Indore-based used car dealer Gaurav Thakur says rationalisation of cost and lowering of GST rate on used cars can help boost sentiment further. Excerpts from a candid interaction.
Balaji Marketing, an Indore-based used cars enterprise, is operated by Gaurav Thakur and Sanjay Thakur. They began their careers as salespersons under a DSA and later started out on their own, with a good network of dealers across Madhya Pradesh. They are associated with multiple finance institutions like AU Bank, HDFC Bank, Mahindra Finance and IndusInd Bank, among others.
How has your business journey been thus far?
I started the business 18 years ago in 2002 as a partnership while still in college. After gaining some experience, we started operating individually and Balaji Marketing took shape in 2006. Initially, we started with 5-10 cars a month; now we do 100-125 cars a month.
What is the demand-supply situation at present?
In the post-Covid market, demand for used cars in the ticket size between INR 200,000-500,000 is the maximum. But over the past 2-3 months, the premium segment (INR 15– 25 lakh) is also seeing strong demand. We have been facilitating finance for almost 100-125 cars a month. Sales after Diwali have picked up significantly and numbers are at pre-Covid levels now. We have seen 10-15 percent growth in used car sales in the past year. However, supply is significantly slower as customers are delaying new purchases.
Is the supply situation better now?
The supply situation has not stabilised yet and we are still unable to match demand for used cars. Nonetheless, we expect improvement in supplies after March.
Has availability of loans for used cars improved?
The situation is much better now; people get used car loans
far more easily and the rejection rate is significantly low too at 5 percent. Also, interest rates coming down from earlier levels have also helped the availability.
What type of digitisation are you seeing in the used car segment?
Digitisation has limited use in the used car segment. Only enquiries are tackled via the online platform. Once customers shortlist the cars, they want to check them physically before buying one or taking a test drive.
Are there any specific policy that can benefit used car demand?
Further cut in GST rate and lowering of RTO expenses can help boost sentiment in the used car market. GST is 18 percent of the car cost, RTO expenses are 1.5 percent of the actual new car cost. The rationalisation of these expenses can lead to more demand.
What is the average ticket size for used cars?
Nearly 60 percent of customer prefer cars worth INR 500,000 or lower; 15 percent prefer cars in the INR 700,000-800,000 bracket. Another 15 percent prefer cars in the INR 10-15 lakh bracket. Ten percent of buyers opt for cars in the premium segment.
What are the type of models/segment that are seeing maximum traction in used car segment?
Maruti, Hyundai, Mahindra and Toyota are seeing maximum demand across car segments.
How many check-points does a used car typically go through at your dealership?
Sanitising the cars is a specific step we have started in the post-Covid scenario. The number of check-points varies with every dealership but on an average it ranges between 7-32 check-points depending on the dealer and the car’s condition.
What is the average age of a used car at your dealership?
We generally deal in cars which are 7-8 years old or less than that.
What is the amount of paperwork involved and has the online process reduced this?
Paperwork is still predominantly physical. There hasn’t been much impact in terms of online operations.