In this challenging moment in time, only the most creative and innovative will survive. BMW Indonesia is a prime example; it offset its declining sales because of the COVID-19 pandemic by expanding its digital presence. The efforts so far have proven to be fruitful for the German premium automotive brand.
“Online sales account for 20 percent of sales, or around 200 units,” said Bayu Riyanto, Vice President Sales, BMW Indonesia.
As of July, 1.034 BMW cars have been sold at retail. Although it decreased by about 20% from the same period last year, this result is quite encouraging because it happened that BMW temporarily managed to grab the largest share of premium cars from Mercedes-Benz. The most affordable car models were the bestsellers for BMW this period, with the compact SUV BMW X1 and sedan BMW 320i accounting for the largest sales.
Many initiatives have been done, ranging from opening an official store on Tokopedia, providing bold online sales programs such as Drive Now Pay Later, which includes installment holidays for the first six months, to launching an interactive website mybmwdealer.co.id.
So far, this year is a nightmare for all premium car brands in Indonesia, including BMW Indonesia, which in April only recorded retail sales of 55 units, down 62.8% from 148 units in April the previous year.
The negative trend was triggered by the COVID-19 pandemic, which affects almost all types of businesses, including premium car sales in Indonesia due to the sluggish economy. Particularly in Jakarta and other big cities, Large-Scale Social Restrictions (PSBB) have limited individual mobility and affected potential car consumers.
BMW Indonesia online initiatives
Until the first half of this year and this article is being written, BMW Indonesia has launched ten new cars and special editions online. The first online launch took place at the start of the pandemic in Indonesia in March, with the BMW 6 Series Gran Turismo launch. This is the first time a car has been launched online in Indonesia, a move that is soon followed by other car brands.
Tokopedia Official Store
In April, BMW Indonesia launched its official store on Tokopedia; this is the first time a premium automotive brand principal in Indonesia has opened an official store on Indonesia’s largest e-commerce site.
At that time, BMW launched the all-new BMW 3 Series Touring, a niche car selling well online. It also offers some exclusive and online-only program with Tokopedia, such as the Ramadhan Peace of Mind Program with gasoline vouchers up to Rp. 20 million, free car insurance for up to 2 years, and a direct discount of 5 million rupiahs for the latest series of BMW vehicles on the BMW Official Store on Tokopedia.
BMW Indonesia doesn’t worry that launching an official store and selling its cars online on Tokopedia will tarnish the brand’s image.
“For online sales on Tokopedia, we maintain a premium feel at the market place, such as designing our landing page. So that everything is still under control and following the BMW brand identity, “said Jodie O’tania, Director of Communications of the BMW Group Indonesia.
Offers that customers can’t resist
One of the newest bold and innovative sales programs, Drive Now Pay Later, was just launched in July. Consumers can register for this program online at the mybmwdealer.co.id site. This program resulted from market research, where BMW Indonesia surveys its dealers to find out what programs will tempt customers to buy cars.
Bayu saw that consumers at the beginning of the pandemic had shifted their attention and concentration to fulfill basic needs. Now that this condition has slowly passed, consumers will seek other fulfillment needs, including, in this case, cars.
Especially, it is currently not easy to travel or have a vacation abroad; that’s why people in the premium segment are thinking about what they can do. Like today many people are cycling on weekends. Bayu saw that after bicycles, traveling by vehicle would become a trend. Nowadays, people only have the option to go to domestic destinations.
“Hopefully, when the vaccine (COVID-19) has been found, the condition for 3 to 6 months has started to recede, so they (consumers) can start paying off their vehicles,” said Bayu.
Although this program is quite aggressive, Bayu argues that BMW’s leasing partners have mitigated the risk of default from consumers. Before being approved, potential customers will be surveyed regarding their financial capabilities so that everything has been predicted and analyzed.
“Our partners dare to take this program because the risks are measurable,” added Bayu.
Meanwhile, according to Jodie, all online initiatives have been prepared from last year following BMW headquarters’ direction. According to BMW’s research, more than 87% of its customers conduct research online, including cars. With a developed online presence. BMW, Indonesia wants to improve the purchasing process from consumers. This online presence will be a gateway to information and contact for its consumers.
“A strategy such as a virtual website has been prepared since last year, and fits the current conditions, so our global initiative is in the right direction. We always try to see from the customer’s point of view,” said Jodie.
Trends were negative even before the pandemic.
The negative trend due to the COVID-19 pandemic has made sales projections for this year to be corrected.
According to Researchandmarket.com, Indonesia’s automotive sales will experience a decline of 16.7% this year due to the COVID-19 pandemic. Meanwhile, as reported, the Association of Indonesia Automotive Industries (Gaikindo) has lowered its car sales target by 40% to only 600,000 units this year.
The ASEAN auto market has experienced challenges in recent years, and the decline occurred even before the pandemic. The automotive market of the Association of Southeast Asian Nations (ASEAN) decreased by 2.9% to 3.5 million units in 2019 compared to the previous year. The main cause is the decline in the world economy and the decline in automotive sales in Indonesia.
Indonesia is one of the largest contributors to the ASEAN market, with a contribution of 29.8% in 2019; the decline in sales was due to the presidential election.
The second wave is coming.
The first-half of the year is only the first round; in the second half of the year, there are still many uncertainties that could disrupt the Indonesian economy.
First, there is currently no vaccine for COVID-19; this leads to uncertainty about when this pandemic will end because vaccines play a very important role in preventing transmission and death from this virus.
The number of cases in Indonesia is also still increasing. On August 22, 2020, when this article was published, there were additional 2,090 positive cases and bringing the total positive cases to 151,498 cases in Indonesia.
Second, Indonesia is in danger of being hit by a recession in the fourth quarter or September of this year, causing a decline in people’s incomes. A country can be considered a recession if it records negative economic growth for two consecutive quarters.
The Indonesian economy has contracted 5.32% in the second quarter of this year, so the country is already placing one foot into the abyss of recession.
For this reason, the government needs to maintain people’s purchasing power so that they can recover from the impact of COVID-19. Currently, the government has a National Economic Recovery program with a total budget of Rp 695.2 trillion. Unfortunately, only about 20% of the budget or Rp.141 trillion has been realized.
BMW Indonesia is still optimistic that it will be able to record growth this year. Bayu sees that there are still companies that still have good growth, such as telecommunications and food & beverage companies that are not disturbed. Hence there are still potential customers for the brand.
“This year has been tough, and there may be one wave to come. However, this is not an obstacle to keep being active and innovating. Growth will still exist, and we will remain optimistic,” concluded Bayu.
The Indonesian version of this article can be found here.