[Car Talk Forest] The Contactless Society Brought by COVID-19... Why Domestic Cars Lag Behind in Online Sales

[Asia Economy Reporter Suyeon Woo] As the non-face-to-face society accelerates due to the novel coronavirus infection (COVID-19), the landscape of the automobile industry is changing. Some companies are live-streaming new car launch events online, setting up showrooms using augmented reality (AR), and offering additional discounts to customers using non-face-to-face channels. It seems that non-face-to-face marketing is becoming increasingly common in the car industry as well.

However, there are still areas where non-face-to-face interactions feel unfamiliar. This is especially true in the domestic automobile sales sector. Since cars are high-priced consumer goods, many consumers want to see the actual product before purchasing, and compared to other industries, salespersons have strong negotiation power, so the non-face-to-face approach has not yet been fully established.

The 'right to survival' advocated by the sales labor union is also a major obstacle to online sales. In the case of Hyundai Kia Motors, more than half of all salespersons are regular employees belonging to the union, making persuasion even more difficult.

At least, Renault Samsung Motors, which found a compromise between labor and management, has been reaping significant benefits from non-face-to-face sales through the online subscription system it introduced for the first time in Korea in 2016.

Renault Samsung proposed a compromise plan that uses online only in the initial stage of the contract, with the rest of the process carried out through salespersons at each dealership, creating a 'win-win' model for labor and management. Of the pre-orders for the compact sport utility vehicle (SUV) XM3, launched on the 9th, 25% were made through online subscriptions, especially drawing a positive response from the young 2030 generation.

Renault Samsung XM3 Successfully Gains Popularity Through Online Subscription Sales

Imported car companies already provide a 'non-face-to-face one-stop service' that allows all processes from test drive applications to vehicle contracts and delivery requests to be completed online. Recently, they have been running promotions that offer additional discounts and prizes for online consultations and purchases, strongly driving non-face-to-face marketing.

The biggest beneficiaries of activated online sales are consumers. Above all, the elimination of intermediary margins in the distribution process can lower consumer sales prices. Another advantage is that consumers can inspect the vehicle and purchase it immediately from the comfort of their own home.

With many changes coming to our lives due to the COVID-19 crisis, it seems necessary to consider various aspects of the sales methods in the domestic automobile industry. A senior official at Hyundai Kia Motors said, "From now on, it has become an era that requires an order-made online sales system rather than simple online sales," adding, "There are still difficult tasks ahead for full implementation, such as building the online system and establishing relationships with the sales network."