How Entry Of Online Players Is Boosting Car Dealership Segment In India

The market for pre-owned cars in India has seen a sudden surge in popularity buoyed by factors like greater customer acceptance, the desire to upgrade to high-end models and the fact that the car dealership sector is undergoing a sea change. From being a largely unorganised space, this segment is now becoming more and more regularised and is able to offer more assurance to customers via multi-point scrutiny and certification. The penetration of technology into this sector has altered the way used car dealership works and the effects of this metamorphosis have translated directly into extremely positive numbers.

While 5 years ago, an average consumer would have displayed hesitation in opting for a pre-owned vehicle, today it’s the first choice of many. The fact that people are buying cars at a much younger age, have higher disposable incomes and more propensity to spend is driving much of this change. They desire cars which look better and bigger and are equipped with more features than new cars in their budget. Additionally, the life cycle of cars in India has changed drastically in the last decade. While 20 years ago, people made their cars last for a decade on average, today most people want to switch their vehicle for a snazzier one in 3-4 years. This has led to steady inventory expansion and more options for those looking to buy used cars.

Accelerating the pace of growth in this space is the entry of online used car aggregators. Ken Research which recently unveiled its latest publication, “India Used Car Market Outlook to 2020”, stated that by FY2020, the pre-owned car space will record GMV of 45 billion. Much of this increase will be led by the increasing presence of online players.

The advent of web aggregators in the pre-owned vehicle space has shifted the focus of the industry on making it more customer-oriented. It has eliminated the problem of information asymmetry to a large degree and has made it extremely convenient to search for and find a car of one’s choice. Comparative tools which allow a customer to pit several cars against one another and evaluate them on the basis of kilometres done, price, past usage and features was never possible in the offline format. What’s tilting the balance of the scales in favour of web aggregators is the fact that many of them are now also entering the space of fulfilment.

Most top platforms for buying and selling used cars check any vehicle across several stringent parameters before putting them up for sale. Spinny, for instance, examines a car across a 200-points inspection test before giving its stamp of approval.

Since customers are being given the promise that the car they are buying has been tested by experts and are being given a warranty, they have no qualms about going in for such a purchase. Doubts that used to earlier plague the Indian consumer about having to run from pillar to post in case of a breakdown are now mitigated thanks to the warranty offered by new players in the market.

The benefits of greater organisation and regulation of the used car space are, however, not limited to buyers alone. Sellers too are enjoying its advantages. Besides creating a larger market for pre-owned vehicles, online aggregators are able to provide access to a wider customer base to sellers for their cars. In addition, many top platforms these days use advanced algorithms to determine the correct price of vehicles which is a shot in the arm for the sellers as it leaves limited scope for unreasonable price negotiations. In fact, for a buyer a car purchase is a one-time transaction but for car dealers selling used vehicles is an everyday transaction. The entry of online platforms in this space is therefore a bigger gain for them as it makes their business more viable and enhances scalability.

The car dealership space in India has undergone a complete facelift of late. The greater demand for used cars, the accessibility of information thanks to the internet, the emphasis on quality checks and warranties are all leading to improved growth for this segment. As tech becomes more of an integral part of this sector in the country, one can look forward to more and more consumers seriously considering making used car purchases over new ones and freeing themselves of the hassles of complicated documentation and quick depreciation. Both the sellers, dealers and buyers stand in good stead given the current tide of the industry and more exciting times lie ahead for everyone involved!