in Europe. It is high time that the Vehicle Margin Levels are reviewed and increased to support the dealership business operations. However; this call has to be taken by the respective OEMs and dealers should unitedly demand for it.
As per FADA; the automobile dealerships across the country employs over 40 lakh people at dealerships and service centres. These include 25 lakh direct employees and another 15 lakh who are dependent on dealerships for their livelihood. It is extremely imperative that the automobile dealerships make a way out of this chaos till demand picks up. And yes; there will be a shift in consumer demand. People are going to want private transportation and would not want to use public transportation – But unless it translates into end sales; dealerships will have to survive till then!
If you liked this article; we strongly recommend you to read through the ‘All about Automobile Dealerships’ Series – Part 1, Part 2, Part 3 and Part 4.
The Punto was actually the worldwide successor of the Uno in Fiat’s portfolio. Fiat had launched the Punto nameplate globally in the year 1993. Internally code-named Project 176, the Punto was announced in September 1993 as a replacement for the ageing Fiat Uno and was finally launched in the end of 1993 in the global markets. The Fiat Punto was voted European Car of the Year for 1995, defeating rival Volkswagen Polo! Punto was designed by one of the world’s most iconic car designer Giorgetto Giugiaro – He had designed models in brands like Alpha Romeo, Maserati, VW, Lamborghini & even Ferrari. Giugiaro is widely famous for designing the DMC DeLorean which was notable in its own time for its unique design and was also featured in the Hollywood Blockbuster Series Back to the Future.
India actually received the third generation Punto; also known as the Grande Punto. The car was based from the GM Fiat Small platform – Developed from 2002 in Italy, by Ulrich Schmalohr the engineer head of Opel (subsidiary of General Motors) and Giorgio Cornacchia head-project of Fiat Auto the Small platform was designed to be adaptable for Fiat Group and General Motors small cars. Even the Opel Corsa D was developed from the same platform. The Grande Punto was launched in India during the Delhi Auto Expo in January 2008, with sales starting in June 2009. The Punto was manufactured by the Fiat Tata Motors joint venture Fiat India Automobiles Ltd (FIAL) in a new plant in Ranjangaon, Maharashtra.
We present the reasons why the Fiat Punto makes an entry in the ‘Gone but not Forgotten’ series –
Punto was the best selling model in the Fiat India’s Lineup. Fiat had sold 72,235 units in the 10 years of the lifecycle of the model.
Timeless Design – Even as on date Punto stands out as one of the best looking hatchback on the road! No wonder it was designed by the legendary Giugiaro. The car’s nose, headlights and front grill look reminiscent of the Maserati Coupé (both were designed by Giorgetto Giugiaro of ItalDesign).
Solid Build Quality – The car at its time had received 5 star safety ratings in the Euro NCAP and felt the sturdiest vehicle in its category. Still the Punto customers go gaga about Punto’s solid build and paint quality levels.
Calibrated Handling – The car had set new benchmarks in terms of ride quality, high speed dynamics and overall handling. It was nothing but an enthusiasts dream!
Excellent Steering Feedback – The Punto was one of last small cars to be equipped with a hydraulic power steering. The steering was brilliant to use and gel well with the ride and handling prowess that the car possessed.
Came with National Diesel Engine of India – Fiat was the pioneer of 1.3L Multijet diesel engine and the one in Punto developed 74 bhp Power and 197 Nm of Torque.
An Enthusiasts first choice – Punto was one of the first cars to give importance on the overall driving pleasure and ride quality. Even Fiat marketed the Punto to be crafted for a True Fan!
The model was surely a savior for Fiat India – The car contributed to 51% of Fiat’s sales in India during its timeline!
Fiat later launched various iterations/updates – namely the Punto Evo and the Avventura –
The Punto + Evo + Avventura’s combined sales was 72,235 units
Even the Abarth version of the Punto was launched in Jan 2016 and it could sell 357 units in its lifetime.
Also though Linea was launched before Punto in India; It was developed from the Punto platform!
Let us look at the Punto’s Sales Trend through its years of existence in the Indian market –
The Punto had a promising start and sold 9,674 units in the first year of its launch.
Punto’s sales increased in the second year and crossed 10k sales mark in 2010. It continued to cross 10k sales in 2011; but post that could never achieve the feat.
Do note that Punto was sold in Tata showrooms in its initial days. The showroom staff always had a dilemma to pitch Fiat’s Punto or Tata’s Vista! The inhouse clash actually affected both the brands.
The sales did improve in 2014 when the Evo was launched and this time in a dedicated Fiat Showroom.
However; the sales couldn’t stabilize and the volumes fell owing to :
Low Resale Value
Poor Service Experience
Higher Cost of Maintenance & Reliability Concerns
Lower Network Availability
Anyhow with the death of Punto; Fiat brand too takes an exit from the Indian Market. All efforts from FCA is to focus on Jeep marque for India.
Punto made an impact for pioneering the ‘hot hatch’ culture in India. The Indian consumer was traditionally devoid of performance oriented, good looking and capable hatches – Fiat broke the mould and launched the Punto in the Indian market. Punto was always an enthusiasts car and shall always be remembered as one!
What we understand is that Wishbox 1.0 was a massive success in 2019. This has led to Mercedes Benz bring out a more aggressive Wishbox 2.0 now. A lot of OEMs are focusing on announcing smart financing schemes to support customer purchases in the Covid era. While Mass Market OEMs like Hyundai, Mahindra, Maruti, etc have already announced similar schemes; Mercedes Benz takes the initiative in the Luxury OEMs.
Wishbox 1.0 actually helped Mercedes strengthen the leadership position in 2019. We believe that Wishbox 2.0 is way upgraded from Wishbox 1.0.
What was Wishbox 1.0?
Key-to-Key Change : The plan allowed the customer own two Mercedes-Benz cars in a span of four years. It allows for two upgrades for no extra cost. And package was offered on the Mercedes-Benz GLE, GLS and S-Class.
25-25-25-25 : The scheme allowed the buyer to purchase the Mercedes-Benz product in four installments. The first installment was 25 per cent the price of the car and then pay three annual payments of 25 per cent each. The cars included in the offer were Mercedes-Benz GLC, GLE, GLS.
Zero Down payment : The regular downpayment of the Mercedes-Benz is at 40 per cent of the price. This scheme took off that hassle and the customer only paid the road-tax to purchase the car/SUV and then the rest of the amount was converted to EMIs for the next 60 months.
Star Agility+ and Comprehensive insurance : The package provided new customers with 40 per cent lesser EMIs which are inclusive of the maintenance, warranty and assured buyback. Also complimentary insurance program was offered for two years from purchase.
Our Views: It was majorly focused on getting more customers know the Brand.
What is Wishbox 2.0?
EMI free period – no EMI for first three months
Step up 2020 – lesser EMIs for the first six months with regular EMIs starting from 7th month of purchase
10 year loan – 10-year extended loan
Hence what ‘Wishbox 2.0’, primarily offers is customized financial solutions including no EMI for first three months, lesser EMIs for the first six months with regular EMIs starting from 7th month of purchase and 10-year extended loan.
Our Views: We believe that the scheme is aligned towards the current Market situation where customers are scared. Hope the demand picks up basis easy and comfortable finance options.
Online Sales Experience by brands. What we feel? Also, some feedback for the Manufacturers..
Car buying in India has always been driven by the ‘Touch & Feel’ model. While the consumers used to ‘research’ online; a lot of activities was still conducted at the showroom for finalizing the purchase. The activities primarily included Display & Demo of the Car, Test Drive, Booking, Finance Options, Exchange and finally delivery of the car. Covid 19 Pandemic has turned the dynamics of car purchase and is going to change the way people shall buy cars (atleast for now). While customers would be wary to physically approach the dealership and take the transaction ahead; majority of the OEMs have jumped to provide the ‘Online’ route to the prospects.
We are still on Websites when customers rarely use them:
We believe the OEMs are still lagging behind in the use of technology. While the world has graduated to the usage of apps; the OEMs have just stepped in to provide options to purchase vehicle online – and that too its not seemless in many cases. These are Covid times and manufacturers just need to be ahead of the curve!
As connected capability grows, automakers are investing significant resources in developing mobile apps for their vehicles. Despite a considerable effort, many apps are falling short of automakers’ hype. In the interconnected world of smartphone apps, the negative consequences of not delivering what’s promised can be profound.
Let’s review all the Online Car Selling websites available:
We have attempted to go through all the major Mass, Premium & Luxury brands to understand their Online Sales process. As mentioned before we feel that, all of them are still on websites when the world is on apps. Amazon & Flipkart have spoilt customers of choices. We see brands like Mercedes Benz who are able to display their stocks on the website. This seems to be by far the best brands could reach up to.
While we compare all the Websites; many of them have done a decent job, while some interfaces aren’t friendly at all. We present you the snapshot of our assessment here –
Mahindra, Kia & Nissan outdo the other Mass & Premium Car Manufacturers:
Mahindra: Simple, Detailed & Complete purchase experience. Hence Excellent Rating. Do visit the link mentioned below.
Integration with Mahindra First Choice a good option to facilitate exchange
Kia: Premium Experience, Well Guided, Felt special through the experience. Do visit the link mentioned below to know more. Kia had already tasted success during the Seltos Pre-Launch bookings phase. It has received considerable amount of bookings online. It is now attempting to go seemless for the entire purchase experience now.
Entire Showroom Feel right from your mobile device!
Let’s now review Online Buying Options of Luxury Brands:
BMW was the first Luxury brand to come very aggressively with their online experience. I would say it was well presented but it doesn’t win this battle of the Best Online Experience. Lot of work required to make the website feel premium.
Mercedes Benz – Leader in the Luxury Space. Didn’t quite meet the expectation of Luxury on it website. We just missed the sheer opulence while we went through the website. Yes, Mercedes was one of the only brands with Real stocks in place which can be booked but it just didn’t attract us.. “ Mercedes is considered to be the epitome of Luxury in India.” – They need to put more effort on their website_ it isn’t simply rich..
Audi: Steals the show with AR (Augmented Reality). While other options have been kept very simple. Very close to this would be a Mercedes & then a BMW.
Just feel that the Top 5 luxury brands should come together to create an integrated app for the benefit of the customers. All of the brands can be on the Menu and feel some one should take the leadership in getting this done.
We anticipate many more disruptions in the days to come in the ways cars are being bought. Let’s see how things transition in the way ahead.
The Venue was the first car in India to bring Hyundai’s 1.0-litre turbo petrol engine. Among Venue buyers, this engine accounts for a 47% share. Now this engine is available in the Aura sub-compact sedan, Grand i10 Nios hatchback and Verna compact sedan. Soon, this engine will power the Kia Sonet and the next-gen Hyundai Elite i20. It comes with 100PS and 120PS power ratings. The 100PS version is available in the Nios and Aura with a 5-speed MT. The 120PS version is available in the Venue and Verna. Transmission options for the 120PS variant are a 7-speed DCT automatic and a 6-speed MT.
The Aura turbo’s only rival was the Tigor JTP as it had a 3-digit power figure. Now, there’s none. A year ago, Nios turbo would have rivalled the Baleno RS, Tiago JTP and Polo GT. Now, only the Polo has comparable performance from its new 1.0-litre turbo petrol engine.
The Nios turbo’s torque-to-weight ratio puts it in the league with of Abarth Punto. So, its acceleration should be the best you will ever experience for a sub-Rs. 10 lakh car.
Hyundai and Kia are going against the tide and winning customers over. Almost all of their cars come with a diesel and a small turbo petrol engine. In times when everyone else is going lean, these South Korean sister companies are expanding like there’s no tomorrow.
It’s worth noting though, that the 1.0-litre turbo petrol is the only engine option in the reasonably equipped variants of the Venue. Naturally, it has an upper hand over the 1.2-litre normal petrol engine.
Multiple reports are pointing towards the imminent launch of Maruti S-Cross petrol. The exact launch date is still under covers but dealers are unofficially accepting bookings for the car.
Maruti Suzuki S-Cross
The Brezza went from diesel-only to petrol-only while transitioning to BS6. The S-Cross is also doing the same thing. It’s unclear if the S-Cross will offer the hybrid engine with the manual transmission or reserve it for the automatic. Their 4-speed torque converter is a vintage piece of tech with gas-guzzling characteristics. The hybrid part boost helps it negate the fuel efficiency disadvantage to a great extent.
Opinion
After dominating the diesel passenger vehicle segment for over a decade, Maruti Suzuki suddenly dropped diesel engines entirely from their portfolio. VW/Skoda and Renault – Nissan are also on the petrol-only path. Honda are also dropping the diesel option from a few vehicles but retaining it in others. This is leaving the playing field open for Hyundai and Kia to scoop it up. Kia was reporting a 50-50 split between petrol and diesel engine options for the Seltos. That suggests a strong demand for diesel engines. After the COVID dust settles, things could go in any direction. For now, Hyundai and Kia are ready to grab the entire diesel passenger car market as they have a diesel engine in almost all of their cars.
After Renault, Maruti Suzuki are also offering a 2-month EMI holiday option with the purchase of their cars. It’s available from their partner, Cholamandalam Investment and Finance. Under the offer, you can opt to start your payments 2 months after the purchase of the vehicle.
Opinion
Renault also announced a similar offer with a 3-month EMI break. However, unlike Renault, Maruti Suzuki haven’t clarified the maximum principle, rate of interest and the loan tenure to benefit from this offer. Renault’s offer has a loan amount cap depending on which vehicle you buy.
Update May 24: We spoke with an Edelweiss representative and found out that only fire and theft are included for the entire year even when you turn off the cover through the app. This is a first-party cover only and you’ll have to separately buy a third-party add-on, which is required by law. This is a zero-dep cover by default and also includes cover for consumables and road-side assistance. You have to maintain a 60-day balance in the account. The first payment includes that 2-month balance. For a total insured sum of Rs. 5.0 lakh for 2 cars and 2 drivers in the house, a typical initial payment will be a little over Rs. 5,000. The monthly payments will be around Rs. 1,000 – IF – you use your vehicle every day of the month. Otherwise, the amount payable will reduce depending on the number of days you enable the cover as the premium is applicable on a daily basis. So, the maximum yearly payment will come to about Rs. 15,000. Considering that I have only used my vehicles about 10 times in the last 2 months, I would have to pay about Rs. 350 for this duration instead of Rs. 2,000 under this plan.
General insurance provider, Edelweiss, have announced a usage-based insurance plan. Under this, you can have up to 3 vehicles and up to 3 drivers insured under 1 plan. You can then enable or disable the plan depending on your usage. Some protections from natural calamities, theft, fire, etc. are covered even when you have paused protection. There’s a yearly payment involved and after that, you pay a monthly payment, which varies depending on your usage.
Overall, this should help you cut down on insurance costs if your usage is limited. Unfortunately, there is no option for a 0-depreciation cover under the Switch plan. So, if you have a new vehicle and you like to keep it as protected as possible, then this is not for you.
For most vehicle owners, this could help them save some cash if their vehicle usage is minimal or seasonal. This plan also changes how we use vehicle insurance as it brings customers into a subscription world. Just like a Spotify or Netflix subscription, your vehicle insurance premium could become part of your monthly bills. This option could improve customer retention for Edelweiss.
What we understand is that Wishbox 1.0 was a massive success in 2019. This has led to Mercedes Benz bring out a more aggressive Wishbox 2.0 now. A lot of OEMs are focusing on announcing smart financing schemes to support customer purchases in the Covid era. While Mass Market OEMs like Hyundai, Mahindra, Maruti, etc have already announced similar schemes; Mercedes Benz takes the initiative in the Luxury OEMs.
