Short term: More bargains. Long term : More online focus, less real-life interaction, and an even more competitive market

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SINGAPORE
When the Circuit Breaker (CB) measures were enacted on April 7, 2020, it was clear things were not going to be the same for all of Singapore - its car industry included. 

Three months on, it’s quite clear that some things are already very different. Car buyers who had intended to buy a car in January but postponed their decision until now, will find that the entire experience of buying an automobile has evolved in significant ways. 

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Short Term: An (Online) Buyer’s Market 

During the CB, the big losers were car dealerships. With showrooms closed and with auctions for Certificates Of Entitlement (COEs) suspended, new cars could not be registered, meaning cars in stock had to stay in their lots, taking up storage space and incurring costs. Service centres were shuttered (until June 2), except for emergency repairs, which meant another revenue stream dried up. 

The industry’s response to the two months of forced inaction was clear: Take the buying experience online, dangle big discounts in front of buyers, and amass as many orders as possible to get the cash flowing once again when COE bidding resumed (see our COE analysis story for more on this). 

“If we leave COEs out of the equation for now, and looking at the competitive pricing we’ve seen with the online sales throughout the CB period, it really shows that it’s a buyer’s market right now. Car dealerships have no choice but to build a backlog of orders so they can resume business when COEs return,” said the sales manager of a European brand CarBuyer spoke to. 

The immediate effect of that would have already been seen by regular readers of CarBuyer.com.sg. Almost every car brand in Singapore held online sales events during the CB measures, with a smorgasbord of various promotions, and some of our most popular online stories were naturally those reporting big bargains and online sales. 

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But online promos do not a new era of buying make - did these sale events actually work with much of the public tightening their belts because of COVID? 

CarBuyer contacted a number of brands for comment, and while (as usual) none would release specific figures, all of them reported strong interest and positive responses to their new sales initiatives. 

Jasmmine Wong, the CEO of Inchcape (for Singapore and Greater China), told CarBuyer: “It has always been a buyer’s market and at Inchcape, we believe in the value of listening to the needs of our customers. We still saw an interest in vehicle purchase amongst our customers in the past few months,  but our role then was to make these choices available and accessible to interested buyers.”

“The response has been very good. We have observed a healthy increase in website traffic as well as a lot of enquiries through our various channels such as the sales hotline, live chat, and Facebook Messenger,” said Christopher Wehner, the managing director of BMW Group Asia. 

“The response has been definitely more encouraging than pre-Circuit Breaker, when showrooms were operating. During CB, we also saw more customer traffic visiting our brands’ websites,” said Dawn Pan, the director of multi-franchise operations for Cycle & Carriage. 

Continue to Page 2: Rise of the digital showroom

Digital Domain 

COVID has commonly been termed a catalyst for change, and it’s no different here - it has without a doubt accelerated the digitalisation of the car-buying experience in Singapore and the fast-tracked the debut of the full-featured digital showroom. 

Audi and BMW debuted their new online showrooms during the CB period, while Toyota, Lexus and Suzuki will debut their online showrooms progressively from late June, with additional features such as 360-degree views of the cars.  

But it’s not a ground-up jump-start into the digital domain either - digitalisation of the buying experience was already happening, and COVID simply accelerated the process. 

“Digital transformation was always part of the plan for both BMW and Mini,” said Mr Wehner. 

“The COVID-19 pandemic has certainly been an accelerant to the transformation of automotive retail. Moving forward, we believe that there will be a greater prevalence and combination of online and in-person sales and interactions,” said Ong Lay Ling the group managing director for Eurokars Group, which distributes Mazda, McLaren, MG, Mini, Porsche and Rolls-Royce here. 

“There has been a flurry of social media and online marketing campaigns during the circuit breaker period,” said Ms Pan. “It’s clear that automotive retailers have been greatly disrupted during this period, and so there is increased urgency towards further digitalization of the buying experience now.”

Hyundai and Porsche were two brands who led the way early, with full-featured online showrooms with configurators and pricing already in place long before COVID hit. 

Porsche simply expanded on its already mature digital buying experience: “With showrooms closed, Porsche started offering virtual video consultations on WhatsApp and personalised quotations. For an online shopping experience, customers were able to head over to Porsche Finder, an online vehicle search tool, to assess available cars, both new and pre-owned, for sale,” said Jason Lim, general manager of Singapore’s Porsche dealership, Stuttgart Auto.  

The benefit for car buyers is that they can now truly shop for cars at the virtual showrooms in a meaningful way: looking at prices, deciding equipment levels, chatting virtually to sales consultants, and even putting down a deposit - a much easier process than it was in 2019. 

Before COVID, visiting a car brand’s website locally offered lots of information, but if you wanted to actually find out how much it cost or even to put your moolah down on a car, you had to get on the phone or hop down to the showroom, or puzzle through a PDF of the car prices and models. 

Since Singaporean buyers are already well used to online shopping experiences, it looks to have been a largely smooth transition to the virtual for car showrooms. 

Continue to Page 3: Buy a car without stepping into a showroom

Remote, But Not Isolated

Of course, the sheer cost of a car - it being the most expensive consumer item most people will ever buy - means that a test drive, and a direct experience of the product will remain essential. 

But even that, like food or other services, is now coming directly to your door. To go with digital showrooms, car brands are also “remoting” as much of the buying experience as possible, and the two major developments here are remote test drives and remote delivery. 

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Would you buy a car now?

https://www.facebook.com/CarBuyer/posts/3148766601846764

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Even before the CB came around, the “remote” test drives were already offered by Lexus and Kia - you arrange the time and place, and a representative sends the car to you and accompanies you on the test drive. 

In fact, this is simply an extension of what some of the more luxurious car brands have already done for VIP customers or prospects for expensive cars for quite some time.  The difference is of course, right now pretty much any brand will do the same as long as you ask for it. 

Before long we will see the entire “as remote as possible” experience crystallised into a standard experience across the industry. BMW has already unveiled its new buying experience with all the above-mentioned integrated in mid-June, and christened it with a snazzy new name: ‘Convenience 360’ means you only need to come into contact with a real person during the test drive and delivery phases. 

So far the response has been positive, according to Mr Wehner: “We are pleased that the feedback on our digital showrooms from potential buyers has been excellent. They can connect with the emotional content, appreciate the ability to easily find relevant information, and receive immediate support whenever needed. In these times, a fully contactless customer journey is highly appreciated.”  

Continue to Page 4: The most important thing that decides car buying behaviour in Singapore is: 'C-O-...

The shift from owning to...something else? 

A disruption of the normal means less disposable income - so will car buyers shift to alternatives, such as leasing or second-hand cars? 

“Households will try to be prudent with their spending in these uncertain times. As Singapore is a high tax country, the leasing or short term rental options need to be highly competitive in order to attract customers in a saturated market,” said Florian Weber, the general manager for Finance, Insurance and Leasing for the Eurokars Group.  “However, as long as employees are encouraged or required to continue to work from home, we anticipate that people will be reluctant to increase their expenditure on transportation.”

For second hand cars, the Land Transport Authority (LTA) still reported figures in May for car ownership transfers. They were on the upswing until COVID hit - in 2020 January, February and March saw 12,422, 12,863, and 14,405 transfers respectively.

April, with CB enacted, dropped to just 45 percent of that, or 6,505, and May was even worse with 4,930. That was likely exacerbated by the fact that it wasn’t strictly legal to deliver cars privately, though remote deliveries were allowed by the Ministry of Trade and Industry for some official dealerships. 

With the immense cost of buying a car, leasing or short-term ownership seems like a good alternative to taking public transport, since some may find taking a bus or train akin to playing Russian roulette.  

Even then, it’s a mixed bag on how things panned out here: Car sharing firms saw a demand rebound, but car sharing firm Smove went into liquidation, while other car rental firms are suffering, yet at the same time public transport ridership fell 80 percent in March. 

But even as COVID fallout makes people change their behaviour, like the digital showroom, alternatives are already in place: Most car dealership groups offer leasing options, with the more high-profile ones launched recently being BMW’s short-term lease programme Access, its long term leasing through BMW Flow, as well as Audi’s Audi-On-Demand short-term drive programme. 

“Even before the pandemic hit, we observed an uptake in the subscription and leasing models, but we expect accelerated growth in this business as individual mobility needs change due to the pandemic,” said Mr Wehner. 

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Singapore is still a special case 

The only clear thing when it comes to the coronavirus and cars, is that global car sales have tanked, and even in this respect, we can’t say the same thing about Singapore. 

Singapore, as always, is a unique case and cannot compare to countries which have “open” car markets (i.e. not limited by a quota system like ours), and with COVID shutting down the main mechanism for car sales - the COE -  it’s still too early to tell just where the dice will land. Even though bidding restarts this week, it'll take a few rounds to make sense of it all.

Here at least we can offer one certainty: When COE bidding restarts in July, it will be fully subscribed i.e. there will be more takers for a COE than there are COEs available. 

In other places, the coronavirus will change how business is done as well as how much business is done. In Singapore, COVID will change, and has already changed, how business is done as we’ve just seen. But how much business is done remains down to the other thing car drivers and buyers have long had to shape their behaviour around - the COE. 

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