The used car market will see increased participation from OEMs in the time to come, believes Vinay Sanghi, the founder & CEO of CarTrade. “OEMs can generate revenue in addition to new car sales and can retain customers by offering good deals against old cars,” he says. In an interview with FE’s Vikram Chaudhary, he adds that the recent new car price rise will affect the pre-owned car market positively. Excerpts:
Many car makers raised vehicle prices last month. What could be the reasons?
The price of a vehicle relies on raw material costs. There are strict policies imposed on manufacturers to maintain the new safety and emissions guidelines. Car makers are spending more resources to abide by them. The increase in vehicle prices can also be justified by the upsurge in costs involving R&D. Auto companies have to maintain a buffer to absorb any kind of fluctuation concerning drop in sales or sudden change in raw material costs.
Now the excise sops have gone. How will it affect car sales?
Without excise sops, sales will be affected but not as much as projected. The image of a particular car available at a particular budget has been replaced with the flexibility of options available—now one can buy an MPV for a little over R4 lakh. The absence of excise sops will have a marginal effect on a short-term basis.
But can this lead to a growth in the pre-owned car market?
The used car market has been growing steadily. The price rise will affect this growth positively.
Does this also mean that most OEMs could actively consider entering the used car space?
The pre-owned car market will see increased participation from many OEMs. One, it helps generate revenue in addition to new car sales. Two, the target customer can be retained by offering him a lucrative deal against his existing car. With the active involvement of more car manufacturers, even the trust in the pre-owned car space will increase.
OLX this week said it leads the online customer-to-customer auto sales. How do you see portals such as OLX and yours growing in the space?
I must add that CarTrade.com is the leader in the used car auto classified space. We about 1.5 lakh cars listed on our website and have verified most of these. Over 3,000 dealers list their cars for sale on CarTrade. In fact, we hope to grow 3X in the next 12 months.
Online car or two-wheeler buying and selling process is different from, say, buying and selling used furniture, because of the associated paperwork involved. Who takes care of this paperwork?
Since a used car is a high-value purchase, it is important that websites help consumers in the buying process. That is why we certify the cars on our platform via our engineers and give our free warranty to back the car. Our sales team ensures that the dealer completes all the paperwork.
Is online the future of the pre-owned automobile industry?
Online is becoming the preferred medium to find and buy pre-owned cars. Our own traffic figure of 4 million unique visitors points towards this trend. As mobile internet penetration is increasing, more and more consumers and dealers will find the car of their choice online.