Auto industry digital first – this is how much the corona crisis is changing the auto trade
In the wake of the corona crisis, the online share of car sales is likely to have increased significantly.
munich for rudolf rizzolli, the classic car trade is like a "perfect price discrimination machine". Sellers always aim to offer the individual customer as few discounts as possible, but still generate as many deals as possible. the result, he says, is a huge bandwidth of discounts.
One customer gets a three percent discount, the next nine percent and the one after that 14 percent – depending on the price at which he is still willing to buy a car. "but this principle has reached its limits," believes rizzolli. With online portals like meinauto.De, the head of mobility holding gmbh, is trying to ensure greater transparency in the market and take some of the retail margins away from stationary car dealerships.
Never before has rizzolli been as successful as now in the pandemic. "we’ve doubled in sales in 2020," says the italian-born. While new car sales in germany have slumped by almost 22 percent overall and many car dealerships are struggling to survive, the business of digital leasing providers and brokers is booming.
"We are cheaper, more flexible and more transparent," says rizzolli, praising the advantages of online trading. "the corona crisis has once again brought this home to vehicle manufacturers and their dealers and triggered a change of mindset in the industry."the sometimes still very analog industry is suddenly embracing the digital transformation. Even opel – one of the biggest latecomers to e-commerce – quickly set up a uniform platform with its dealers in germany shortly after the first lockdown in spring.
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"online retail has experienced a huge jolt. The corona crisis will change the market forever," states kai muller. The head of experience one and his digital agency specialize in the personalization of customer experiences. Together with daimler, the manager and his team have, for example, designed the app for the "mercedes me store" or co-designed daimler’s model configurator.
Consultations only online for the time being
Kai muller is certain: "no dealer can afford to ignore the digital sales channel for much longer."those who are only offline are currently generating zero revenue. This is because on-site sales and advice in showrooms will remain important until at least the 10th year of the new car’s life. january banned.
The result: exchange shifts to the web. Consultations are conducted via video from the comfort of your living room, and the preferred model is then delivered to your doorstep. "there has never been a greater opportunity for the auto industry to establish a more direct sales model and centralize customer data," says muller.
Compared with other sectors, however, online retailing in the automotive industry still enjoys a niche existence. Hardly more than two percent of new cars in germany are ordered digitally. By contrast, more than a third of toys are already purchased online and one in four trips is booked online.
In the wake of the corona crisis, the online share of car sales may have shot up significantly, but it is still at a low level. After all, even mobility holding, the market leader in independent online portals, only sells a few tens of thousands of vehicles a year to private users in germany. This is only a fraction of the total market for private cars, which amounts to more than two million units per year.
"no online platform for cars – not even ours – has yet managed to establish itself as a brand that customers fully trust," admits mobility managing director rizzolli. That’s the big plus point that car manufacturers and their stationary dealers can still claim for themselves today. "But we know from other industries that it’s only a matter of time before customers start trusting online platforms more," says rizzolli.
Radical change necessary
The manager is sure that online sales will "multiply" in the next few years. The corona crisis is accelerating three major trends in this regard. "first of all, customers want to pay a monthly installment instead of a large one-time sum," explains rizzolli. Leasing is the big winner.
Secondly, as a result of the lower prices for installments, more and more people would be willing to order cars online. "thirdly: the car is becoming increasingly deemotionalized." more and more people are looking for a mobility offering that meets their needs, and the brand is becoming a secondary consideration. All trends taken together would boost digital sales.
The 36 or so.000 german car dealerships with their nearly 440.000 employees are under enormous pressure. To survive, the trade will have to change radically. "most customers are less and less interested in haggling over prices and equipment with a traditional salesman," states digital agency owner muller. People who go to a car dealership are usually well informed in advance and are looking for honest advice and long-term support.
"70 percent of new car buyers complain that they don’t know all the functions of their vehicle. Customers are far too often left to their own devices," says muller. Especially with electric cars, the need for explanation is high – even long after the sale has been concluded. All new cars today are also packed with technology and can be continuously upgraded via software updates. Here, too, customers would be looking for a reliable contact partner.
"those stationary dealers who take on a new accompanying role and see themselves more as partners than pure salespeople have good prospects for the future," muller believes: "on the other hand, those who are only out to make a quick deal will fall by the wayside in the medium term."online portals have a clear advantage in terms of price and speed of processing.
Mobility boss rizzolli sees it similarly. "dealers’ margins are shrinking and will continue to shrink," believes the manager, who once spent a decade in the stationary car trade himself. Glass palaces on the outskirts of town are completely outdated in his opinion. Dealers, on the other hand, who increasingly see themselves as local logistics and service partners, will continue to be needed.