Used cars in the fast lane
As consumers prefer more personal yet affordable mobility solutions during the pandemic, the online used car market is seeing increased adoption. Online used car markets and platforms grew 17 to 18 percent in FY21, according to Deloitte. Some of the major players in this segment, like Mahindra First Choice Wheels, Cars24, CarWale and CarDekho, have made inroads into rural markets by launching dealerships and franchises, marking the transition to online and contactless sales over the past year.
According to a report from Indian Blue Book, an online vehicle pricing guide, the used car industry volume was pegged at 3.9 million units in FY 21; in FY20, that number was 1.4 million. The new car market, meanwhile, is said to have experienced a 36% year-over-year decline, largely due to the nationwide lockdown imposed in the early part of 2020.
The report states that there was a 60-70% increase in the number of first-time buyers of used cars in FY21, and 73% of consumers prefer the online channel to explore second-hand cars. ‘opportunity. These platforms therefore improve their online checkpoints for customers and provide financing options for dealers and end users.
Cars24 now offers features like KYC video, home inspections and instant credit. “Despite strong competition, we have seen growth of around 50% during the pre-Covid period. Customers are looking for end-to-end support and buy-back options, but the market does not have such features. The NBFC function has allowed us to deeply integrate and improve the confidence of our customers, ”says Kunal Mundra, CEO of Cars India, Cars24. The platform has a seven-day no-questions-asked refund policy and six-month warranty coverage on cars purchased.
Banwari Lal Sharma, CEO of CarWale & BikeWale, says that although the pandemic has caused demand for used cars to drop 10-15%, overall traffic for this segment on CarWale has grown 48% year-on-year in January 2021 compared to January 2020. “We plan to expand into 100 cities over the next three years with a network of franchised dealers and adopt a phygital model,” adds Sharma. In the used car market, companies are concentrated in the top 20 cities, with subways contributing 70% of traffic.
Meanwhile, Mahindra First Choice Wheels claims to have seen a 20% growth in FY21 on its online platform. It pioneered remote dealership management, digital vehicle certification, and warranty and automated communication to drive online sales. “We have implemented a four-pronged strategy, including the expansion of 200 used car franchisees over the past 12 months across the country. Our one-stop-shop approach to managing the customer journey has been the most efficient of all, ”said Ashutosh Pandey, Managing Director and CEO of Mahindra First Choice Wheels.
The used car market is currently working on a phygital model, as touch and feel is still an integral part of buying. While the demand for used cars is on the rise, the lack of adequate working capital has been a hindrance. But that is changing, says Rajeev Singh, partner and automotive leader of Deloitte India. “Companies come up with innovative ideas to support dealers, which makes the market more lucrative.” For example, Cars24 launched Cars24 Financial Services to provide vehicle loans to customers and financial assistance to its distribution partners.
The rural market will be a key driver of growth, says Kaushik Madhavan, vice president – mobility, Frost & Sullivan. “With an increased number of refurbished models and more OEMs entering this ecosystem, the used car market could grow to double the size of the new car market by 2024,” he adds. .