OLX Autos has crossed $1 bn in sales in 10 countries: Sapna Arora

The pre-owned car market continues to outstrip new car market sales, as revealed by OLX Autos- CRISIL study, titled ‘Indian Pre-owned Car Market Study’. According to the study, the pre-owned car industry is pegged to cross 7 million units by FY26.

Digital platforms are gaining traction due to their wide reach, accessibility and ability to provide a variety of options. The share of organised players, including digital platforms, to total industry sales is expected to grow to 30% by FY26, from around 20% in FY21. Additionally, the share of vehicle sales through the digital classifieds segment is expected to increase from 15% in FY21 to 25% by FY26.

The pandemic, digitalisation, changing demographics and aspirations, first-time buyers, and availability of financing options are driving sustained growth in the pre-owned car segment.

In conversation with Adgully, Sapna Arora, CMO, OLX India, speaks about how OLX is betting big on the pre-owned car market, their marketing and campaign strategy and much more.

OLX Auto recently released the 5th edition of its Auto report, could you share some key insights of this report? What are some notable revelations in the report?
According to the ‘OLX Autos -CRISIL Study 2021’, the pre-owned market has been outpacing the new car market, and the industry is expected to clock a healthy growth rate of 15% in FY22. As per the study, the prospects continue to be bright on the longer horizon, with a 12-14% CAGR expected over the next few years, taking the size of the market to more than 7 million vehicles by FY26, from 3.8 million units in FY21. In contrast, the new car market is expected to grow at a tepid 10% CAGR. With many people preferring socially-distanced personal mobility, during and because of the pandemic, the pre-owned car market is expected to continue to be a sunrise sector. In addition, the accelerating trend of digitalisation will lead to an increasing share of sales through digital classifieds, which will move to 25% from 15% currently. The share of organised players in the pre-owned market, including digital platform sales, will also see a 10% increase, from 20% currently to 30% in five years.
During the first wave of the pandemic, supply crunch and increased demand impacted stock levels across regions, mainly in the South and West, where inventory levels came down to 30-35 days, from the typical 45-50 days. Supply levels are slowly normalising in 2021, with improved mobility, lesser restrictions, and lower reluctance to sell vehicles.

Unlike other regions, the North was relatively shielded from the supply crunch, and was able to maintain near-steady inventory levels throughout the pandemic. Compared to the pre-COVID-19 levels, the demand shot up 20-30% after the unlocking in CY2020. Demand improvement was more pronounced in the South, followed by the West, while demand growth was relatively lower in the East post lockdown. The pandemic also witnessed a sudden increased traction for cheaper, smaller, fuel-efficient cars.

The study also throws light on emerging trends in mobility, such as the rise in preference for and the share of UVs in the pre-owned car market. In line with their expanding share in the new car market, share of UVs is increasing in the pre-owned car space, up from 18% in FY18 to 20% in FY21. Sporadic model launches and feature-rich competitively priced vehicles will aid the shift towards UVs in the pre-owned car space, whose share will cross 1/4th of the total market by FY26. The share of UVs is the highest among all regions in the East, at 35% of the total market. 

The report mentions that pre-owned cars are expected to see a growth of 15% in FY22 and reach a size of over 7 million vehicles by FY26. What are the factors that are driving this growth?
The pandemic, digitalisation, changing demographics and aspirations, first-time buyers, and availability of financing options are driving sustained growth in the pre-owned car segment.

The share of first-time buyers expanded by 8-10% during FY21 in the backdrop of the pandemic, primarily due to restricted availability of public transport, and increased need for personal mobility. Increasing urbanisation and nuclearisation are expected to provide further impetus to the need for personal mobility, thereby accelerating the demand for pre-owned cars.

Another upcoming trend according to the report is that, the share of EVs in new car sales is expected to reach 20% by FY31, at which point in time, the share of EVs in pre-owned car sales is expected to be around 5%.

Severe chip shortage has impacted the new car market, also, resulting in long waiting periods across the categories like hatchbacks, SUVs and sedans. The shortage came right close to the festive season.

How do you see digital giving a further boost to the pre-owned cars market in India?

There has been an abrupt surge in the demand for pre-owned cars in the country. Digital platforms are gaining traction due to their wide reach, accessibility and ability to provide a variety of options. As per the OLX Autos report with CRISIL, there is increased dependence on digital platforms for sale & purchase of vehicles for dealers as well as customers, and digital classified segment share of sales is expected to reach 25% from 15% currently in the next few years.

In addition, the digital medium provides an additional platform for the dealers to showcase and sell their vehicles. Most customers search on these platforms before visiting the actual dealership. Pandemic has provided an additional kicker to this medium amidst the restricted customer movement during fiscal 21 & 22. Owing to the digital push,  the share of organized players (including digital platform sales) to industry sales is expected to increase from 20-22% levels in FY21 to 30% by FY26. 

Could you tell us about your latest campaign, what is the objective and the core communication of this campaign?

Our latest campaign, ‘Price nahin, surprise milega’, aims to raise awareness about the brand’s best price proposition and encourage sellers to consider OLX Autos when selling their pre-owned cars. While the festive season is driving up demand for pre-owned vehicles, it indicates that getting the optimum price for their automobiles is an important consideration for sellers. In addition to not being able to find an ideal platform that fulfills every possible expectation, sellers also have to contend with barriers in realising the best price for their product such as hidden charges, lack of information about the car’s worth, etc., are factors that add up to compound their dissatisfaction and need to be eliminated for a seamless customer experience.

The two TVCs assure sellers that they can always expect the best prices for their cars on the platform. Other benefits such as signifying a transparent process with no hidden charges, free inspection, and RC transfer also strengthen the claim by addressing multiple customer concerns. Through the element of drama and exaggerated disbelief, both TVCs portrays family and the couple, respectively, capturing the seller’s pleasant surprise while also reiterating the central message relatably through his caricatural astonishment and repeated questions to the salesman/ his family. By portraying this sentiment, the ad film successfully conveys that the pricing offered on OLX Autos’ platform goes above and beyond to exceed seller expectations. 

What are some of your observations on the growth of the pre-owned cars market during the pandemic times?
Vehicle supply got impacted across regions with increased demand for personal mobility and in turn, due to the increased reluctance of the customers to sell their old vehicles. Owing to the chip shortage, waiting periods in the new car segment impacted the ratio of vehicles exchanged with the new car purchase, worsening the supply situation in the pre owned vehicle market.

During the first wave of the pandemic, supply crunch and increased demand impacted the stock levels across regions mainly in South and West, where inventory levels came down to 30-35 days. Moreover, unlike other regions, the North region was relatively shielded from the supply crunch and could maintain near steady inventory levels throughout the pandemic. In comparison to the pre-COVID-19 levels, demand shot up 20-30% post the unlocking in CY2020. 

How has OLX Autos’ growth been since its launch? How many units of car sales are you targeting in FY22?
We recently celebrated a milestone of crossing $1 billion (over Rs 7,420 crore) in sales in ten countries across Asia and the Americas. Every month, around half a million (5 lakh) cars are listed for sale by consumers and dealers on OLX Autos classifieds platforms in India, Indonesia, and Latin America. Till date, OLX Autos has bought, sold, and inspected more than 400,000 cars. OLX currently commands 80 per cent of the market share in the Indian pre-owned auto marketplace. OLX has seen over 20% increase in demand and a 29% increase in supply for pre-owned cars on its platform in Q3 2021 compared to Q2 2021. 

Who are your major competitors and what is your strategy to stay ahead in the game with newer players entering the market, such as OLA Cars? How are you geared to maintain your relevance?
OLX Autos is one of the leading platforms for buying and selling pre-owned cars in India. Our aim is to organise the buying and selling of pre-owned cars, so that the consumers get more predictability, best price and hassle free experience.

OLX Autos has over 15,000+ dealer partners across the country, who rely on OLX to drive their business. During the lockdown, we extended support to our business partners, which include many small entrepreneurs, by extending the duration of existing paid ads on the platform until the lockdown is over. This allowed them to tide over the challenges of the lockdown and continue serving their customers across the country.

Going forward, how are you strategising to grow the OLX Auto business? What will be your key focus areas and markets over the next 2-3 years?
OLX Autos rolled out a slew of new customer-centric initiatives which helped to spearhead this recovery. We launched home inspections, which allowed users to sell their cars in the comfort and hygiene of their homes. Additionally, we also unveiled a slew of products related to the pre-owned car market, including financing, insurance, roadside assistance, and more to become the definitive destination for consumers.
Given that we have a huge market share in Tier 1 and 2 cities, we will continue to focus on key cities like Delhi, Mumbai, Bangalore, Jaipur, Chennai and Hyderabad.


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