E-auctioning of used vehicles has swelled as banks take back vehicles for which owners are unable to pay their loan installments.
According to industry estimates, non-repayment of vehicle loans has almost doubled this financial year due to the economic slowdown.
“It varies from bank to bank. However, a general estimate is that from 0.25-0.75% (of loans), delinquencies have gone up to 0.5-1.5%,” said Yatin Chadha, senior vice-president, Mahindra First Choice, the used car business arm of the Mahindra and Mahindra group.
This translates to about 300,000 cars, two-wheelers and trucks ending up in the yards of banks and non-banking finance companies this year. Mahindra First Choice, the largest e-auctioneer of used vehicles with a 41% market share, has been involved in 65,000 transactions so far this financial year — a spurt of 58%.
The company has tie-ups with 55 banks and NBFCs, and 9,000 dealers participate in the e-auctions facilitated by the company. Participation in Mahindras’ e-auction is at present restricted to dealers, who in turn sell purchased vehicles to individuals.
“We are planning to open e-auction to individual buyers in about two years,” said Rajeev Dubey, president, group human resource and after-market, Mahindra & Mahindra.
It was e-commerce firm ebay that initiated electronic auctioning of repossessed vehicles in India about five years ago, following which four or five other comanies entered the business. At present, 60% of repossessed vehicles are sold through online auctions, and the rest through conventional auctions at regional centres.
Ebay has temporarily stopped automobile auctions. Apart from Mahindra, Chennai-based Shriram group too operates in the auctioneering business, albeit exclusively in commercial vehicles.
Others in the business are portals such as cartrade.com and autoauctionindia.com.