Amid the ongoing lockdown / Unlock 1.0, the restrictions have now eased up big time. However, people still refrain from using public transport and once the world’s biggest lockdown lifts up completely, buyers would tend to shift towards personal mobility that broadly includes two-wheelers and private cars. With the current situation in hand during which the income of an individual has been badly affected with pay cuts and job losses, there is a healthy chance that one would be attracted to used cars in the weeks to come. In order to understand the scenario of used car business space in a much better way along with the expectations, Express Drives recently had an interaction with OLX Cash My Car that happens to be one of India’s biggest used/second-hand car platforms. Amit Kumar, Business Head, OLX CashMyCar shares some useful insights and also tells us some interesting facts for this lockdown.
Express Drives – Demand for personal vehicles is expected to see a boost after lockdown. Do you see this as a big opportunity for used car business?
Amit – A natural offshoot of a growing economy is a strong, sizable & vibrant automobile market with global biggies battling it out. Although since the lockdown, the global economy came to a halt, it is now gradually opening up and the same is the case for the automotive industry. Preferences for personal hygiene and mandatory social distancing for medium-term till a cure or a vaccine is found for COVID-19, are going to increase demand for personal vehicles. Given the economic fall out of the lockdown consumers are likely to go for better value for their money, utility purchases and in turn tilt towards pre-owned personal automobiles. On an average, pre-owned cars can be significantly more affordable compared to a brand new car. Therefore, the entry-level and hatchback cars will be more in demand as we can foresee in the short run. In the medium term, we are likely to see a revival of the upgrade behaviour from 2 wheelers to used cars as well as the economy picks up.
What has been the impact on business during Covid-19 lockdown?
Pre-owned car demand and supply were at peak before COVID-19. Due to the lockdown, the demand came to a halt due to the restrictions on movement & businesses inside the country. This impacted transactions on the ground for us and for the industry at large. However, since the mid of lockdown 3.0 and now in lockdown 4.0, demand & supply for pre-owned cars has started to gain traction.In the containment zones, the demand and supply continue to remain impacted as the restrictions on movement and businesses opening fully still apply. This behaviour is specifically visible in the West Indian states of Maharashtra & Gujarat.
However, we expect positive consumer sentiment and an increase in demand for pre-owned cars as lockdown restrictions ease up. This will largely be driven by increased demand for personal transport in the cities. We expect that demand will especially pick up in the economy and entry-level segment for cars which is Rs 1.5 lakhs plus.
Watch our two-wheeler maintenance tips video for lockdown:
What steps are you taking at present to ensure smooth operation of the business?
As the lockdown has gradually eased, we have resumed the operations of our pre-owned automobile retail business (OLX CashMyCar) as per government guidelines, across the country. As we speak, 45 of our stores have resumed operations. We have taken all the necessary precautions including periodic sanitization of our retail centres and ensuring a safe and trustworthy retail experience for our consumers. Our team members at our retail stores have been trained to follow the social distancing and sanitization protocols and we adhere to all the government guidelines to combat the spread of COVID-19. Additionally, we have also started home inspection services where we offer inspection and procurement of the car for car sellers within the safe confines of their homes.
Digitization of the pre-owned car business, its operation during lockdown and what is ahead in store for customers?
The pre-owned automobile industry is fragmented and the sector comprises a large chunk of dealers who are yet to come online. As consumers increasingly begin their car buying or selling journeys online, the industry will follow suit and move towards establishing a digital presence to draw in more prospective buyers. Currently, the market opportunity to digitize the industry is huge as more than 80% of the dealers in the pre-owned industry are predominantly offline. During the lockdown, business sellers were adversely impacted like all other businesses with significant capital stuck in inventory.
Customers can expect more digitization across the industry and a stringent focus on the right sanitation and hygienic upkeep of the cars. Customers also may have to wait for a while to get fresh supply of cars since the lockdown and the automobile slowdown has led to a stock pile up in the new car inventory. The future is digital and contactless is the buzzword. The customer can expect a lot of the services including buying & selling of the pre-owned cars from their homes itself. We as OLX CashMyCar have also started to offer home inspection in key geographies. We see this as a long term trend.
What have been the most searched used cars at OLX during lockdown?
Here are the most searched used cars during the ongoing lockdown. These are Maruti Suzuki Swift, Mahindra Scorpio, Maruti Suzuki Swift Dzire, Maruti Suzuki 800, Toyota Innova, Maruti Suzuki Alto, Mahindra Bolero, Maruti Suzuki WagonR, Maruti Suzuki Zen and Honda City. The age group that prefers pre-owned cars the most are millennials. As per our research study in 2010 -OLX Auto Note, 51% millennials between the ages of 21-36 bought a pre-owned car as their first car. Some of the best-performing markets for OLX are Mumbai, Delhi NCR, Bangalore, Hyderabad, Jaipur and Lucknow.
From which region have you been receiving the maximum queries about used cars?
Around 40% of the listings for pre-owned cars emerge from top metros while 60% of the listings emerge from non-metros. In terms of demand for pre-owned cars, non-metros are outpacing metros in a similar ratio.
What are your expectations from the used car market post lockdown?
As worries around safety and personal hygiene mount, consumer preference for personal vehicles will increase. This will be a win-win situation for the industry as pre-owned would be a value first choice in this cash crunched market where consumers are looking to cut down on their expenses. Customers who already own a car may plan to upgrade to a better model of a used car or may plan to sell it due to cash crunch. While it would be difficult to assign a number right now on the rate of recovery for the industry overall but I am hopeful that the recovery for the pre-owned car industry would be almost equivalent to the pre-COVID era which would be about 10%+.
Any special discounts or offers you are planning for customers for business revival!?
Our main objective is to erase the friction that sellers faced earlier when it comes to retailing their cars. However, we plan to roll out new services such as home inspection of cars and focus more on the digitization of our payment platforms so that we can ensure faster payments to our customers.
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