All about virtual showrooms and online auto marketplaces
Written by Eric Tipan
Buying an automobile online isn’t a novel idea. In fact, it’s almost as old as the commercially available version of the World Wide Web. One of the first companies to capitalize on this was eBay which launched their automotive online marketplace in 2000 and it went on to sell 2 million vehicles by 2006.
In the Philippines, even with the threat of the COVID-19, purchasing automobiles continues to be largely a real-world task, albeit with a few minor tweaks to reduce person-to-person contact and promote physical distancing.
When auto dealerships closed their doors last year, they opened virtual showrooms to keep the business going. These new websites assisted consumers in finding the model (and variant) they want by way of a VR (virtual reality), 360-degree tour of the vehicle, inside and out. But sadly, not one offers the option for an outright online purchase.
Only sites like Autodeal give buyers the total cyber experience from browsing to buying – complete with side-by-side comparos and even links to banks for an auto loan. But even on their site, it’s only available for select makes and models as this arrangement is still highly dealer contingent.
The simple answer to the question is, yes. A pure online transaction to buy a new car in the Philippines is possible. You just have to know where to look and who to buy from.
A dealership insider told me their hesitation to commit to a full digital transaction is mainly due to one reason, fraud prevention.
While banks and dealerships make it appear that getting your dream car is as easy as 1-2-3, they’ve also quietly put in place safeguards to limit (and hopefully eliminate) loopholes for scams and estafa. An example is bank-initiated training to teach approving officers at dealerships how to spot forged signatures. There are obviously more but our source is unwilling to provide additional information as it will compromise security protocols that have been put in place.
Regardless of the apparent risks and challenges, major auto brands like Toyota are moving forward, albeit slowly, and are working on adding a ‘buy now’ feature on their virtual showrooms.
According to Elvin Luciano (PR and Communications Manager) of Toyota Motor Philippines, “the capability to directly make a car purchase online is in our roadmap” but when I asked about a timeline, he only said “soon”.
This is because automakers have seen a spike in sales from digital leads (online inquiries forwarded to dealers and followed up by sales executives).
Suzuki PH, for instance, has seen a huge 16 percent uptick in sales from 2019 to 2020 while Verna Hiyao, of Honda PH (Dealer Operations) tells me that 20 percent of all their reservations now come from their [email protected] page.
But Nissan’s been the one seeing the biggest gains with close to 400 percent growth from online traffic coming from the ‘Request a Quote’ page on their website. This “proves that digital transactions in the auto industry is on the rise,” said Dax Avenido, Head of Communications and Assistant General Manager of Nissan Philippines.
I imagine the revenue and profit would be much higher if customers can actually buy a vehicle in one click — without having to wait for a call from a dealer rep.
Christopher Franks, co-founder of Autodeal, says that despite the drop in overall auto sales in 2020 due to the pandemic, their market share in terms of new auto sales grew to 10.5 percent, which means that of the 244,274 vehicles sold last year, 25,648 units were bought through their website. And there’s nowhere for those numbers to go but up.
A study shows that 56 percent of millennials, which is currently the largest auto-buying demographic, don’t like facing sales execs because of the stressful scenarios they’re forced into during the sales pitch and negotiations. Plus, as we all know, the youth want to make their purchases directly from their mobile device.
As good as these virtual showrooms are right now, there’s a lot of room for improvement and it all starts with the user online experience as detailed by Franks: key qualities to work on are website loading speed (ideally optimized for mobile use); a knowledgeable sales staff; fast and accurate responses to digital inquiries; a clear and cohesive process; and transparency.
Are we seeing the end of physical dealerships? I’m a Gen-Xer so you can call me old-fashioned but I don’t think so. Franks says today’s auto buyers want “an omni-channel experience”, which means there will be an online component (from research about the vehicle to getting a quotation) and an offline one (testing the seat fit, touching the cockpit fixtures, etc.).
So, while you can actually buy a car online today in the Philippines, don’t call their brick-and-mortar counterparts obsolete just yet.