'Changing the channel mix and becoming more flexible is going to be the key challenge of car retail.'

With disruptors like Tesla now changing the game, OEMs and their dealers need to keep up to stay relevant. Nick Gill, Capgemini’s Global Head of Automotive Practice, provides some insight into the imminent evolution of car retail. An interview by Shourya Harwani.

How is the Internet redefining the car retail business?

The real impact of the internet has emerged in the last 10 years, where every retailer has established a digital and a physical environment for sales. What they have learned to do is instead of selling 100 percent products through the physical channel, how do you manage the model when 80 percent of the products have to be sold through the physical channel and the rest 20 percent is online?

It is going to be the same fundamental for us in the automotive industry and I’m not saying that the change is going to be significant but a dealership which sells 1,000 cars through its doors every month is now going to be selling 900 cars through its doors and the rest online. How do you change the mix and become more flexible as time passes is going to be the key challenge of car retail over the next few years.

Do you think that the online retail channel would lead to incremental car sales in the future?

The answer is both yes and no. Our research shows that a large number of consumers are interested in completing all or a major chunk of their car-buying transactions online. Especially in emerging countries like India, more so than developed countries, because acceptance levels of newer sales models is more here.

In the end, people who embrace the change would be successful but the opposite is also true, because if the dealers and OEMs which do not accept this change will face a tough time as the consequences would be quite severe. Understanding and accepting the change is really important, as otherwise, they run the risk of going out of business.

What is your view on the use of social media in car retail?

Social media in today’s day and age is very important. All of our research says that people use social media extensively and are impacted by what other people say, both positive and negative. They want to share their experiences about buying a car, getting it serviced or even just posting a picture of something they aspire for. It is important but the industry is still struggling to know how to use this medium from a marketing point of view, let alone the sales point of view.

We would be learning a lot more on this in the coming days, but selling on social media is not likely to pick up anytime soon. It will push people to make informed decisions but it would still largely be a click-and-brick kind of a setup.

Do you believe ride-sharing services such as Ola and Uber would eventually lead to a dip in car sales in the future?

A lot of people think that it could happen, but I believe otherwise. I do not think that people would stop owning cars because of ride-sharing services because just the way people own cars and use public transport at the same time, it would be very similar to that they just would have more options.

I think it would be more of an ‘and-and’ scenario rather than an ‘either-or’. I think the mobility channel is what all of the OEMs need to embrace as it will only grow bigger in the future.

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