Vehicles & E-Commerce: The Future is Reaching Us
By Iván Iglesias
Current times, marked by the presence of a pandemic that does not seem to give way, are characterized by constant adjustment and adaptation to new ways of living, while also relating and acquiring those goods necessary for our new way of life. In this sense, the way we buy a car has also evolved. And, within this context, it is in the automotive world that new global trends are emerging that force this industry to shout: “Innovate or die!”
Among these new trends in the automotive sector, the domestic market is seeing how digital processes, especially e-commerce, are setting the pace in the process of display, test and sale of light vehicles.
Among these digital trends, which are already present in Mexico, the following are the most relevant:
- The evolution of electronic commerce. The need to stay at home because of COVID-19 accelerated the process so that dealers would begin to provide new experiences online. Lucien Pinto, sales director for Ford Motor Company Mexico has commented that “previously, the digital issue had been underestimated by the industry. But, in the midst of the pandemic, we faced the challenge of incorporating virtual tools.” Among them, the distributors have already enabled 360 virtual showrooms, which allow customers to “walk” the sales floor or have an augmented reality experience while being attended by a salesperson who connects with the customer as in a Zoom call. Also, buyers now have access to new experiences, such as on-site driving tests that they can schedule online.”
- Sales (and digital sellers). Additionally, the sector is looking for a new type of seller, one that specializes in digital sales. The JAC brand, for example, is undergoing this transformation: “In the midst of the health contingency, half of the company became a call center. We gave each salesperson a database, training, and so they all became digital salespeople,” explained Isidoro Massri, general manager of JAC México. Today, this company has a digital department that monitors and channels all leads (contacts that leave their data on a digital platform because they are interested in a product or service) to its 35 distributors
3. Small dealers. Another change that is to come is a reduction in the size of the showroom floors, which will no longer require so much space to meet the needs of customers, as more phases of the purchase and maintenance process of the units are being handled by digital platforms.
4. Multipurpose vehicles. Short road trips are getting a new boost. Given the difficulty of traveling by plane to vacation, people now seek to do so by car and drive comfortably to a nearby destination. This is a window of opportunity for auto dealers specializing in multipurpose vehicles.
As can be seen, the digital technological evolution is already present in the automotive sector. According to the most recent research from Market Research Future, a consultancy, this is a market that has a high outlook for annual growth, while specialists claim that online vehicle sales are largely driven by the consumer habits of millennials, who are very used to this type of trade.
According to the study “Competitive environment of the automotive industry over the Internet in Mexico,” created by Comscore, the total annual value of sales through e-commerce in the country is US$216.75 million. Also, according to that research, Mexico is the country with the greatest growth potential in e-commerce and “it is estimated that by 2022 it will become the largest market in Latin America.”
In particular, e-commerce represents a great opportunity for the automotive industry, since it is launching new products under this purchase modality and takes advantage of the fact that, as in many other sectors, consumers tend to research products that they want to buy online, both to compare prices, seek opinions, reviews from other consumers and use this channel to make their purchase a reality. Thus, according to the Comscore study, of the 72 million Internet users in Mexico, 47% of them are interested in content about automobiles. Of these, a third indicated that they would like to change their car because their current model has already reached its useful life.
The specialist Francisco Bautista, leading partner of the Advanced Manufacturing and Mobility Segment of the business consultancy EY, expressed during the recent workshop “The future of the automotive industry” that the automotive industry faces one of its largest challenges: “for a long time, changes were observed in the product portfolio and in the adoption of new technologies. As a result of the COVID-19 pandemic, we have experienced a wide disruption in production patterns and consumer
preferences, coupled with a significant drop in sales and productive investment, both private and public.”
For Bautista, while it is true that the pace of change has accelerated in recent months in all industries, “the way in which vehicles are bought
[by consumers], distributed and repaired will change dramatically. Car dealers are faced with disruptive waves coming from various directions, such as the development of new mobility solutions (shared economy, carpooling, carsharing, etc.); intensification of competition; product
innovation; proliferation of new technologies; stricter regulations
and ever more constant changes in consumer preferences,” Bautista explained.
When the future catches up to us
The relevance of Internet sales in the current context is more evident in the automotive companies that had already adopted this method, as did Toyota in particular, which, in May 2020, sold all its cars online.
The fact that car agencies are already prioritizing digital tools not only modifies the commercialization of vehicles, but it also represents an important impulse for the complete transformation of the automotive industry, which, although it will not replace the importance of physical
distributors, will reduce a lot of interest in going to a dealer. In this way, the future of automotive light car dealers is seen as an area of opportunity on terms never seen before. From its early decades in the 20th century, it was clearly seen that the automotive sector had to be at the fore in terms of
market trends, ways to produce cars by creating new standards for the world industry, research and development of materials, creation of passenger safety equipment, invention of state-of-the-art technology in
automobile manufacturing, assembly and driving, and so on.
Today, as if that were not enough, the way a car is sold has already changed, and much is due to the fact that the way consumers buy has changed
thanks to our new way of life caused by the pandemic (the experts say that his way of now buying digitally was 10 years ahead of their predictions). There is no doubt: the future has already reached the automotive industry.