Who would agree with me that it’s tough in our economy? Though in this tough economy, without the car buying consumer, we can’t sell all the wonderful things that we make or secure a strong car dealer digital presence in SA.
Let me try and push the boundaries a little & give you some insights into what we see in the consumer market -- all to help the car dealer secure a strong digital consumer presence in a changing economy.
The tech-savvy consumer
We can agree that the South African car landscape is complex, there are many car makes, models and variants and it’s probably one of the most complex. We also know about Africa as a “car dumping ground”.
To add to that, the decline in government spending, consumers holding onto their cars for longer, less sales in the market -- all made worse by this one thing: The tech-savvy consumer. And he or she comes along and stuffs everything up -- all the “stuff” that we’ve believed in; all because we don’t know who this new tech-savvy consumer is until they’re ready to buy a car.
Once they walk into your business, they’ve done more research than any generation before them. They know everything about the price of the car, they know everything about the features of the car, long before they get to your car dealership.
Using the internet to influence the car buying consumer
Which means that, this changes the way in which we think about consumers. This also means that the internet is not a lead generator, the internet is an opportunity to influence the consumer, which is an important point when it comes to influencing the consumer while they are anonymous, and they are becoming even more and more anonymous.
Whilst thinking about the internet as an influencing medium, means that you’ve got to think about the internet in terms of how the consumer thinks about your brand and that’s hard to do when the car buying consumer is anonymous -- so you have to make yourself an option as a car dealer, using influence. And on top of this, our economy has changed -- made even worse by disruptive middle men who are reducing your profit margins.
The impact of unstructured data
And to top it all off, the lack of good structured data in the South Africa is making car pricing and car valuation very, very difficult. Because a lot of the time unsophisticated businesses, that are not at scale, are being relied on for car valuation data and the supply of the data. Trade and retail pricing for cars is antiquated in South Africa and outdated and pricing and car valuation methodologies are being used; that were being used back in the 80’s. So more and more businesses in our industry are asking:
- How do I raise the profile of my business or as a car dealer?
- How do I adapt to change?
- How do I get more of the right feet through the door onto the car dealer floor?
- How do I start a car dealership or automotive digital-first strategy?
Those are good questions, but, what if I told you that those are the wrong questions.
Understanding the car buying consumer journey
The right question is: How do I understand the consumer journey to my product? Because understanding the consumer journey is the precursor to the lead. Because if we understand the car buying consumer journey, we will get the quality lead and we will make the sale. Think in terms of a consumer, think about pricing in terms of the consumer, think about alternative choices of the consumer, think about your reputation in terms of the consumer and think about transparency in terms of the consumer.
The car buying consumer comparison shops everything and because they comparison shop everything, I have this relentless drive to continuously understand how consumers shop for cars. Because if we can understand how consumers shop for cars, we can all help move the industry forward. In understanding how consumers shop for cars, we realised one thing, that the data structures within South Africa were flawed -- and difficult to use. And in creating those databases that are as clean as I think they need to be, we think we can now tap into the right in-market car shopping audience. Because targeting the wrong audience is like throwing money away.
The Future of Live-Market Pricing
As a car dealer that needs to market cars, gone are the days where you would throw paint on a wall to see what sticks -- you can now target the right audience -- but it all starts with structured data. And this is only possible with industry-wide true partnerships where we all play a part in making this happen. So we’d like to believe that innovation is in our DNA. Let me use another example to give life to this story: do you remember Blackberry?
Blackberry thought they were an alternative to the iPhone and they tried to compete with the iPhone, when in fact they were an alternate to email. So a gentleman by the name of Brian Atkin applied for a job at both Apple & Twitter and got turned down both times. He decided to go onto his next adventure: WhatsApp. Brian Atkin and his partners eventually sold WhatsApp to Facebook for more than $16 billion, in actual fact, some reports say up to $19 billion -- that’s a lot of money right!
Blackberry could have become WhatsApp, in fact Blackberry should have become WhatsApp. So consider this, consumers comparison shop everything including each other and in today’s world transparency is expected, but businesses still lag the consumer, which creates a perfect opportunity to embrace transparency and lead as a business or car dealership in South Africa.
Let me introduce you to Live Market Data. The future of car pricing and car valuation in South Africa is going to centre around retail-back pricing supported by transactional data, not lead by historical transactional car values that existed in a particular, make, model, variant and some moment on the past. Those days are going to come to an end. Here’s an example: There are 314 Hyundai Tucsons for sale this morning with all the price points and mileages shown in a transparent way. I call this dumb data, but, while dumb, it’s transparent and creates a consumer expectation of value. We are giving this kind of data to sellers of cars with intelligent layers on top of the this supply data. i.e. car dealerships, so that they can price their cars to live market data, after all, that’s what the consumers see, the selling prices right. As car prices become more transparent, they will converge and the car dealer will no longer be able to use price as a competitive advantage. If I showed you a pricing chart from 3 years ago, the scatter graph would show car prices all over the place.
So, back to our Hyundai example, what if a rental company released another 100 Hyundai Tucson’s into the market tonight?
All prices of Hyundai Tuscon’s would more than likely decline and the reason they would decline is because consumer demand for Hyundai Tuscon’s would have been met with more supply. There would be enough in the market to satisfy consumer demand and choice. The price changes would also happen relatively quickly as a result of supply and pricing transparency. So if this is the case, then it gives us a window of what to expect for the future and that is, even more transparency and faster moving car prices. Car dealerships need to re-price more often than they ever did in the past. So those of us who are not willing to embrace transparency are going to be the ones that lag and those of us who embrace transparency are those who are going to get ahead. We are seeing this happen in the car dealership world today.
Embrace transparency and the car dealership can WIN
The car dealership that embraces the transparency of the internet and a new way to value cars, are the ones doing the best in the marketplace, the data shows it. But where the consumer demands further transparency the industry still lags the car buying consumer, so bringing the right tools to businesses ahead of the consumer is what needs to happen. Intelligent layers built on top of dumb live market demand, supply and pricing data. Then inside all of this, understanding the consumer journey, don’t become like Blackberry, listen to the consumer.
Here’s a personal example: I was once selling a 2012 VW Polo with 48 000km on the clock and at that time for a 2012 model, it had very low mileage. When I put it up for sale, the market average price was R123 000, when I looked at it 3 weeks later, the entire market had dropped to R109 000 that was after the launch of their new VW Polo -- and this is the point of transparency and the speed at which the whole market changed prices based on a reduction in demand and increase in supply.
5 things car dealers need to do today:
- Listen to the changing car buying consumer market -- it may sound cliche, but probably the most important thing to do
- Get digital -- because this tech-savvy consumer buys with their eyes and their emotions -- plus they are super anonymous.
- Use your online presence, your photographs, your speed of service delivery -- build a car dealer brand in your local area and then nationally
- More importantly use influence to grab the car buying consumer’s attention
- Have an eCommerce mindset. Every part of the car buying journey will eventually move online including finance.