DUBAI | Ahmed Gabre
Global car sales were decrease by 9.4% by the end of 2020. Many factors contributed to this drop, including the COVID-19 pandemic and subsequent decline in consumer purchasing power, as well as weaker economies, a reduced need for transport and falling oil prices.
The automotive market in the MENA region was naturally also impacted. For example, Saudi Arabia – which one of the fastest growing automotive industries in the world between 2010 and 2015, had a tough time in 2020. Between March and June, new car sales in Saudi Arabia by 60% and showroom traffic has dropped by 80%. This has had a severe impact on the maintenance and aftermarket sectors, with average spend per vehicle down 25%, scheduled maintenance down 75% and spare parts sales plummeting 70% .
With the need for digitization greater than ever, is it finally time for the region’s car retail industry to go online?
It’s definitely something to think about; looking at other markets, online tools have come to the rescue of struggling car dealerships. In the United States, where car sales are estimated at $840 billion, online transactions still only account for around 1% of the total, but their share has started to rise following COVID-19 restrictions.
REGIONAL AUTOMOTIVE DEALERS ADOPT NEW SOLUTIONS
Some auto retailers in the MENA region are beginning to recognize the value of online tools, suggesting that the “handshake deal”, which has long defined the regional market, may not be the only way to do business in this region. sector in the future.
Last June, Mohamed Yousuf Naghi Motors (MYNM) launched its first-ever virtual showroom for BMW cars in Saudi Arabia, allowing customers to remotely explore and compare models from new car collections and certified pre-owned. Mark Notkin, Managing Director of MYNM the movement as “a step in the right direction”.
Kia Motors followed suit by launching its “Live Stream Showroom” service, which offers personalized real-time video tours of select Kia dealerships in Saudi Arabia, Qatar and Pakistan. Customers can schedule one-on-one live sessions with a company representative to get their questions answered. Kia is expected to expand the service throughout the MENA region.
DIGITAL TOOLS ENTER THE AFTERMARKET SPACE
Seeking to attract wary car owners to service centers and fuel the aftermarket for cars, Nissan has started offering a new door-to-door service in Saudi Arabia via a dedicated mobile app. Customers can arrange to have their vehicles picked up at a location of their choice, then delivered to their doorstep, serviced and sterilized.
“Vehicle maintenance trends are increasingly focused on convenience, and customers are now more inclined to take advantage of [themselves] services at their home or workplace rather than investing time in a service center,” Subhash Joshi of market research group Frost & Sullivan.
It is still too early to properly assess customer adoption of new technologies offered by auto dealerships in the region. A recent study by asked 1,200 respondents from GCC countries about their car buying preferences after the COVID-19 pandemic. According to the results, 60% of car buyers surveyed would now prefer to buy online rather than in a showroom.
This could provide an early indication of changing consumer and business attitudes in the region for a market segment that has long resisted online sales, but whether this change is here to stay is difficult to predict.
“While we don’t know how long this uncertainty will last, we hope these early results will help guide the automotive sector towards its next course of action,” YallaMotor chief executive Jorge Bialade said in a statement. .
Regardless of the long-term success of these newly launched online tools, the changes brought about by the pandemic and declining sales have prompted the automotive industry to explore ways to reinvent its traditional experience. As a result, the post-COVID automotive market in the MENA region is likely to differ from that of the pre-pandemic period.