Businesses the world over—the automotive industry not an exemption—felt 2020's devastating blow. Many brands have changed their strategies, and some even pulled the plug on local manufacturing. All of this was on top of a 40% reduction in industry volume. Because of the COVID-19 pandemic and the subsequent lockdowns that occurred, the market was set back years. Growth over a long period of time was hampered in a matter of months, and the momentum brought to heel by the new normal.
Because of these, the importance of great digital services was brought to the forefront. Online presence needed to be established, regardless of the industry. Automotive manufacturers, who’ve enjoyed entertaining walk-ins and other browsers, faced the reality of empty showrooms and service centers. However, the prioritization of a stronger online presence in lieu of lockdowns and social distancing measures are only a few of the learnings we were able to deduce from our 2020 AutoDeal Industry Insights. Here are 10 key findings that could stay for years to come in the automotive industry.
1. A larger portion of the market is shopping online
Online shopping has become commonplace in the Philippines. With e-commerce sites like Shopee, Lazada, and even Facebook, you can buy pretty much anything as long as you can search for it and find it. The year 2019 saw about 7.3% of the market transacting for cars online. In 2020, we saw a significant bump, with a 2.7% increase. This brings the total number of all transactions up to 10%. This figure was calculated against the total market size and doesn’t take into account the thousands of people that simply browsed the website.
2. In 2020, it took longer for dealers to close deals
While there was an increase in transactions for 2020, the problem was that there was a drop-off in terms of lead-to-sale conversion, meaning that it took longer for people to decide whether the car that they inquired for was the right one that they wanted to invest in. The average conversion was at 45 days in 2019, but in 2020, that average time went up from 45 to 63 days or over 2 months. This wasn’t the case for all months of the year, as the lockdown was primarily to blame for the extended lead-to-sale time.
However, that wasn’t the only reason why this metric lengthened. Other factors like the digitization of the traditional process, the longer loan approval times contributed to this effect. Was this because it was taking consumers longer to decide, or was it due to a slow down in the transaction time by dealers or the duration of time required to approve auto loans?
3. Dealer engagement improved significantly
In 2020 we saw that dealers were more eager to engage with their customers. With physical interactions being way less prevalent in the market, dealers were required to go online and exhaust other channels to interact with customers. There was a 66-minute improvement in the response times in 2020 compared to 2019.
What this means is that the consumer can expect faster services and response times from dealers, and assured interaction since their quote request can be seen and addressed.
4. The industry is starting to speed up again
One of the more baffling metrics that we’ve seen is the increase in inquiries on the AutoDeal platform in December 2020. Year-to-date, we saw a 17.28% increase over the 2019 figure. This signals that the industry is starting to bounce back from its prior slowdowns earlier in 2020.
There are also more consumers looking to purchase a car within certain time frames. The majority of clients looking to purchase within 3 months of their inquiry has steadily risen month-on-month from 47% in April, to 67% of all inquiries in December. Conversely, customers looking to convert their inquiry to a purchase within 30 days hit an all-time high in December with 39.7% of all inquiries getting tagged with that time frame. In December alone, the transaction time was already down to 46 days, a day shorter than the 2019 average of 45 days.
5. Mobile shopping is becoming even more relevant
We’re seeing that consumers are shopping more on their smartphones. In total, 81.81% of all consumers on the AutoDeal platform now send inquiries and request quotations through their mobile devices.
6. Toyota still top of the pack, but old adversaries and new rivals closing in
Over the years, the number of digital inquiries and transactions kept climbing. Consumer activity online has made it easier for younger brands to get noticed. Marques likes Geely has grown exponentially since 2019, making it to the top 10 list of most inquired-for brands in the Philippines out of nowhere. Other brands like Chery and Maxus have also broken the top 20 most-inquired for brands in the country without any placing in 2019. Meanwhile, MG is still holding on to a spot in the top 10 list of brands on AutoDeal.
These new players are starting to pose a threat to some of the more established brands in the market. Toyota has seen a lot of success in the country, and still remains on top for 2020, however, it would appear that, at least on AutoDeal, Suzuki is hot on the heels of the number one brand in the country, coming in second in terms of inquiries. Toyota’s lead in terms of inquiries was cut by over 5% since 2019. Comparatively, Suzuki’s leads went up by about the same percentage if not more. Another brand that appears to be expanding its popularity is Kia, jumping a number of places forward for 2020.
In whatever case, it’s proven that younger brands have a good chance of standing out in the market on the AutoDeal Platform. While the giants may play well with many customers in the market, the underdogs seem to be coming into the consumer’s consciousness through online channels.
7. The Suzuki Ertiga is the most popular car on AutoDeal
Since its introduction in 2019, the Suzuki Ertiga has been a critical player in the Philippine automotive industry, offering value for money for a 7-seater that is not only good but is also a frugal fuel sipper from a reputable brand. Suzukis have long been known for their exceptional value, and the Ertiga is one of the most affordable cars with a 7-seat passenger capacity. Whereas other brands give you a 5-seat sedan, the Ertiga gets you more ground clearance, space, and a good number of features that you will be able to utilize for years to come.
8. Top color choices
Car colors are one of the new additions on AutoDeal, and you can now inquire about the car you want with your preferred color. Based on this data, we were able to compile several of the most popular car colors in the country.
White appears to be the safest choice in 2020, and predictably, neutral colors like black, silver, and gray, also have a high amount of inquiries. Oddly enough, red tied with black for second place, and orange is the 7th most popular. White has always been a popular choice, but it’s interesting to see that quite a few consumers want something more daring.
9. 1.01 - 1.25M price range is the sweet spot
We’ve noted in 2020 that the average price for cars sold in the Philippines went down. According to our data, the most popular price range is from P1,000,001 to P1,250,000. This range is where a lot of popular players are priced. Popular models such as the Toyota Rush nestle nicely in this range, topping out at P1,100,000.
Then we move over to the average price for 2020, which is now at P1,228,928, way below what it once was in 2019. Buying power is now less than before, and this is observable in consumer spending habits even at AutoDeal.
10. Customer Service online is still equally as important as it is offline
Whether you’re online or off, there is still another person on the other line. Customer service online is just as important as customer service face-to-face. The best-performing agents on the AutoDeal platform are able to treat their potential or existing clients with promptness, respect, and enthusiasm.
We often see that 5-star agent reviews come with accompanying keywords such as “attentive,” “accommodating,” and “honest”—all commonly-used descriptors by very satisfied customers when referring to their agents. Pandemic or not, customer service shouldn’t take a back seat.