Almost 70 per cent of Indian automobile sales—or $40billion—will be digitally influenced by 2020, compared with $18 billion today as per a joint report by management consulting firm Bain & Company and Facebook.
The report titled, ‘Changing Gears 2020: How Digitalis Transforming the Face of the Automotive Industry looked at the impact of digital technologies on the automotive industry and found that digital engineering, 3D printing, smart sensors and the Internet of Things(IoT), are poised to disrupt auto R&D, manufacturing, sales, marketing and after-salesservices. Social media will influence about 40 per cent of sales valued at $23 billionby 2020, up from 20 per cent of sales today.
“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. 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,” said Karan Singh, Managing Director at Bain & Company India.
The report collated responses from 1551 Indian customers who had purchased a vehicle in the last 12 months and surveyed their purchase influencers. This was supplemented with a survey of 87 dealers and conversations with top management teams across automakers.
The report also drew insights from Bain’s Global Automotive Consumer Survey that included respondents from the US, the UK, Germany, China and India.
“India is likely to witness digital leapfrogging given consumers’ openness to new technologies. At this time, more than ever, it is important for companies to adopt adigital mindset. To remain relevant companies will need to keep up with the changing customer behaviour, differentiate the retail format into brand experience centres, use product digitization to create deeper ongoing relationships and invest in a stronganalytics backbone,” added Yaquta Mandviwala, Partner at Bain & Company and co-author of the report.
Highlighting the importance of mobile in the overall device mix, the report said that 80 per cent of online research is on mobile phones today and this is expected to rise further with the increasing penetration of smartphones and mobile data connections. Not surprisingly, those 35-years-old and younger will lead the digital charge: 49 per cent of consumers younger than 35 years report digital influence on purchases today compared with 40 per cent of those older than age 35. As this cohortages and a new younger cohort enters the market, digital influence is set to increase.
The study also explores auto customers’ changing mindsets and attitudes towards mobility. The report reveals that the nature of the game is changing. Apart from thefight for the consumer, it also referred to the fight for relevance as new business models compete for attention. More than 40 percent of lead consumers report using app-basedtaxi services like Ola and Uber more than three or four times per week and furtherheadroom for growth exists.
“Technology is transforming the automobile industry in un-imaginable ways and thisreport discusses quite a few insights,” said Umang Bedi, Managing Director,Facebook India.