May 15, 2017 | By Tess
A new report suggests that 70% of India’s automobile sales (which accounts for $40 billion) will be influenced by digital media and technologies by the year 2020. According to the same report, jointly issued by management consulting firm Bain & Company and Facebook, only $18 billion of India’s current automobile sales are digitally influenced.
Entitled “Changing Gears 2020: How Digital is Transforming the Face of the Automotive Industry,” the joint report addresses how new technologies such as 3D printing, digital engineering, smart sensors, and the Internet of Things will impact India’s automotive industry in the areas of R&D, manufacturing, sales, marketing, and after-sales services.
The report based its findings on responses from 1,551 consumers in India who purchased a vehicle in the last 12 months, as well as surveys taken from 87 car dealers and conversations with automaker company management teams. The report also gained information via Britain’s Global Automotive Consumer Survey.
“As digital technologies cause disruption across the value chain from manufacturing to after sales service, rules of the game are changing and new opportunities and threats are emerging for auto makers,” said Karan Singh, Managing Director at Bain & Company India. “Players from outside the traditional auto industry are witnessing rapid growth world over. It is important to evolve the business model to tap into shifting profit pools.”
Currently, India’s automotive OEMs can be seen as lagging when it comes to digital investments and adoption, as most only spent between 10 and 11 percent of their marketing expenditure on digital mediums in 2016. Additionally, most car dealers in the country (85%) still rely on bulk SMS and database calling for marketing and customer-targeting strategies.
“At this time, more than ever, it is important for companies to adopt a digital mindset,” commented Yaquta Mandviwala, Partner at Bain & Company and co-author of the report. “To remain relevant companies will need to keep up with the changing customer behavior, differentiate the retail format into brand experience centers, use product digitization to create deeper ongoing relationships and invest in a strong analytics backbone.”
Currently, about 80% of online research is conducted on mobile devices, a number which the report expects to rise in coming years. This reality, combined with the fact that younger consumers (under the age of 35) are increasingly influenced by digital marketing, means that automotive companies will have to emphasize mobile-friendly marketing more and more.
Additionally, with the popularity of app-based driving services like Uber and Ola, the automotive industry will have to figure out new business models to compete and stay relevant with the a generation of digital-savvy consumers. According to the report, 40% of automobile sales ($23 billion by 2020) are expected to be influenced by social media. Currently, that number is at 20%.
Posted in Statistics
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