Mercedes-Benz, BMW go online; choose digital sales and contactless delivery

It's the new car buying age. From choosing the model to having it delivered to your doorstep, all with a click of a few buttons online.

The government initiated one of the world's most stringent lockdowns to fight the spread of the Coronavirus. An already weak economy seems to have lost much, if not all, of its steam due to the crisis. So, how are luxury car brands driving through these troubled times?

According to the India Brand Equity Foundation (IBEF), the country has the fourth-largest automobile industry in the world. It is expected to be worth Rs 16.16-18.18 trillion ($251.4-282.8 billion) by 2026. The question now is whether it will reach that figure, considering the crisis (health and economic) and the lockdown.

Luxury car brands seem unaffected by all this, though. In fact, BMW and Mercedes-Benz India are now selling their range of new and used cars online.

A customer can choose a model, get it customised, have the documentation sorted, and see the car delivered to his doorstep, all with a click of a few buttons online. What seemed like an exaggeration a few months ago, is now a reality, and it will possibly become a common thing in the post-COVID-19 universe.

Mercedes-Benz India, according to AutoCar India, saw a 38 per cent drop in sales after it said it had sold 2,386 units during the January-March 2020 (Q1) period, compared to 3,885 units in the corresponding quarter of 2019.

But, despite the drop, Mercedes-Benz India has introduced #MercFromHome, which, according to its website, is a "... hassle-free, digital car buying experience."

According to Santosh Iyer, VP sales and marketing, Mercedes-Benz India, this service wasn‘t the result of the lockdown, because the brand already had a used car portal running in February 2020, and a digital service drive running since 2016.

But, digital car buying may seem too much for those who'd still prefer a traditional point of sale (POS) experience. Iyer says, "We saw a huge response when we launched our digital service drive in 2016, where we shifted our entire customer service, appointment booking, along with estimates, online. Nothing to do with young or old here, it's all about convenience, which everyone wants."

This is a new thing because earlier, consumers would research about a model online and then go to the dealer to buy it. Says Iyer, "Yes, it's true because the biggest issue was transparency. Why did a customer have to contact the dealer? First of all, there was no online platform for full booking. Because of the FDI norms in India, single-brand retail can‘t sell online."

"On-road price visibility and the scheme weren't transparent so the customer would call a dealer. Today, the customer can see on-road pricing and offers, and still check with the dealer. If the Mercedes-Benz sales consultant gives a special offer, the customer is sent a customised booking link."

A unique thing about #MercFromHome is the test drive and that, too, during the times of COVID-19 and lockdown. Iyer explained to us that the test drive was introduced because of the virus. "We ensure the car is completely sanitised, and if our sales consultant goes on the test drive with the customer, he sits diagonal to the customer. There‘s a PPE kit for both of them, along with the Aarogya Setu app, ensuring both are safe. This will help take away (any) customer's concerns."

Mercedes-Benz India also has a consultation studio, where a customer can understand the product better. We asked Iyer if this was a part of the brand's purchase experience. He agreed, "Consultation studio is for product geeks when, say, a dealer may fall short of answering all customer queries. It helps such buyers get an excellent overall experience."

He continued, "We also contact the customer seven days after the purchase and do a 'connect call', where the car is connected to his smartphone and we register him for a Mercedes Me account, thus welcoming him to the ecosystem."

"Customers also like to have a concierge service and that's why we have taken the concept of 'phygital' – a combination of physical and digital, and combined it with online consultations. Technically, the customer is not alone. Even at 11.30 at night, if the customer wants (online) consultation, a salesperson will attend (between 10 am and midnight) via Zoom, or any other registered apps, and solve his queries."

Will used cars sell more post lockdown? Iyer says, "Our biggest test was used cars. So, we set up the Roadster platform, an e-commerce marketplace, and you'll be surprised to know that we sold 150 used cars online from February 1 to March 15, and that's close to around 30 per cent of our normal used car sales."

"Used cars are generally favoured by those who can't afford a new car, or some of them like a new car, but they like it as a depreciated asset. They don't want the latest model and are fine with a three-year-old one. It's more value for money and if you take the emotions out, you can enjoy all the features of the physical asset."

"New car customers want the latest model in the market. A big plus is the depreciation benefit, which you only get for new cars. Eighty per cent of our customers are businessmen, professionals, who would like to buy a new car so that they can also claim depreciation and other benefits in their books of accounts."

We also got in touch with BMW India, which reported a 16.80 per cent decline in first quarter sales. In Q1 2020, it delivered 2,482 units of BMW and MINI cars, while in the same period last year, it had delivered 2,982 units.

To bolster sales amid the lockdown and the Coronavirus pandemic, it has introduced the 'BMW Contactless Experience'. The carmaker's website describes it as "a digital-first experience that gives you all the benefits of a brick and mortar dealership, and more with a click of a button."

When asked about the target audience, Arlindo Teixeira, BMW Group India's acting president, responded, "... In the last couple of years, millennials and Gen Z have opened a connected view of automotive sales and services, which is a significant shift from traditional methods. At the same time, older customers have also seamlessly adapted to new technologies. We see an equal mix of customers from each age group..."

He added, "The change in consumption and purchase behaviour has encouraged businesses to innovate and redesign their experiences... Offering digital sales and services via easy to use platforms remain one of the best entry points."

A unique feature of the 'Contactless Experience' is consultations with advisors via video or email. Is it with a dealer or a BMW executive? Teixeira says, "The 'Contactless Experience' is a comprehensive journey that is personalised by our dealership representatives. Experts from across dealerships in the country have been trained extensively on the contactless process. This campaign has not only transformed our customer’s digital journey, but also our internal teams. All queries are answered thoroughly, and all possible options related to the product, customisation and financial offers are presented to the customers."

While online consultations are extremely helpful to solve customer queries during the lockdown, would they, considering the ongoing economic slowdown, choose to go for user cars over brand new ones? Teixeira seems to agree, "Personal mobility will definitely see an upswing after COVID-19. Individuals will prefer to use personal vehicles as they would want to ensure that their mode of transportation is safe. A lot of customers would like to upgrade to pre-owned vehicles or consider them as a second vehicle as well."

Pre-owned or new, luxury car brands like BMW are renowned for their post-purchase experiences, but that will change a lot once the lockdown is lifted.

Teixeira seems to agree. He says that the 'Contactless Experience' lets customers access both sales and aftersales services, while following social distancing. And, existing BMW customers can book aftersales services instantly using the 'Contactless Experience'. Service cost estimates, along with other details, are sent for customer approval using BMW Smart Video, while payments are done securely online.

On whether this service will stay separate, or merge with a POS experience to offer a hybrid model, Teixeira says, "The idea is to not be tied to any one journey – online, offline or hybrid - these should simply be deployed based on the customer and developing trends. Digital technologies are here to stay and evolve, even after COVID-19."

While India's two biggest luxury car brands are going all out to drive sales, other car brands aren't behind. Honda, the Japanese carmaker, has what it calls 'Honda From Home', a five-step online process that goes from selecting a model to buying it. Volkswagen, too, now lets you buy and/or book a service from its India website.

The ongoing lockdown is supposed to end on May 3. And with only certain areas facing the possibility of partial relaxation, it‘s wait and see on how this new post-COVID-19 world of online car buying will work.