South African auto consumers rely heavily on dealerships for advice and support in their decision-making process, even though online platforms are rapidly changing the landscape, placing pressure on dealers to clearly define their role.
This was the view of panellists during a discussion on the Transformation of Mobility at the Hypermobility Conference 2020 organised by Messe Frankfurt and Naamsa recently.
According to Mark Dommisse, Chairperson of the National Automotive Dealer Association (NADA), purchasing in the auto industry is a complex activity. “Consumers still need to see the car, touch it and trust their ability to make a choice,” he told the panel. “Buying the car is not the end of the relationship, but in most cases the start, when servicing the cars add to the longevity of the relationship.”
Dommisse also emphasized the important role that a dealership places in its community, where it has a significant economic impact on its environment. This goes beyond providing jobs and includes the various sponsorships that it often provides to schools, charities and other community institutions.
George Mienie, CEO of Autotrader, says that while a dealer’s role should not be underestimated, consumers have become more comfortable with shopping online. He points to research by Autotrader that shows significant changes in behaviour by consumers during lockdown and the state of disaster.
“Within 24 hours of the lockdown back in March, we saw an increase of searches and online shopping for cars. It is interesting to note a 20% increase in activities taking place between 11 and 3 at night, with the slot between 01:00 and 02:00 proving to be especially busy,” says Mienie.
Mienie told the panel that online searches also saw a significant increase in the demand for cars under R200 000, which seems to foreshadow the general economic downturn. Consumers’ move to the internet was accelerated during lockdown, with a plausible explanation for the move being a search for personal mobility as a perceived safe haven when travelling.
“The move from public to private mobility, together with a search for cheaper cars, could be commuters who now look at alternative ways of being mobile and be safe,” Mienie explained.
Faisal Mkhize, Head of ABSA Vehicle and Asset Finance agreed with this sentiment and focused on emerging trends. “Consumers now have time to do research and comparisons before they go to the dealer, applying themselves more and not rushing to any decisions,” he said. “Affordability has become essential as uncertainty regarding employment and cash flow are now key in determining the final commitment.”
Mkhize also mentioned the dilemma of long-term financing opportunities (up to 96 months) ensuring an increase in transaction volumes and turnaround times. On the flipside it prolongs the time for customers to get back into the market. “Most of the activities that are currently part of the transaction will continue to happen on the dealer floor,” Mkhize said. “At Absa we noticed that people, when making big decisions, still prefers human interaction for advice and getting answers to their questions, limiting the transformation to new ways of shopping.”
To counterbalance this view, Mienie points out how the time spend inside a dealership is still consumers’ biggest gripe, tied for first in their research with the effort of going through the financial process. “I agree that the role of dealers is critical, but the online experience of getting to the know the product is an important one that can lessen the burden and save time for the dealer,” he says.
Facilitator, Gary Scott, CEO of KIA Motors, concluded the conversation saying that buyers are more efficient with their time and allowed them to look for a more rich and compelling experience, both digitally and at the dealership.
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