Automotive

Industry : Our view

In the automotive industry, global consolidation, flat to depressed vehicle demand & over capacity issues are leading to fierce competition that is resulting in lower prices & eroding profit margins. Automotive manufacturers are under pressure to offer more at lower costs.

On the other hand, consumers are better informed than ever before, have more choices & are in much more powerful negotiating positions. With so many OEMs trying to draw customer attention, customers are looking for individualized attention & trust.

With reduced margins, after market has potential to contribute significant portion of revenue & build long term customer relationship. However, counterfeit spare parts & role of influencers (workshops & mechanics) are major impediment to build customer loyalty.

Study indicates approx. 39 — 46% of auto parts sold in the Indian market are counterfeit & fake with losses of approx. INR 16000 Cr to industry. Counterfeit parts increase maintenance costs, reduces efficiency, compromise safety & is serious threat to customer loyalty, brand image, reputation & goodwill.

Vehicle owners are customers for life. Mere one percent increase in customer loyalty may translate to life time revenue in thousands of crore. Gaining the ability to track both customers & vehicles throughout their life is clearly significant industry opportunity.

Role of influences (dealers & workshops/mechanics) is significant. Need of the hour is for OEMs to directly engage the vehicle owners & gain life time loyalty & at the same time engaging the influencers in a positive manner.