Ram Jaulus, CEO of NGG, presents the changes that Israel’s automotive industry experienced this year:
The auto industry is not what it used to be; that much is clear to everyone. Autonomous vehicles, connected vehicles, electric cars, and more – much of the public attention is focused on changes occurring in the vehicle itself, and on the technology changing the product that we call “vehicle”. However, the real news is not about these changes. The real news is about customers’ consumption habits and their tastes.
Several years ago, Nassim Taleb wrote The Black Swan, a book about the shattering of our preconceived notions and the question of why we didn’t see what was clearly written on the wall. In the automotive sector, the situation is very similar. Customers were used to buying a new or used car by going the showroom of a particular brand, talking to a salesperson, consulting with friends who “know a thing or two”, comparing prices, going on a test drive, and then perhaps coming to a decision. Then, “suddenly”, customers got used to buying online – comparing, exchanging opinions, influencing others and being influenced, all while browsing the Internet.
The number of showroom visits made before a purchase decreased from an average of five visits to fewer than two visits. The salesperson hasn’t been the knowledgeable advice-giver for some time, and is now simply the one who performs the sale, or at most the one who negotiates the price when the client comes to make the purchase. The salesperson no longer has the ability to influence the client.
In addition to consumption habits, there has also been a change in the tastes of customers, who now prefer ridesharing or public transport. This is a trend that is only continuing to grow, and customers across the spectrum no longer see a vehicle as desirable property.
The industries of auto distribution, importers, garage owners, leasing companies, and trade-in dealers, are still playing last century’s game. We have recently seen a number of announcements by various companies that they have implemented digital transformation, but what’s the real meaning of these announcements?
The projects we have seen implemented are mainly marketing moves supported by technology: the ability to place an order and pay a down payment online, the ability to book an appointment for on-site handling, and various customer service or marketing apps. True Digital Transformation is not happening, though it may well be that there are already such projects in the industry which are simply not yet public.
We see continually accelerated development of the light rail, of Israel Railways, and of Israel’s roads, while at the same time companies such as Gett continue to accelerate development that will affect the future of transportation solutions for us all.
2018 shows changing trends in the market, more parallel imports, a decrease in purchases of new cars, and as already mentioned, alternative solutions. Throughout 2018, we assisted our clients in developing their programs in various fields:
- True digital transformation, enabling control of the sales process and of the logistical process that supports it.
- Centralizing operational activities, enabling stronger operational and logistical support.
- Streamlining and improving performance in sales and service networks.
- Streamlining various processes aimed at resource clearance and digitization.
We believe that this trend will continue in 2019, that declining sales of new vehicles will be an established fact, and that this process will speed up the streamlining of the auto import industry.