The pre-owned industry in India is at 3.8 million units in the FY2021, making it 1.5 times larger than the 2.6 million units new automobile market. While both groups’ sales are predicted to increase in the coming years, the disparity is expected to grow, with the research report estimating 8.2 million used car sales in FY2025, compared to 3.9 million new vehicle purchases in the same year.
By FY2025, the used automobile market in India is expected to be twice as large as the new car industry. After contracting significantly since FY2019, the Indian passenger vehicle (PV) market is likely to improve in the future years. The growth will be driven mostly by used car sales, which are expected to outweigh new car volumes by more than 2:1 by FY2025.
The used automobile industry is frequently regarded as an unstructured space, and for the time being, it is, with organised dealers accounting for only 25% of sales.
However, due to more coordinated efforts by larger competitors and an increased willingness of customers to pay a premium for more reliable cars, their market share is expected to rise to a considerable 45 percent by FY2025.
Many people due to budget constraints opt for used vehicles rather than buy a new one because used vehicles are often less expensive due to the deprecation. Secondly, another reason why some people go for used vehicles is that for new vehicles the ongoing charges like maintenance, repairs, fuel and insurance are pretty high so one can avoid all these by just buying a used vehicle rather than a new one.
When a vehicle enters the used-car market, much of its depreciation has already occurred and has been paid for by the previous owner. Buying a used car is thus a reasonable choice for persons with limited financial resources.
Some automobiles now come with 200,000-mile warranties that cover the most expensive components of a car’s drivetrain. If you purchase a certified pre-owned vehicle from a dealer, you will most likely receive a warranty that extends the manufacturer’s original warranty.
A used vehicle comes with its set of disadvantages as well because you don’t know how the vehicle was treated or used by the previous owner.
The mileage on a secondhand car is likely to be higher, which can shorten its lifespan. If you acquire a car with a greater mileage, you may need to replace it sooner. The options are less so It can be difficult to find a used vehicle with the exact options and features that you require.
The inception of CARS24:
CARS24 is a cutting-edge e-commerce network for used automobiles, including cars and motorcycles, that aims to make buying and selling automobiles easier online.
The platform provides a large selection of licensed cars as well as quick and convenient home delivery services. On the other hand, the organization cares about its sellers, promising to credit the best price for their vehicles within an hour.
Cars24 is an ISO 9001:2015 certified firm that is one of India’s fastest-growing used automobile marketplaces. Cars24 was the first company in the used-car sector to take a ‘transaction-led approach to selling a vehicle.
With this portal, a potential car owner may quickly sell their car privately in less than 2 hours and get paid immediately. CARS24, on the other hand, has thousands of used vehicle firms that buy these cars online via mobile auctions from potential car owners all over India.
The platform acts as an intermediary that connects potential buyers to the seller with no involvement of brokers. There are thousands of used vehicles (cars, bikes, etc) listed on this platform for buyers to the auction.
It presently dominates the used automobile ecosystem, which includes financial and information services. CARS24, in addition to dealing in used automobiles online, has an offline presence in the form of brick and mortar stores, with over 155 branches spread across 35 cities in India.
The company is revamping the pre-owned vehicle industry in India and tackling the difficulties that car owners encounter by offering a world-class consumer experience that is quick, straightforward, and hassle-free.
CARS24’s CEO and Co-Founder, Vikram Chopra did his BTech and MTech in Engineering from the Indian Institute of Technology, Bombay, and his MBA in Finance from the University of Pennsylvania. He was a previous Co-Founder of FabFurnish, Sequoia Capital Investment Analyst, and McKinsey & Company Business Analyst.
Mehul Agrawal, Co-Founder and Chief Operating Officer of CARS24- He has an MBA from IIM Calcutta and has previously worked with BCG. Mehul previously founded FabFurnish, an online furniture retailer.
Gajendra Jangid, Co-Founder and CMO of CARS24 – Gajendra, like Vikram, holds a BTech and MTech in Engineering from the Indian Institute of Technology, Bombay. Gajendra worked for Schlumberger before co-founding CARS24.
CARS24- Ruchit Agarwal, Co-Founder & Chief Financial Officer Ruchit is a Cornell University graduate who worked as a Vice President at Bank of America Merrill Lynch before co-founding CARS24.
The founders observed that the used automobile business had been in disarray for a long period. They found a significant gap between supply and demand in this market. There was no standard protocol for selling or purchasing a used car, and the industry lacked the technology to calculate an appropriate price for the vehicle.
Another impediment was the time-consuming process of gaining access for potential consumers, as well as the jumbled market players that do not allow for a thorough evaluation of the vehicle. Both buyers and sellers must put in a significant amount of time and effort to reach an agreement.
After noticing these differences, the founders decided to employ technology to overcome these challenges and streamline the entire process of purchasing and selling used automobiles for its users.
Business Model of Cars24
The platform is designed with a customer-to-business (C2B) approach in mind. It buys automobiles from customers and resells them to dealers. Unlike a classified site, Cars24 supports end-to-end transactions and charges a commission on each transaction.
The business model of the platform is based on the criteria of purchasing a car from its owner at the most appropriate and competent price in comparison to other alternative services for auto selling in the neighborhood.
The website is primarily focused on providing Indian consumers with a more acceptable and easier alternative to several other mundane techniques to selling used cars, to make the entire process smoother and more straightforward.
The portal also manages the transfer of legal documentation related to the vehicle’s registration, with no additional fees charged to the seller. The platform primarily operates in automotive, e-commerce, retail, and used car trade, and has progressed at a quick rate since its inception based on this leading model.
The used automobile market in India is regulated, with major companies owning the lion’s share of the market due to their business practices and increased number of pre-owned car retail shops. OLX, Mahindra First Choice Wheels, CARS24, Maruti True Value, and Hyundai H Promise are among the key participants.
Other participants in the local market, such as Quikr, Honda Auto Terrace, Ford Assured, and Toyota U-Trust, have been growing their outlets and activities. The unorganized sector accounts for almost 80% of the total market, with a progressive trend toward the organised sector in recent years.
The Reserve Bank of India (RBI) also granted Cars24 an NBFC license for its new firm, CARS24 Financial Services. Cars24 Financial Services will help clients and financing channel partners build their businesses by facilitating automobile loans.