Lockdown fast-forwards a digital revolution in car sales
Auto Trader’s George Mienie tells how Automotive Digital Retailing has been catalysed by the Covid-19 crisis
Long before the Covid-19 forced matters, the automotive industry had begun its introspection into how to do business in the digital future. George Mienie, AutoTrader’s CEO, had already begun making the moves as well. We asked him about the fortunes of the automotive sector post the coronavirus era.
Phuti Mpyane: The advent of the digital era has changed the way customers buy cars. The web, social media and even interactive digital showrooms have arrived on the SA scene. How has technology affected the pre-owned vehicle purchase experience?
George Mienie: The internet hasn’t changed buying and selling, but rather it has facilitated the speed, ease and scale of buying and selling cars.
One of the underlying drivers of success of these platforms is transparency. In the days of old, they said “information is power”, but information in the hands of who? Now information is in the hands of the consumer. Transparency is starting to create a world where creating trust with the consumer is far more important than the product itself. This means that merely offering the lowest price will no longer be a competitive advantage in the future because the consumer will see everything.
PM: Has the SA used car industry caught up to modern trends?
GM: We have the understanding, drive and motivation to be on par with the global playing field. There is one factor that is key in keeping up with the world, and this is the underlying car taxonomy-metadata.
Everything, all valuations, price comparisons and purchasing decisions spin on the transparency of the economic model which is demand, supply and price. The only way you get transparency of these — at a granular enough level — is if you are able to extract intelligent data. The underlying car taxonomy-metadata structures, the way it is collected, stored and disseminated in the marketplace, has to be fixed at government level.
Then, the ability for businesses to extract that metadata will accelerate the online tools and accelerate the transparency of the economic model in the hands of the consumer and businesses. Once this happens, then clever technology can be layered on top of that metadata to give life to vehicle demand, supply and price transparency. That’s when more and more of the transaction can move online, faster.
PM: Covid-19. What provisions has the pre-owned sector made to ensure continuity in business during the lockdown or do you find that the market has slumped to a point where business is at a standstill?
GM: I can confidently say that the car business is definitely not at a standstill. Initially search for cars declined and as a result so too, inquiries to car dealers. However, since lockdown the traffic, search and inquiries to dealers has steadily increased. Additionally, the consumers inquiring at this time are more serious.
One challenge that the market is facing is transaction fulfilment as a result of the delivery of the vehicle not being able to be carried out. Dealers are, however, keeping consumers informed and engaged with many of them having found creative and innovative ways to still build sale pipelines and sales.
PM: It has been said that nothing will be the same after this coronavirus period. What in your opinion is likely to change in the used-car sector?
GM: Adoption of Automotive Digital Retailing (ADR) will accelerate, and has been catalysed by the lockdown. ADR is using digital technologies to better connect digital showrooms with physical ones. It pivots on seamlessly connecting online showrooms to physical showroom experiences.
As a result of the lockdown, consumers are going to expect more of the journey to be online to continue as much of the social distancing as possible. Dealers are going to have to create this world — and those who don’t, will lose. Foot traffic on dealership floors is still the best indicator of economic activity in the car retailing business, as the deal still has to be fulfilled inside the dealership. So, foot traffic will go to those dealers, who create better ways to engage with the consumer journey using ADR strategies.
PM: Have the finance products protocols changed here? Can people buy insurance, extended warranties, and so on, exclusively online?
GM: You can partly buy all the above online. I haven’t seen a solution — finance, insurance or extended warranties — where there is no human interaction. The trick to having these online is to have no human intervention. The legalities around the finance and insurance legal agreements haven’t kept up with the internet. Capabilities are there, but the government and legislators haven’t kept up.
The challenge for dealers is to offer online — as much as possible — the front-end consumer journey, and then automate that seamlessly with the car dealers back-end operational systems, therefore requiring no human intervention to get banking credit checks and finance approvals from banks. Then we would be at the cusp of bringing online what I call the point-of-sale of finance. The only thing then left to digitise is the physical signing of those documents at the dealership.
PM: What of the pre-owned aftersales services and experience. Would you say this has been affected by the digital revolution, or is it still stuck in the analogue world?
GM: In America research was done where dealers saw an increase in profit when they included an online car booking service where price estimates were made visible on their websites. While booking a service is an option on a dealer website in SA, the functionality is sparse. Where service booking forms do exist, price estimates are not given. In many respects we are still stuck in an analogue world. Everyone is putting up a “landing page”, but they ultimately want you to get the consumer to call and speak to someone or fill in an inquiry form. Instead, the entire process should be able to function using intelligent digital systems with no human intervention in any stage of the consumer service booking journey.
PM: How will the recent Competition Commission recommendations sweeping through the industry affect the pre-owned vehicle buyer? What can they expect that’s different from the norm?
GM: Over the past few years there have been a few legislative changes which have come to affect the automotive industry in SA. Most recently, from a consumer perspective, the Right to Repair Act was proposed which would provide some benefits for SA car owners. Like any fundamental shift within any industry, challenges do exist and would need to be overcome before the act could be implemented, such as monitoring the quality standards.