ABeam Consulting (Thailand) Ltd. a global consulting company headquartered in Japan that specializes in digital transformation unveiled a whitepaper focusing on how ISUZU managed to achieve to increase its market share despite the pandemic, while all other pickup selling brands saw a decrease in their yearly sales compared to 2019.
Besides leveraging brand value/reputation, vehicle design and driving experience, an aggressive localized pricing strategy and an initial lower investment played a significant role in moving the odds in favor of ISUZU compared to its competitors despite the total higher cost of ownership over 5 years. Customer relatable and dealership region-specific promotions are considered to have influenced the buying decision of pickup buyers, when choosing between the two major pickup brands in the Thai market.
2020 was an unprecedented year, the automotive industry saw an overall slump in sales and production across the world, with Thailand following the same overall pattern. Due to the COVID-19 pandemic, the Thai automotive domestic market shrank by 21% from 2019 to 2020. However, the vehicle sales market share of the pickup segment – the best seller segment in Thailand due to its flexible multi-purpose nature – increased from 49% in 2019 to 52% in 2020.
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The rise of ISUZU’s one-ton pickup truck sales in Thailand
ISUZU is one of the 2 key players in the race for pickup sales in Thailand, having market shares over the past decade that control around two-thirds of the total pickup market. During 2020, all brands except for ISUZU lost significant pickup market share, with ISUZU beating competitors and claiming the number 1 spot in Thailand for the pickup vehicle market.
ISUZU expected that COVID-19 would impact consumer income and that vehicle sales would drop dramatically, but in practice, many unemployed people went back to their hometown to start new businesses. The Japanese Chamber of Commerce also revealed that the sales of pickups were from the higher needs of logistics. The same point has also been confirmed by ABeam’s Customer Journey Study of 2021.
While pickup truck sales of other brands declined from 2019 by up to 45%, ISUZU’s pickup truck sales grew by 9% in 2020, selling more than before the pandemic, making ISUZU the top-selling pickup brand in 2020. ABeam’s research identified the main factors behind the success of the ISUZU D-max over any other pickup in 2020.
Why buy ISUZU during the pandemic?
ABeam’s market study looked at different factors that impact consumers when choosing specific brands and models. the survey concluded that a combination of brand reputation, vehicle design, driving experience, and cost of total car ownership factors can significantly affect the vehicle purchasing decision among other factors. ABeam’s Customer Journey Study from 2019 showed Isuzu as the no. 1 brand with the highest customer loyalty within the non-luxury vehicle segment, while its key competitor was no. 2.
Following those findings, ABeam did another analysis through social listening of online channels in 2021, comparing Isuzu’s and key competitor’s users. It found that 83% of their comments agreed that Isuzu had lower cost of ownership. Vehicle design was another influential factor from the studied comments; ISUZU had launched the new ISUZU D-max in October 2019 after the last minor change in late 2018, which when consumers compared pickup models, led them to feel that the new ISUZU model looked more modern than the current model of its key competitor, which launched its latest design in 2018, even though the driving experience comments did not show any significant difference.
Perceived lower cost of total car ownership
From the most significant factors for the pickup buying decision cost of total car ownership was one of the most significant factors showing the largest gap when people compared between key competitor(17%) and the ISUZU D-max (83%), as to which they perceived as the lower cost brand. From all comments related to the cost of total car ownership, the cost influencing the decision can be broken down further into 6 smaller categories – Fuel cost efficiency (31.8%), Lower maintenance cost (20.4%), Higher resale price (13.6%), Lower vehicle price (11.4%), More promotion (11.4%), and Lower annual tax (11.4%).
Fuel cost efficiency
From a Thai consumer perspective, ISUZU is the more cost-effective pickup; the smallest engine size of ISUZU starts at 1.9-liter, while key competitor’s is a 2.4-liter engine, allowing its entry model to offer lower fuel cost. Another point is that the prime competitor focuses more on pickup models with an automatic transmission, which is preferred by new drivers, as well as female drivers, but usually is considered to result in worse fuel consumption. A gap for manual transmission can also be seen with ISUZU offering a 6-steps transmission system for all its models, while It’s key competitor still uses a 5-step transmission system for some of its entry models which can result in a worse fuel efficiency perception for consumers.
General maintenance cost
One area where are all comments pointed strongly towards ISUZU were the lower maintenance cost, but after analyzing the cost over 5 years of those two brands, the difference is almost negligible and only majorly different during the first year. ABeam anticipates that the perception of the early lower cost is enticing for most decision-makers, without looking into a full lifecycle calculation over 5 years, which is in line with the overall strategy of ISUZU.
Resale price
By gathering the resale price of vehicles from each brand after 5 years, ABeam found that the most significant factor that affects the resale value is the vehicle’s mileage and/or the vehicle condition. However, the gap is not that different between ISUZU and its key rival.
Vehicle price
Tag prices of the ISUZU D-max are slightly cheaper than the comparable models of its key competitors for almost every model. ISUZU puts more focus on the commercial purpose of its line-up such as pickups with few features and with refrigerator systems for cold-chain logistics. ISUZU also provides less automatic transmission type vehicles, which is not a problem when it comes to commercial use because manual transmission is preferable as it results in most cases in a better fuel economy, less maintenance, and high-heat endurance. But despite the lower tag price, reality shows that competitors are given larger discounts than ISUZU does for their line-up resulting in an actual higher vehicle price for an ISUZU than for comparative competitor models.
Promotion
Due to COVID-19, ISUZU and its competitor have offered extremely competitive promotions since March 2020 such as low-down payments, low-interest rates, small installment amounts per month, and 3-months credit limits were provided to customers. ABeam found that most dealerships offered better promotion deals in 2020 than in 2019. Promotions from ISUZU focused on the 4×2 B-cab Spark model, which is widely used for commercial purposes, and the 4×4 pickup, which is used for agricultural businesses.
The promotions from ISUZU matched the customers’ needs more than the competitors did as COVID-19 raised the pickup demand for business usage. ISUZU provided even more attractive promotions and match the customers’ needs across different regions, which have different usage and preferences as well.
Moreover, while most of the competitor dealers usually offer the same standard promotions countrywide, the promotions from ISUZU dealerships are different from each other. This makes ISUZU’s promotions in most cases more suitable for their local customers by understanding their needs.
Annual tax
The yearly pickup tax in Thailand is categorized into two groups: 2-door and 4-door pickups. The tax is calculated by vehicle weight for 2-door pickups, while for 4-door pickups, the tax is calculated based on engine size. The ISUZU D-max 1.9 has a lower tax rate than the competitor for almost all types. However, for the 4-door pickups with 2.8 and 3.0 engines, its competitor models can save 16.5% more on annual tax when compared to ISUZU.
Total Cost of Ownership Summary
Even though customers perceived that ISUZU trucks were cheaper in terms of cost of ownership, overall ISUZU trucks have an actual higher price compared to other brands. Individual items contribute to the perception of low cost of ownership for ISUZU trucks compared to its key competitor especially in the first few years. ISUZU’s model line-up which gives better fuel efficiency and more commercial use perception as well as its low-down payments, low-interest rates, small installment amounts per month, and 3-months credit limits provided, matched the customers’ needs for commercial use during the outbreak situation over its competitors.
In conclusion
Demand changes quickly and can vary by location as well. Only real-time analysis of interactions with customers, starting from their first walk-in all the way to their aftersales services experience can help make better decisions. Full understanding of customer journeys and preferences will enable dealerships to know their local car buyers better and allow them to offer the right experiences and campaigns. Having that data connected with the Car manufacturers and distributors, so that can quickly and seamlessly adapt products, pricing and promotions will improve the brand’s overall customer experience and retention. In case ISUZU they focused on aggressive pricing that gives the perception of a cheaper purchase especially during the first few years, a very fitting strategy for the pandemic when people are moving back to their hometowns to start new businesses and require low investment even if it might cost more over the course of 5 years.
