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Internet puts second-hand car market on fast track
Move over groceries, consumer goods and apparels. The Internet is driving a new segment these days – used cars. According to industry estimates, the used-car market has close to 3.5 million vehicles. Now contrast this with the new-car market – It is expected to touch 2.8 million in 2016-17.
Move over groceries, consumer goods and apparels. The Internet is driving a new segment these days – used cars.
According to industry estimates, the used-car market has close to 3.5 million vehicles. Now contrast this with the new-car market – It is expected to touch 2.8 million in 2016-17.
For long, like the new-car market, the second-hand car buyer depended on a local dealer, or on one of the car-reselling franchisees of Mahindra First Choice or Maruti True Value. But as more people logged on to the internet, companies, including Olx, Quickr, CarTrade, Cardekho and Droom, mushroomed. These companies connect the buyer and the seller much like the e-commerce marketplaces.
Around 90% of second-hand car buyers search for cars online, said Vinay Sanghi, founder and CEO, CarTrade. “This helps the dealer move the inventory faster–within 15-20 days, compared to two months earlier.”
Marketplaces also certify cars, connect buyers with banks for loans and rope in insurance companies. Droom does all of that, and also offers a software-based pricing application, Orange Book Value.
“This benchmarks the used car against its original market value, gives lenders an evaluation tool to write-off auto loans, and provides real-time data to insurance companies,” said Sandeep Aggarwal, founder and CEO of Droom.
Online classified platform OLX claims that 200,000 cars are sold every month through its platform (OLX is just a discovery platform which allows listing of cars).
“About 370,000 cars are listed on OLX every month… around 70% of them are individual car buyers,” said Amarjit Singh Batra, CEO, OLX.
Meanwhile, traditional used car dealers are also looking to cash in on the new trend.
Mahindra and Maruti now allow buyers to search for cars and its prices on their websites. The deal happens at the company’s dealership. While Mahindra has a total of 923 dealerships, Maruti has 867. However, Mahindra also sells through OLX.
At present, organised trade is just 10% to 12% of used-car sales. But the internet is set to change all that.
“The match-making-process on the internet is much faster, and prices are more transparent ,” said Arpit Maheshwari, head of product and strategy (used cars) at Girnar Soft, which owns Cardekho that auctions used cars.
The marketplaces are also working to bring down interest rates, which is higher in used car. “Banks don’t know the condition of the car. If the car is not hypothecated, they don’t get security on the car. We will plug these gaps,” Maheshwari added.
