With over 400 million active Internet users, India is at the brink of a digital revolution. Recent investments in telecom and technology have put access to the Internet to a large chunk of the population. Digitalization is setting new standards for industries in India as customers are actively interacting with brands and businesses online. Hence businesses are increasingly looking to invest in digital to connect, engage and influence their customers.
However, the Indian auto manufacturing sector has been lagging behind and is yet to catch up with other industries. A research report published by Facebook in association with Bain & Company has predicted that by 2020, 70% of auto sales in India will be digitally influenced. The research has also thrown light on the abysmal state of digital advertising where Indian auto OEMs are spending a mere 10-11% of their marketing budget on digital, as compared to >50% in China and >25% in Mexico.
Mobile devices are the frontrunners when it comes to digital engagement. It is estimated that over 80% of pre-purchase engagement activity happens through mobile devices. As market forces cause an increase in penetration of smartphones and mobile data, this is expected to rise further.
Social media and search have emerged as the top digital channels and are each expected to influence over 40%(~23B) of auto sales in 2020. Facebook is one of the few players emerging as the frontrunner of this revolution. It allows auto manufacturers to target and personalize their marketing efforts at scale, at a fraction of the cost of traditional advertising. The social media giant is proven to have provided successful business outcomes for both online and offline brands.
Indian auto OEMs must take cognizance of these changing customer behavioral patterns to remain competitive in the digital era. They need to allocate a greater proportion of spend to digital - a paradigm shift from their traditional investment mentality into offline and print advertising. Becoming truly digital, will also require building data and analytical capabilities to gather and analyze massive volumes of data from a large number of customer data points.This will enable them to have a single-view of the customer's persona, identify challenges and accurately target customers with personalized marketing content.
The report also states that almost 50% of consumers already make their choices of brand and models online, before even stepping into a dealership. Dealers need to evolve with this mindset change and transform their customer outreach strategies from traditional methods such as bulk SMSes, database calling and print ads to digital platforms. They will have to start experimenting with new and innovative store formats and interactive virtual-physical layouts by leveraging new age technology such as VR/AR. Since customers already have a fair idea of what they want before they step in, dealerships should not be limited to influencing variants or providing test drives, but to evolve into brand experience centers to drive real-time customer connect.
Post-purchase is where digital will truly make its presence felt. By 2020, over 40% of consumers are expected to use digital channels for vehicle service booking and 30% for purchase of accessories and spares. New age mobility solutions such as connected vehicles are paving the way for auto OEMs to offer value added services such as smart service, emergency support, usage and infotainment services which will only help deepen customer engagement and 1-1 relationships with the brand.
With the evolution of customer mobility mindsets and the emergence of next generation of mobility models such as app-based cab services, OEM's need to think of themselves as mobility providers and not as vehicle providers. Indian OEMs must also carefully evaluate which parts of the value chain they must play in in the coming years, forge offbeat partnerships with mobility startups, and make the necessary investments today in order to maintain the profit pools.
Auto OEMs and dealers need to understand and reflect on the importance of digital influence. While creating a positive digital influence is challenging and takes time, but given its multiplier impact, it is imperative that automotive industry players should strategically harvest it to the hilt.
Read the full research report here