Sylvio Alves de Barros Netto, ZFlow

We caught up with Sylvio Alves de Barros Netto as he was about to leave for a 7-day cross-country car rally through the center of Brazil, where his new company ZFlow (LinkedIn) is based.

ZFlow is building an automotive dealer platform, covering everything from lead generation to dealer CRM. It’s a logical extension for De Barros, who built the two largest automotive classified marketplaces in Brazil: WebMotors and iCarros. “Over the last twenty years, we digitized the entire market in Brazil,” he told the AIM Group. “We now have more than 400,000 cars listed across both classified sites.”

As for De Barros’s racing passion, he’ll be driving a prototype BMW on the 4,000-kilometer-long route. “It’s a secret track. We don’t have a map until the day before the competition,” he said. De Barros knows what he’s doing too: He won the race (riding a Suzuki motorcycle) in 1995.

De Barros will be speaking at the AIM Group’s upcoming AutosPlus2017 classified conference in London in October. In our latest profile, we hear what De Barros is up to now and what he’s learned after getting “all the cars” on his two foundational websites.

We asked:

What unique challenges do you face in your market?

De Barros: Our biggest challenge is to transform the manufacturers and dealers, those in the actual chain of value, into digital players. We are betting that – even with all the different options consumers will have in terms of not owning a car or buying a car as a service – the dealers will continue to be here for a long time.

We position ourselves at ZFlow as the “oil” that makes this chain of value work better. We don’t want to compete with the already established chain of value. We want to help them adapt to new digital ways of managing their relationships with the consumer. The challenge, then, is showing them that going digital can lower the cost of bringing customers to the dealership and can lower the cost of owning a dealership.

There has been a great crisis in Brazil — it set us back ten years in terms of sales and we don’t see it coming back soon. As a result, the used-car market is much stronger than the new-car market. We are selling seven times more used cars than new cars; that used to be just three to four times more. Dealers will have to embrace these trends if they are going to survive.

The good news is that when the market is like this, dealers are more open to new technologies and new ways of doing things. And if they can lower their costs and structures, they will be ready when the value comes back — and it will.

What will you be speaking about in your presentation at AutosPlus2017?

My talk will cover the opportunity we see in the marketplace, based on my background and experience, and the results we’re already seeing with the new platform we’ve built. ZFlow has already doubled the results of leads on iCarros. I’ll also look at why financing is a priority for dealers and what we are offering them in this area.

We see a lot of changes in automotive classifieds. What are the most interesting developments worldwide you’ve seen so far?

There are different ownership models coming. On one side of the equation you have total ownership; on the other side, there are Uber-like options to the consumer, such as owning a car for only one week a month. We understand that we’ll be in the middle. Our ambition is to move with the consumer through whatever possibility they have to buy a car. If you don’t have credit to buy a full car, for example, maybe we can offer half a car or a certain number of hours of a car.

We’re not so interested in the Carvana type of direct-to-consumer model. That’s disruptive to the chain of value. Ours is more like the Cox Automotive model — providing value to the actual players. We don’t believe we necessarily need new ways of doing things — the players are already there. But there is a lot of space to develop better tools for those players.

How big a part of your business will artificial intelligence (AI) become?

The best way to work a client lead involves at least five touchpoints or follow-ups by the dealer. “How did it go, are you still interested, are you looking for another type of car, have you done a deal with a different dealer?”

We believe that 70 percent of the work we do will be automated with AI and machine learning, and 30 percent will be done by the actual sellers. It doesn’t matter how much you train a salesperson — part of the process is always going to be done better by machines than humans.

Sending an SMS or a WhatsApp message should be done by machines. A lot of messages come in after 10 pm. With a machine, you can ask for more information — such as the right time to book a test drive — and in the morning, the salespeople will have all that information.

In your opinion, what are the biggest challenges the automotive classified industry faces in the next three years?

We will see a lot of things tried in transportation and mobility in the coming years. Many of them won’t make it. There will be a lot of innovation — and failures — and that will be a challenge for investors. In the end, though, we will have a much better landscape. After all, it’s hard to find a more inefficient industry than the car business!

What will succeed and what will fail — that is the trillion-dollar question. But I don’t see any of the models that saved the industry in the last ten years, like the advent of SUVs, coming around in the upcoming years. There will be new shared-car models. And the dealerships need to reduce costs. Whatever model will come, it will be much more complex and there will be a lot of destruction in terms of value. All the models we have now will be in jeopardy.

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