Munich For Rudolf Rizzolli, the classic car trade is like a “perfect price discrimination machine”. For the sellers, it’s always about giving the individual customer as little discount as possible, but still generating a maximum of many deals. The result is a huge range of estates.
A prospective customer receives a three percent discount, the next nine percent and the next but one 14 percent – depending on the price at which he is just ready to buy a car. “But this principle has reached its limits,” believes Rizzolli. With online portals such as MeinAuto.de, the head of Mobility Holding GmbH is trying to ensure more transparency in the market and to dispute part of their trading margins with stationary car dealerships.
Never before has Rizzolli been as successful as it is now in the pandemic. “We doubled our sales in 2020,” says the native Italian. While new car sales in Germany have plummeted by almost 22 percent and many dealerships are struggling to survive, the business of digital leasing providers and brokers is booming.
“We are cheaper, more flexible and more transparent,” says Rizzolli, praising the advantages of online trading. “The corona crisis made this clear to the vehicle manufacturers and their dealers once again and initiated a change of heart in the industry.” In fact, the sometimes still very analogue industry is suddenly committed to digital change. Even Opel – one of the biggest stragglers in e-commerce – quickly set up a uniform platform with its dealers in Germany shortly after the first lockdown in spring.
“Online retail has experienced a huge jolt. The corona crisis will change the market forever, “states Kai Müller. The head of Experience One has specialized in the personalization of customer experiences with his digital agency. Together with Daimler For example, the manager and his team designed the app for the “Mercedes Me Store” or helped design the Daimler model configurator.
Consultations only online for the time being
Kai Müller is certain: “No retailer can afford to ignore the digital sales channel any longer.” Anyone who only travels offline currently generates zero sales. Because on-site sales and advice in the showrooms are prohibited until at least January 10th.
The result: the exchange moves to the network. Consultations are held via video from the comfort of the living room, and the preferred model is then delivered to the front door. “The auto industry has never had a greater chance of establishing a more direct sales model and centralizing customer data,” says Müller.
Compared to other industries, online trading in the automotive industry is still a niche market. Little more than two percent of new cars in Germany are ordered digitally. By contrast, over a third of toys are already purchased online and every fourth trip is booked on the Internet.
In the wake of the corona crisis, the online share of car sales is likely to have skyrocketed, but it is still at a low level. After all, even Mobility Holding, as the market leader in independent online portals, only sells a few tens of thousands of vehicles per year in Germany to private users. That’s only a fraction of the total private car market, which accounts for over two million units a year.
“No online platform for cars – including us – has already managed to establish itself as a brand that customers completely trust,” admits Mobility Managing Director Rizzolli. That is the big plus that the car manufacturers and their stationary dealers can still claim for themselves today. “But we know from other industries that it is only a matter of time before customers also place more trust in online platforms,” says Rizzolli.
Radical change necessary
The manager is certain that online sales will “multiply” over the next few years. The corona crisis is accelerating three major trends. “Firstly, customers want to pay a monthly rate instead of a large one-off amount,” explains Rizzolli. Leasing is the big winner.
Second: As a result of the lower sums for installments, more and more people would also be willing to order cars online. “Thirdly: The car is becoming increasingly de-emotional.” More and more people are looking for a mobility offer that meets their needs, the brand is becoming secondary. All the trends taken together would spur digital sales.
The around 36,000 German car companies with their almost 440,000 employees are under enormous pressure. In order to survive, industries have to change radically. “Most customers are less and less interested in haggling over prices and equipment with a classic salesperson,” states digital agency owner Müller. Anyone who goes to a car dealership has usually already informed themselves well in advance and is looking for honest advice and permanent support.
“70 percent of new car buyers complain about not knowing all the functions of their vehicle. Too often, customers are left alone here, ”says Müller. The need for explanation is particularly high when it comes to electric cars – even long after the sale has been concluded. All new cars are now packed full of technology and can be continuously upgraded with software updates. Here, too, customers would be looking for a reliable contact.
“Those stationary retailers who take on a new accompanying role and see themselves more as partners than pure salespeople have good prospects for the future,” believes Müller: “Those who, on the other hand, are only looking for a quick deal will be lost in the medium term.” When it comes to price and quick processing, online portals have a clear advantage.
Mobility boss Rizzolli sees it similarly. “The dealers’ trading margin is shrinking and will continue to shrink,” believes the manager, who himself was in the stationary car trade for a decade. He considers glass palaces on the outskirts to be completely outdated. Dealers who increasingly see themselves as local logistics and service partners, on the other hand, are still needed.
Even with a purely online portal like MeinAuto.de, interested parties ultimately need to exchange ideas with an expert again before making the final click. “Nine out of ten customers who buy or lease a car from us seek advice from one of our over a hundred consultants in the call center,” says Rizzolli.
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