CarTech players in used car market are going for omnichannel strategy
The used car market in India is growing at a good pace. As per IndianBlueBook, a used car pricing guide by Mahindra First Choice Wheels, in 2018-19, new car sales were recorded at 3.6 million units, while 4 million second-hand cars were bought and sold.
The space is growing fast and the key players in it are leaving no stone unturned to grab it. These include both offline and online players such as Olx, Mahindra First Choice Wheels, Cars24, CarDekho, Maruti True Value, Hyundai H Promise, and Others (which include Quikr, Honda Auto Terrace, Ford Assured, Toyota U-Trust, etc.)
Interestingly, the online players such as Cars24 and CarDekho, the incumbents in the used car industry, have become established destinations to sell used cars. CashMyCar from OLX has joined the category this year and all three platforms have upped their marketing efforts to get attention of the user and establish dominance in the used car market.
With OLX already a well-known brand name, it was important to these players to become better known in the market and win top of mindshare for consumers. Cars24 launched its pan-India campaign by roping in MS Dhoni as their brand ambassador. “MSD has a pan-India image and is well respected across geographies. He is uniquely placed in the hearts of Indians. It is a very rare trait of a celebrity. He has always been a problem solver, giving advice to teammates in tough situations. All of these traits make him a natural partner of Cars 24,” said Gajendra Jangid, Co-Founder and CMO of Cars24.
Jangid is really excited about the used cars industry. When his start-up launched 4 years ago, the used cars market was unorganised and no player was really addressing the pain points of the seller when getting rid of their used car. While new cars were offering an array of services to make the customer journey seamless, used cars were largely ignored. “We realised that this was an industry where a huge amount of disruption any technology company can do and we were well positioned to do so,” he added.
To take control of the supply of used cars, Cars24 realised that they need to address the needs of the owner of the car first. Market research indicated four key pain points for the seller. The time it takes to sell a car, ownership transfer, cash transactions and timely payments become the core proposition of every Cars24 campaign since then. Like e-commerce players, Cars24 became aggressively consumer centric and focused to eliminating the friction in the seller journey.
Interestingly, CarDekho began communicating their offline ‘Gaadi’ stores this year. CarDekho has deployed more diverse communications over the years. Despite being in the same space as Cars24 and OLX, the brand has a more holistic view on the automobile industry. They have enmeshed themselves in a range of services that the consumer might require throughout the selling and buying journey of the car.
When GirnarSoft launched CarDekho 11 years ago, information on cars was freely available on the Internet and buyers were much more aware of the cars they wanted to purchase beforehand. As Gaurav Mehta, CMO, GirnarSoft, explains, “The relationship between the dealers and the buyer was a completely dealer driven aspect of car purchasing journey. Most of that journey is now happening in the online space.”
CarDekho became that online destination where users could find out information about the car they wanted to buy. Once the user was 85 per cent convinced about the car he wanted to buy, CarDekho nudged them in the right direction by connecting them to the relevant car dealership. CarDekho was able to monetise that part of the journey and soon, became a trusted destination of new car information seekers.
“Earlier, a person had to wait 4 and a half to 5 months to buy a car that will be right for them and their family. Through digitisation, we have brought the journey closer to 3 months now,” adds Mehta.
CarDekho sees a fairly large amount of traffic on its platform with 19 million monthly users. In the last financial year, about 3.4 million new cars were sold. The platform was enabling discoveries for 90 per cent of car buyers in the country. When they realised that 50 per cent of the users on their platform were existing owners of cars that were looking to upgrade, it was time to expand their services.
The used car segment in the auto industry was largely ignored and desperately in need of innovation. One such innovation was pioneered by Cars24 on the principle of geo arbitrage. A seller in, let’s say, Faridabad, whose radius of finding a suitable buyer would be 20 km, could use the Cars24 platform and access dealer network that was spread pan-India. To find the best price of the car, Cars24 would facilitate an auction of the car that “incentivises the competition, where dealers are compelled to compete with each other, which helps Cars24 discover the best value of the car. The nature of the auction is that the demand of the car will dictate the price,” says Jangid.
The entire transaction is completed online and once Cars24 receives payment from the dealer, they instantly transfer the money to the seller’s pocket. While their branches are spread across 49 cities, Cars24’s dealer network is 250 cities strong. That’s why they are able to promise sale of a car in one branch visit at the best price in their communications.
CarDekho went live with its first offline store on January 8, 2019 starting in Delhi. Their campaign was to let people know about their transition from a digital only to an omnichannel player. “We have understood that there are many need gaps in the market that need an omnichannel approach,” says Gaurav Mehta, Chief Marketing Officer, GirnarSoft. At this point, CarDekho platform already offers several other services that may be required by a used car buyer/seller. When they realised that 15-18 per cent more used cars were being sold, it was an opportunity not just to facilitate the sale of those cars but also offer loans, insurance and other services as a layer on top of that core service. “There is no affect quality, price standardisation, and loans and insurance are very underpenetrated (in the used car segment). That is the path that we are trying to click in the ecosystem almost becoming the vehicle for used cars transactions in the country. We want the process to be as standardised and digitised as new cars are,” adds Mehta.
Since used car buyers are typically from Tier 2 and 3 markets, their purchasing power isn’t at par with Tier 1 city customers. CarDekho caters to these customers with their loan and insurance products.
As we step in to the festive season and consumers look to upgrade, CarDekho’s campaign is spread across big cities and mini metros. The seller of used car is usually present in these markets and 95 per cent of their spends are concentrated on a mix of television, radio and digital until Diwali. They campaign is oriented towards the 30-something, Tier 1 dweller that makes up 75 per cent of the used car sellers.
Both Cars24 and Olx Cash My Car are also trying to cash in on the festive sentiment. “Q4 of the calendar year is the peak quarter of automotive industry. In these 3 months, almost 35-40 per cent of auto sales happen during this quarter,” explains Cars24’s Jangid. “Currently, we are clocking almost 14,000 cars a month, which is equal to 1.64 lakh cars in a year. You could put Cars24 in the top 3 OEMs after Maruti and Honda. We are the largest car transaction company in India,” he adds in good humour.
The sky is the limit for players in this category. CarDekho's Mehta is already looking at other verticals for growth. “We have had a foray into post purchase services like roadside assistance, etc. We didn’t succeed earlier, but that is an area where there is a big opportunity.”
“The new car category is on autopilot today. A sequential approach would take us to the post transaction stage or ownership stage for the 4-5 years when the new owner drives the car. That will be an interesting phase, we would like to look at it in the near future,” Mehta signs off.