Opinion piece by Kriben Reddy
JOHANNESBURG - We’re seeing a lot of hype right now about the digital transformation of the South African motor industry. There’s a boom in online platforms where you can search for the car of your dreams (or, more often, the car of your reality). Practically every dealer has a Facebook page or a website where you can browse their stock. There’s only one problem: it’s not really the transformation consumers are looking for.
What customers want
Right now, what the car industry is doing is transferring some elements of its traditional brick and mortar businesses to an online platform. What South African car buyers want is the full digital experience.
They want to explore their potential new cars in different colours and various models. They want 360-degree videos of the cars, and possibly even videos of the vehicles being driven. When they’ve narrowed down their choices, they want to book their test drive at a time and location of their choice. And they want to do all of this without leaving their couch. Why go to the dealership, if the dealership can come to you?
In fact, in Sweden, Volvo is already making it easier for people to buy a new car than to shop for their weekly groceries.
The real challenge
Even if the car industry digitises the entire buying process, it still isn’t solving the real problem of the consumer, which is mobility. Millions of South Africans can’t afford a car, but they need to get to work and back every day, get their children to school, and do the shopping.
So if we really want to digitally transform the industry and shift the market, we have to solve for the real-world problems of mobility and affordability. That’s going to mean offering different payment options, such as subscription-based ownership or car-sharing.
A US-based company, Clutch Technologies, is reshaping the car ownership experience at every point along the value chain - dealers, manufacturers, lenders, and consumers - by offering, among other innovations, a subscription-based ownership model whereby you pay a monthly fee for a car. Think affordable, long-term, flexible car hire.
Would it work in South Africa? There’s no reason why not. We have all the elements you need for a model like this. We have the demand: there’s a huge market of people that wants to be mobile, but can’t. We have the supply: there’s a massive stock of vehicles standing still at dealerships - and vehicles that don’t move, don’t bring in money. It’s the classic gap between over-supply and under-demand.
But wait. There’s more: Once we’ve chosen a car, we don’t want to go to the dealership and sign 500 forms. We want to do it online, and have our new wheels delivered to our homes.
When it comes to after-sales and service, we’re done with calling the dealership and being put on hold for ages. We want to be reminded when our car is due for a service, and then schedule our services on an app.
This is what makes the digital transformation exciting for the consumer. It’s not just making it easier to buy a car. It’s using technology to help the industry meet its customers where they are, and provide the type of instant gratification that consumers are looking for. It’s helping the industry create real personalised experiences that meet individual customer needs. It’s offering tech-savvy consumers the transparency and control that they want in any car ownership process.
Most importantly, for South African consumers, it’s providing alternative ways of owning a car. It’s putting vehicles, and the mobility they offer, at the centre of people’s lifestyles and expectations. That’s going to take some real digital transformation - and right now, we still have some way to go. But the future is bright if the industry embraces true digital transformation.
Kriben Reddy is vice-president of Auto Information Solutions at TransUnion Africa