How to build a luxury automotive brand in the tough Malaysian market

The Malaysian automotive industry consists of two low-end manufacturers. To help these manufacturers, the government protects them with massive import duties, sales and other taxes that can jack up the price of an imported car with a large engine by as much as 155%.

In addition to these taxes an Approved Permit (AP) is required to import a car. These can cost around RM30,000 (US$10,000) each.

This makes it a tough country in which to sell foreign cars, especially luxury vehicles. To give you an example, a BMW 3 series that costs approximately £30,000 (RM150,000) in the UK, will cost about RM230,000 (£46,000) in Malaysia.

Top selling luxury cars in Malaysia
The BMW 3 series and the Mercedes C class are the most popular of all luxury vehicles in Malaysia. Sales of the BMW 3 series are around 2,000 units per year and the Mercedes C class slightly higher at 2,200 units. Both these models account for about 40% of each manufacturer’s total annual sales in Malaysia.

Mercedes Benz C class interior
Mercedes Benz C class interior

So you would expect any dealer that makes a living selling and servicing luxury cars to be on top of their game. Right?

In November and December 2012, a prospect visited a number of luxury auto dealers and had a few test drives. During one test drive, the sales person spent the whole time texting.

On another occasion, at a different showroom he was approached by an executive who began the discussion by arguing about whether a particular vehicle in the showroom was the latest model.

Despite operating in a very competitive space, neither sales executive followed up on the prospect’s visit. However one of them does send ad hoc emails focusing on discounts.

Eventually the prospect asked a friend to refer him to someone at one of the main dealers. He was introduced to a senior Director who referred him to a manager who referred him to an assistant manager. Despite this the prospect purchased a new Mercedes Benz C250 because this dealer offered a larger discount than any of the other dealers.

Even this luxury car dealer who got a referral from a supplier and made a sale with zero marketing investment has done little to build a relationship with the customer, preferring instead to simply sell a car. More on this later.

Selling a luxury product is not like selling a bag of rice
More than any other sector, luxury brands must have people who know how to build relationships with customers. The market for these brands is 0.02% of the Malaysian population. It is not like selling rice, LCD TVs, Computers or Fax machines where volume is the key to success.

Ensuring a luxury purchase requires an investment in time and effort to build a relationship. A one-to-one relationship with a representative that offers individual specific value, exclusivity and personalisation is what customers want.

Levels of service must be exemplary because customers in this space have so much choice and have worked hard for their disposable income.

They want to be seen as special, important and part of a select club and not simply as another anonymous person in an anonymous crowd buying an anonymous product.

In the first month after purchase, our buyer received two or three calls and both times the callers were essentially going through the motions of ticking service and satisfaction boxes.

Since then he has heard nothing. Then last week he received a text message. It is enclosed here, in full.

Poorly written, too familiar and a lazy way to try and upsell a luxury product!
Poorly written, too familiar and a lazy way to try and upsell a luxury product!

Pathetic I know. And the cars listed in the text are not cheaper. We’re talking about RM350,000 (£75,000) and upwards!

Now manufacturers, dealers and salesmen are going to say that all that matters is price and discounts but that is only because you cannot be bothered to build relationships with prospects and customers.

So what should this dealer of luxury automobiles do differently? Here are 10 things they need to do and do fast:

1) Recruit the right people and train them not with generic training courses that are used for automotive today and property tomorrow, but with bespoke training relevant to your brand, your industry and your customers.
2) Use technology correctly. Text messages are not a sales tool.
3) Put in place processes and systems that must be adhered to. For instance, if a member of staff has never met a customer before, the relationship must start on a formal footing, at least to begin with. Depending on how the relationship evolves, staff may be allowed to become more familiar.
4) Telling isn’t selling. Appeal to prospect emotions by identifying individual requirements for value and matching your product attributes to those preferences. You don’t sell cars, you realize dreams.
5) Service, service, service. Every interaction with a luxury brand must be of the highest level and expectations must be exceeded every time.
6) Make the experience of dealing with the brand special, unique, glorious but never, ever assume the customer will come back.
7) Too many brands spend a fortune on marketing and then practically ignore the customer. You have a 50% chance of selling to an existing customer and only a 15% chance of selling to a new customer. But sending a poorly written text is not going to retain a customer.
8) Don’t discount.
9) Carry out a sales process audit and sales skills analysis (yes, we can do that for you) and improve the skills of your customer facing staff.
10) Don’t waste time measuring satisfaction. It offers no value.

There is talk of liberalisation of the Malaysian automotive market but the reality is there won’t be any significant changes soon. Luxury brands need to know how to build relationships and realise dreams, not sell cars.


Malaysian automotive brands must improve the engagement skills of their sales force

I’m buying a new car.

And as it happens, I’ve never managed to secure any consulting projects with automotive brands. So as buying a car is probably the second largest investment most of us will make, I decided to use this opportunity to carry out a mini brand audit of those brands I visited.

So today (Sunday) I visited the Audi, Mercedes, Peugeot, Land Rover & VW showrooms in Kuala Lumpur. Excluding the luxury marques – Aston Martin, Rolls Royce and Bentley, these are considered top end cars in Malaysia.

The automotive sector here in Malaysia is really tough, especially as the middle class market, although growing is still rather small. In fact, between them these brands probably sell no more than 10,000 units per annum of which 60% are Mercedes.

Furthermore, with import duties higher than anywhere else in the world and an increasingly bleak global economy that looks like it will catch up with south east Asia in 2013, you would expect these guys to have some of the best sales people in the industry.

Well here’s my ‘mini’ report card on my experiences and the ability of these top marques to sell their products.

Firstly though, some background information.

1) Not one of the sales people that attended to me asked for my business card.

2) Only one sales person asked my name.

3) Only one of them asked me what car I currently drive.

4) One of the sales people who was very pleasant, could not pronounce the name of her brand. I’d like to add that this brand name is bloody hard to pronounce for English people so must be impossible for a native Chinese speaker. But…

5) At one of the showrooms I was told if I bought the car today I could get free Sat Nav (GPS). When I asked whether it covered Malaysia, Singapore and Thailand I was told no, it covered France – I swear to god that is the truth!

So, in reverse order, here is my report card on my experiences with these brands and a brief explanation. WARNING: It makes for distressing reading.

5=) VW.
VW comes in last, way last. Not really a result of the salesman’s ability or inability to sell because he was a very nice guy and anyway we didn’t get a chance to test his sales ability because the VW in Malaysia doesn’t come with Sat Nav (GPS) and in my opinion, at that level if you don’t have Sat Nav, you are not in the game.
5=) Land Rover
Joint last is Land Rover. Again, not a result of the ability or inability to sell because we didn’t get a chance to find out. There weren’t any sales people to attend to me because they were all out doing test drives. That’s no excuse. When your cheapest car – the Freelander 2 – is RM271,000 (US$90,000) and your most popular car – the Evogue – has a long waiting list, you need to be on top of your game. I wasn’t the only person to walk out frustrated.
3=) Peugeot
I really liked the top of the range 508 GT but the sales person seemed to want to sell me something cheaper. Maybe she was on a higher commission to sell that car or maybe she was just using price to make a quick sale.
3=) Audi
The Audi lady was nice and gave a good description of Quattro to my wife who really looked as if she was interested. But she didn’t ask me anything about what car I drive, how old is it etc, etc. Where’s the relationship building?
1) Mercedes Benz
Apparently, the sales lady here was working in the Mercedes showroom in Glasgow, Scotland for 10 years but is now back in Malaysia. In 20 years of living in Malaysia, this was the first time I have heard a Malaysian speaking with a Glaswegian accent! But crucially she was miles ahead of the rest with her product knowledge, attempts to build rapport, personality and sales ability. Not too pushy, not too technical and she asked for my name at the right time in the discussion and when I gave her my first name she asked for my surname so she could address me as Mr Osborne – top talent.

I’m not here to criticize, only to offer feedback to help people and brands. Viewed for what it is – feedback, every brand on this page can learn from my experiences. Sales is no longer about taking orders or convincing someone of something. It is now about building rapport and delivering value, on an individual basis. If you don’t have the training or the skills to do that you will lose business, lots of it.

All of these brands spend a lot on advertising to draw people into their showrooms. And they may be happy with their sales but my question is, would any of them be happier with less advertising spend and increased sales as a result of better customer engagement skills? Of course they would.