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About 18 months ago, I ran two industry workshops to present our point of view on the Future of Automotive Retail, one in Jakarta and one in Bangkok.  In the workshops, I covered the topics of the impact of the agency model, the experience of the customer and the impact of EV on dealerships.   I thought it would be timely to do present a short recap of the changes in the industry since then, and my thoughts on the industry going forward.   The Southeast Asia's automotive industry is roaring back to life after the impact of the pandemic, but dealers face a unique set of challenges on the horizon. From disruptive agency models to aging technology and the rise of EVs, the future demands not just resilience but a proactive approach to transformation. Here's what I see coming up on the road ahead for automotive dealerships.

Three curves on the road ahead:

  1. The agency model curve: The traditional dealership model is facing a direct threat from agency models. In 2022, a staggering 42% (by some reports) of new car sales in Europe were through agencies, and this trend is poised to hit Southeast Asia soon. Dealers need to adapt to survive, offering competitive customer experiences and leveraging data-driven insights to retain market share.  Southeast Asia is not immune to this with Mercedes implementing the agency model in Malaysia in September 2023.

  2. The aging DMS curve: Many dealerships rely on outdated Dealer Management Systems (DMS) that lack the agility and scalability needed for today's dynamic market.   Many of the dealers that I have spoke to are relying on systems that are mandated by their Principals which are obsolete, and suffers from lack of support from the software providers as they have de-emphasised their operations in this region.   These systems are often siloed, hindering data visibility and hindering efficient operations. In Southeast Asia, where internet and smartphone penetration is booming, dealers require integrated solutions that cater to digital customer journeys.  Dealers have resorted to customizing their requirements on cloud CRM systems, which offers a quick fix but will bring issues with regards to future innovations and upgrades.

  3. The EV evolution curve: The EV revolution is sweeping Southeast Asia, with Indonesia aiming for 50% (based on published reports) of new car sales to be electric by 2030. Sales in Thailand is also picking up rapidly, and the industry is grappling with the issue of charging infrastructure which will become more prevalent in the future.   Dealers must cater to this burgeoning demand by building expertise in EV sales, servicing, and charging infrastructure management. This requires not just new skills and talent, but also innovative business models and technology solutions.

Gearing Up for the Future:

So, how can Southeast Asian auto dealers navigate these curves and emerge stronger? Here's a potential roadmap:

  1. Embrace agility with a flexible DMS: Ditch the rigid legacy systems and invest in a DMS that supports both agency and traditional models. SAP provides a state of the art S/4HANA solution that is focused on dealer operations, and has built in scalability and innovation as part of its future roadmap.   This can either replace the existing DMS solution in the dealers, or work together to complement it by providing a digital platform for innovation.

  2. Streamline Lead-to-Cash with Proactive VSS: Implement SAP's Proactive VSS industry solution for S/4HANA, a comprehensive suite that empowers dealers to manage the entire Lead-to-Cash process. VSS Digital Sales Workplace, a key feature, provides a unified platform for managing leads, quotes, and customer relationships, ensuring data consistency and real-time insights.  This is natively integrated to the core S/4HANA platform which will provide real-time analytics for the dealerships

  3. Unlock New Revenue Streams with EV-Ready Solutions: Don't just sell cars, become EV ecosystem partners. Explore solutions like SAP Cloud for Sustainability and SAP E-Mobility, which help manage leasing programs, charging infrastructure, and energy consumption. This opens up lucrative new revenue streams and positions your dealership for long-term growth.

Move beyond the Best-of-Breed maze:

Traditionally, dealerships have relied on a patchwork of standalone CRM, mobile apps, ERP, and workshop management systems. This creates a complex integration nightmare, hinders data visibility, and impedes real-time reporting. It's time to break free!

SAP S/4HANA provides the answer. This unified platform integrates all your core business processes, from sales and service to finance and inventory, on a single platform. Imagine real-time insights into customer behavior, streamlined operations (sales and service), and the ability to adapt quickly to changing market demands. This is the foundation for a future-proof dealership that can capitalize on every opportunity the e-mobility revolution presents.

The road less traveled:

The automotive landscape in Southeast Asia is changing rapidly, and those who embrace innovation and technology will be the ones who thrive. At SAP, we're committed to partnering with you on this journey.  Remember, the road ahead may have its twists and turns, but with the right tools and a strategic vision, you can transform your dealership into a powerhouse of success. Buckle up, Southeast Asia's automotive future awaits!


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