Learn more about the factors on the recovery rate the Argentine automotive market and industry will have in the face of the financial crisis due to the covid19.
Argentina is not unaffected by the devastating economic implications of the Covid-19 virus in the region. In fact, Argentina had pre-existing hardships prior to Covid-19 that have sharpened the decline caused by the virus.
- An economic recession.
- High inflation.
- Limited state resources.
These factors create several questions about the rate of recovery that the Argentine market and industry will have. Furthermore, the outstanding restructuring of Argentina’s external debt makes our present day a complex context that combines a very intense health, economic, financial and social crisis’.
How is the panorama of Argentine automotive market and industry?
The sustained and restrictive conferment policies in the region made it possible to reduce the loss of life due to the pandemic, but it also led to a large drop in employment, which further contributes to increasing levels of unemployment registered since 2017.
After nearly 4 months of quarantine, Buenos Aires – which is home to nearly half of the automotive parc – is expected to start a slow de-confinement beginning next week.
So far, what specifically concerns our Agentine automotive market and industry are the effects of: reduction of patents; loss of annual kilometers traveled by drivers because of the months of confinement; decrease of the body shop market due to less collisions; extended lengths between maintenance periods, etc.
It’s time to start imagining the new type of customer, and what are the key considerations to take in the de-confinement period, and eventually the post-pandemic period – which is coming sooner rather than later.
How will the new normal in Argentina in the future?
The loss figures of the fall overwhelm us, but it is essential to get back to work with a perspective of the future. The new “normal” is on the horizon with many questions, but also several certainties and clues to help guide the way out of the Argentine automotive market and industry situation.
So, let us start talking about what is coming…
What are the new “normal” customers like?
1) First of all, they are a connected and empowered customer: the progressive increase in connectivity as a method to solve vehicle maintenance needs made a huge leap during the pandemic and multiplied the uses of the digital market to solve all kinds of needs. If distrustful or shy drivers were skeptical of the possibilities offered by the internet, confinement operated as a true catalyst in increasing engagement for all digital media.
This defines great possibilities and opportunities to take advantage in this new context: you have to position yourself, see and take the opportunities offered by e-commerce. For 4 months we supplied everything and connected with the world through digital marketplaces in order to acquire everything from diapers to computers… It is time to introduce the proposals of all kinds of products and services online for the maintenance of the car.
In turn, digitality permits us closeness, follow up/ feedback, transparency and management procedures that makes it possible to improve customer experience. In this sense, digital communication is essential, taking advantage of the means to be close and provide more services.
These opportunities provided by technology are not available to all professionals at the same level and will generate great differences between the mechanical garages capable of boosting their business and those that less resources to implement improvements.
2) On the other hand, the crisis and lack of money after 4 months with the economic standstill creates a user with little purchasing power, beaten enough not-to-disburse nowadays, although betting on his recovery and ability to pay in the future. They seek support with financing, payment options and a deadline for disbursements. They have needs but little money at hand, nevertheless they bet on the recovery of their jobs, activities and economy in the mid-term.
Professionals with means to defer payments will be offering advantageous conditions over their competitors that lack payment plan offers, even if they can offer a cheaper service/part, long-term options will be prioritized.
3) If a vaccine does not lessen the risks of massive contagion, the car the safest and most reliable means of transport. Any attempt to evade trains, buses, subways, etc. is worth it in pursuit of personal health. In this case, having a car in good conditions becomes a primary objective. Taking the girls to school, going to work, avoiding public transport becomes a priority that six months ago was unimaginable.
The pandemic managed to curb what seemed to be the absolute transformation of traditional mobility in pursuit of new ways of sharing and combining efforts when using of available transport. We have taken a step back in the conception of transportation as a service and return to a map that erects the personal vehicle in the center of the scene, at least for now.
What do they want? What are they seeking?
4) The fall in sales of newly registered vehicles caused by the pandemic – besides the fact that in Argentina it had as its precedent a 43% drop in 2019 – leads to a decrease of the car parc growth and a stretching of the cars use in their lifetime.
For official networks, the challenge of a parc with few cars in guaranteed for workshop entries imposes the need to work on retaining customers once they leave the warranty period. This can be done by the development of strategies and services aimed at captivating the middle-aged customer: a driver who takes more care of the pocket but needs more attention and repairs than those of a new car that only changes oil and filters. The effort and challenge is enormous but the reward, if it succeeds, is very tempting.
For independent professionals, the progressive aging of the car parc as well as the stretching of its life creates business opportunities and possibilities whenever they get to communicate the needs of keeping the car in good conditions, to avoid stretching or procrastinating repairs.
It is very important to be proactive and attentive to the needs that may arise, even when they are not obvious to the driver. The safety and importance of having the car available justifies the investment in the car and, if necessary, other needs will be accommodated at home in order to have the car.
How can we serve them?
5) Fall of body repairs produced first, due to the lower volume of cars in the year that experience a minor collision and second, due to the increase of non-repairs resulting of the lack of budget from the driver. This context requires the sheet metal and painting sectors of a maximum effort to communicate profits, promotions and financing plans in order to sustain the level of activity.
Le complexe 2020 est exigeant et nous met tous au défi d’essayer de faire un saut hors d’une année compliquée et d’une baisse profonde de l’activité ainsi que de la capacité d’achat. Si dans le contexte normal, le marché était au mépris de tous les canaux qui n’étaient pas professionnalisés et qui ont acquis un dynamisme commercial pour affirmer leur travail, conquérir les clients et capitaliser sur les opportunités existantes. La crise qui nous laisse le déconfinement, non seulement nous pousse, mais impose, presque comme une question de survie, la maximisation des ressources disponibles pour survivre.