Halfway through 2020 and there’s been a sea-change in the way countries and companies operate. Blame it on the coronavirus pandemic and the resultant new normal of social distancing, which calls for most sectors to engage in new business models. These include automotive retail which is now aggressively switching over to the digital format. OEMs, big or small, had already been dealing with the twin challenges of a prolonged economic slowdown and hugely dampened buyer sentiment. The 50-day countrywide lockdown exacerbated all that.
Orbitsys, a Gurgaon-based dealer management system (DMS) technology provider, assesses the ongoing situation to be opening up new opportunities for multi-brand car dealerships to flourish by means of being able to better manage costs and thus, improve their business-case viability.
According to Gurbinder Singh Dhillon, managing director, Orbitsys Technologies, “The West is already big on this phenomenon. In India too, we will start seeing multi-brand car dealerships taking off in the next 2-3 years’ time.”
Tech as an enabler
The company which provides cloud-based CRM and DMS suites to Skoda Auto and Isuzu in India, envisions some future trends, which are likely to become mainstream by 2022-2023, due to rapidly advancing technology.
With more digital tools, multi-brand dealers will be able to consolidate various brands under their umbrella as well as different staff roles in the sales and service operations, thus developing a superior and sustainable business model from a long-term perspective.
While this might not be lucrative for high-volume brands such as Maruti Suzuki and Hyundai Motor India, but for other players in the market, a multi-brand retail model has all the required capability to ensure frugal operations on the ground-level.
“On the sales front, it is logical to have multiple brands under one roof to rationalise costs. With regards aftersales, there could be a ‘Y’ concept, wherein the front showrooms can be separate for two different brands, while having a common workshop at the back of a 3S facility,” points out Dhillon.
Also, already, a slew of independent multi-brand independent workshops have started coming up in big cities with many start-ups such as Go Mechanic betting big on the opportunity offered by the sector.
From a customer perspective, however, the current Covid-19 crisis has already brought a huge shift towards digital retail, which, according to a Hyundai Motor India study, is witnessing as much as 70 percent people looking for a contactless experience during their purchase journey. With about 40 percent of the prospective customers researching for a new car online willing to actually buy it digitally, Hyundai Motor India also anticipates a growing number of enquiries, in the range of 50 percent, coming through the online channels as early as two years into the future.
Like in Hyundai’s case, the DMS will play a crucial role in integrating the back end of a dealer’s operations to the front-end where it will seamlessly link to the customer to enable a convenient and contactless car-buying experience.
New disruptive technologies to impact retail
While the impetus for multi-brand car retail will also drive the need for dealers to adopt business analytics tools and support distributed services market, the advent of new mobility technologies such as electric vehicles (EVs) will start impacting sales and service operations by 2022-23, envisions Orbitsys.
“Showroom and workshop viability in big cities is not there anymore and with EVs, the parts inventory in a workshop will further go down by 70 percent, thus, critically impacting revenue,” says Dhillon.
The year 2020 has already seen new EVs being launched from players such as Tata Motors and MG Motor India, but their true potential will only be visible over the next couple of years when EVs start penetrating into the mass-market segments as well and thereby bringing a drastic change to the service aspects of vehicle ownership, when nothing more than wheel alignment and basic drivetrain check-ups would be required in a regular preventive maintenance visit to the workshop.
New technology would also mean that connected car features, IoT and telematics, which are increasingly being offered as novelty features in new cars today, will see OEMs integrating these nodes to continuously monitor vehicle attributes and pre-empt a major snag.
So, with such dynamic shift set to unfold in the overall play of the vehicle retail business in the coming future, Orbitsys also foresees a growth avenue for hi-tech solutions providers like it, which would benefit from the growing need for integrated and cloud-based DMS solutions.
The ongoing digital retail initiatives of several OEMs in the passenger vehicle space have already started the move towards the replacement of a lot of legacy systems available in the market and will see new market-based, open-system gateways to appear along with a stronger competition from non-Indian software providers as well. According to the company, only a third of OEMs today operate on fully-integrated DMS and CRM systems.
But, with a continually improvised robust solution at hand, “We have all the technology to manage workshops and showroom operations. We are ready to be a part of an e-commerce-type landscape in automotive retail,” concludes Dhillon.
Also read: Orbitsys gets OEMs and dealers to think digital first in a time of social distancing