The Booming Online Automotive Industry in Sri Lanka
Carmudi’s report on ‘The Booming Automotive Industry in Emerging Markets’ provides a detailed look into the global state of automotive sales and how car purchasing behaviors have changed due to the drastic increase in internet and mobile penetration, rising GDP, and the emergence of a middle class. The findings in this report are the result of Carmudi’s quantitative surveys conducted online with both car buyers and car dealers, and in-depth interviews with industry influencers throughout Sri Lanka.
The State of Global Car Sales
Global automotive sales for 2015 are expected to reach close to $89M, a 2.4% growth from 2014. Emerging markets’ share of global sales will rise from 50% in 2012 to 60% by 2020, while their share of global profits is also set to rise by 10%. When it comes to new cars, purchase intent is strongest in Asia, where 65% of respondents say they will buy new cars in the next two years, compared with 7% who plan to buy used cars.
Growth of Auto E-Commerce
Globally, auto E-Commerce has grown at such a staggering rate that now as many as 80% of new car customers and almost 100% of used car customers begin their car shopping experience online. With internet and mobile penetration significantly growing in emerging markets, the rate of moving the car shopping experience online is beginning to mirror that of Western Markets. Evidence of this phenomenon can be seen when looking at automotive Google Search Queries. The Year over Year search growth is astonishing, particularly in Sri Lanka where the growth of searches in the Motor Vehicle category grew 41%. In Sri Lanka, where the car registrations averaged 1689.19 cars from 1997 until 2014, 30% of car buyers reported using the Internet to conduct research on a car before making a purchase.
Changes in Sri Lanka Car Sales
The motor industry in Sri Lanka has witnessed a number of changes in recent years. Prices fell sharply in 2010 due to cutback of duty charges, which resulted in a surge of vehicle imports. New motor vehicle registrations in 2011 jumped 46% higher than the previous 12 months. Import duties were revised in 2012 to regulate the rising motor vehicle imports, presenting a major impact on the volume of imports.
The Carmudi study found that 70% of car dealers in Sri Lanka reported an increase in car sales over the past twelve months due to the changing economic climate, while 20% of car dealers surveyed reported a decrease. The President of Sri Lanka’s Vehicle Importers Association stated to the media that reductions up to Rs. 300,000 for the prices of vehicles with 1000cc or less engine capacities are in the plans. These plans were later executed in hopes of reviving the sluggish attitude of the overall motor sector and to allow all motor sector players a positive impact.
The Shift to Online
Car dealers in Sri Lanka have reported that over 30% of car buyers mentioned turning to the Internet and 10% of car buyers are turning to dealer sites when researching for cars. Car dealers also reported that 60% of car buyers are still using offline media such as newspaper classifieds as a source of information when searching for a car. This proves that offline media such as newspaper classifieds are still highly used in Sri Lanka as a source for buyers. Despite Sri Lankan car dealers getting more and more digital when advertising their listings with 40% of car dealers are now primarily focused on advertising their car listings online, 60% of car dealers are also still using focusing their listings on offline media such as newspaper classifieds.
“41% YoY automobile sector search query growth is a fantastic indicator of the potential within the Sri Lankan market. Even though data shows that a majority of Sri Lankans use offline mediums to source information historically, we see that online sources are also another stop before a complete buying decision is made. We will see a shift in this situation over the next couple of years, looking at online usage rates, where the online medium will be a clear front runner when looking for a car to buy. Carmudi is well positioned to cater to current and future demand through its cutting edge website design; created for car buyers to source their dream vehicle amongst thousands of vehicles already online in just a few clicks while also allowing car sellers to upload there within a matter of just two minutes. We look forward to the exciting times ahead for the online automobile industry in Sri Lanka and also look forward to adding to the vast list of industry players we currently work with as we move forward, to add more value to our consumers,” said Firaz Markar, Managing Director for Carmudi Sri Lanka.
