The road to your own Tesla is short. The journey to the manufacturer’s website takes less than ten minutes. Choose a model, color, rims, interior – the “customer’s path” has already reached the box office with a few clicks. You can pay, rent or finance by credit card, bank transfer or instant payment. If necessary, delivery is made express and directly to the front door. The customer receives the appointment by e-mail or SMS. “Once the vehicle arrives, you simply sign the relevant documents and you can leave in a few minutes,” Tesla promises.
The American carmaker has sold its electric cars on this or similar digital channels more than 320,000 times since the beginning of the year. A record in the middle of the corona crisis, when data on automotive sales collapsed by more than 20 percent. It’s not a coincidence. “Companies that have been able to reach their customers digitally before locking have a huge competitive advantage,” analyzes a recent McKinsey study. This also applies to the car trade, which is expensive for manufacturers (30 percent of total sales) and with which, according to the study, only one percent of customers are satisfied.
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Corona supported digitization and informed online portal operators about new or used cars. “Today, you tend to buy products online that you wouldn’t expect in the past.” The corona crisis has strengthened this trend, “says Rudolf Rizzolli. Rizzolli is the CEO of Mobility Holding, which includes MeinAuto.de, the market leader in online sales of new cars and leasing of new cars in Germany. “There is also a trend towards monthly installments, leasing or subscriptions. This lowers the inhibition threshold for online purchases. “Sales of new vehicles through the platform have almost doubled compared to the previous year.
Significantly greater demand on mobile.de and meinauto.de
This trend is also evident in the online car dealer mobile.de, which sells mainly used vehicles. Approximately 1.5 million cars, commercial vehicles and motorcycles (of which 140,000 new vehicles) are advertised on the platform, which is the largest offer for the purchase and sale of vehicles in Germany. “The digitalisation of car purchases has been pushed forward by several years,” says CEO Malte Krüger. “The whole industry now has to adapt.” Customers increasingly used digital formats and wanted online offers for financing, leasing and contracting, for example.
Some dealers or manufacturers offer the digital process themselves, most use the appropriate new portals for cars. The exception is full digital processing of purchases or financing, as at Tesla, in most cases the customer is ultimately dependent on the seller. There is no data to show how many consumers have outsourced the entire purchase process and have their vehicle delivered home. Many should not be yet.
Portals such as MeinAuto.de, Carwow or Autohaus24 have found their way out of the niche through which manufacturers sell preconfigured new vehicles. After all, according to a market survey by Deutsche Automobil Treuhand (DAT), one in ten new car buyers in Germany bought their car through such a platform in 2019. Figures for the current year are available in January 2021.
“More and more people are placing more and more emphasis on individual equipment and brand loyalty,” says Rudolf Rizzolli. “It also has to do with the general demotivation of the car.” Another reason: Manufacturers must save and limit the variety of models and equipment variants. This reduces costs and simplifies sales.
Premiums increase the residual values of used vehicles under pressure
This can be seen in new electric cars, such as the VW ID.3, which is only available in fixed variants. VW has announced that it wants to focus more on digital direct car sales and future electric models. Manufacturers face customer uncertainty about whether they should buy an electric car now by offering cheap leasing or prepaid models with a one-year, two-year or three-year validity period. This is where online platforms show their advantage.
“The share of leasing customers is particularly high for electronic cars,” says Mobility Holding chief Rizzolli. “After the increase in the purchase premium in the summer, demand went through the roof.” At times, there were more inquiries about electric vehicles than about diesel. However, the increase in electromobility, driven by government purchasing premiums and tax benefits, has its downsides, which online providers feel particularly in terms of funding. Because cheaper new cars are, the greater the pressure on residual values, and thus on the prices of used cars.
“As a financier, we are particularly critical of plug-in hybrids in terms of residual values,” says Rudolf Rizzolli. PHEV purchase fees are criticized because vehicles are rarely electrically powered and therefore consume much more fuel than officially stated by manufacturers. “If vehicles are much less efficient in everyday use, what is their value as a used vehicle?” Why should a private customer pay more for this than for a regular vehicle? “Rizzolli asks. Rizzolli sees a similar distortion of purely electronic cars, especially small vehicles, which can only be sold as used vehicles at high discounts if new vehicles with bonuses are artificially cheaper.