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Automakers Put Pedal to the Metal With Digital Sales

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The coronavirus outbreak has hurt the auto industry’s prospects. IHS Markit estimates global vehicle sales to decline around 22% year over year in 2020. However, there’s a silver lining behind the COVID-19 cloud. The process of buying cars is undergoing a digital transformation. The online purchase of cars is getting increasingly popular amid the coronavirus pandemic. Car companies are seeking to change the manner of business operations and exploring new opportunities in e-commerce retailing.

Digitization Gets Into Gear

While online shopping has fundamentally changed the majority of retailing markets, auto retailers have been somewhat slow in embracing the potential of digital commerce. However, prospects of e-commerce in the auto industry have got a boost, thanks to the deadly virus. After coronavirus-induced lockdowns of several cities, socially-distant digital sales have come squarely into focus. Auto companies have been looking for alternative ways to connect with car shoppers to sail through unprecedented times.

The pandemic has certainly brought immense opportunities for digitization, laying emphasis on contactless deliveries. Online traffic is on the rise, with auto dealers ramping up their digital capabilities to make deals with customers and arrange for home deliveries for vehicles. Carmakers are keen on revving up efforts in online advertising through websites and social networks. The launch of simple, secure and user-friendly online platform is aiding the seamless end-to end digitization of companies’ sales process.

E-commerce and digital ramp up are fast emerging as the key to survival, as well as enabling effective customer engagement. Even with the lifting of lockdown restrictions, manufacturers look keen to continue building direct relationships with customers and bypass the expensive dealer networks.

Automakers Take the Digital Route to Spur Sales

Auto manufactures like Tesla TSLA, Rivian Automotive, Porsche North America, et al are already actively engaged in digital retailing. General Motors’ GM “Shop, Click, Drive” online program, launched in 2013, has been gaining importance lately amid the COVID-19 pandemic. In March, Porsche announced additional measures to boost the digital pilot program by expanding online retail, customer lease extensions, and home pick-up as well as drop-off facilities.

French auto biggie PSA Group is accelerating the online sales program and targeting to sell more than 100,000 vehicles online by 2021. German automaker Daimler AG DDAIF — the maker of Mercedes-Benz — deploys direct online sales models in South Africa and Sweden, as well as intends to roll out the same in Austria next year. The company aims to sell more than 25% of cars online by 2025. Online traffic on Mercedes’ sales site jumped 70% in the April-June quarter.

Volkswagen’s VWAGY adoption of e-commerce has been intensified by the pandemic. The company has adopted the online sales model for the upcoming electric vehicle (EV) ID.3, whose deliveries are expected to begin in September. Customers can get their hands on the ID.3 just through a click via computer and smart phone. Volkswagen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last Words

Coronavirus cases seem to be slowing down in some places, while accelerating in others. However, one thing is certain. The shift toward digital shopping has grown at warp speed amid the coronavirus pandemic and will continue even after the crisis. A post COVID-19 world will witness the evolution of online sales. Automotive e-commerce will flourish once the virus fears fade and business resumes normalcy. Sustained technological developments will bolster prospects of the market players.

Automakers’ race to invest vast sums on the e-commerce platform will gather steam and aid businesses to reach new heights. Companies that won’t be taking necessary efforts to step up their online game will be left behind.

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General Motors Company (GM) : Free Stock Analysis Report
Daimler AG (DDAIF) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Volkswagen AG (VWAGY) : Free Stock Analysis Report
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