Cashing on the Festive Bonanza By Arist Ranka With Sumana Sarkar | AU Small Finance Bank
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Cashing on the Festive Bonanza

    By Sumana Sarkar, Autocar Professional    
    Arist Ranka, the owner of a popular used car outlet in Ahmedabad, began his journey as a car finance sales executive in 1999 and worked with Standard Chartered Bank initially. This was gave him the confidence to start his own finance business of offering vehicle loans and in 2002, he took the plunge when Ranka Fincorp came into being.
    With work experience of around 18 years as an commercial associate with various big brand banks like HDFC Bank, Kotak Mahindra Bank and AU Small Finance Bank, his firm now has a customer base of nearly 7,500 people with many long associations. He also has a team of skilled associates to ensure due diligence and quality check of the car portfolio. They also facilitate professionally managed RTO process.
    How did you enter this business?
    I am associated with the used car business for past 15 years. The scope of business in this segment motivated me to take the jump and later, with the constant flow of new customers, expand it. Things have improved a lot from the time we started, when it was an under-utilised segment.
    What was the sales scenario during Diwali?
    The Navratri season was exceptionally good. We saw significant rise in enquiries during the festive season and managed to attract quite a lot of new customers during Diwali. There hasn’t been any major impact on the sales. Though the lockdown had impacted numbers, it was offset in the past three months following the unlock, thanks to a healthy demand momentum. Our entire old stock has gone out and new stock is coming in.
    Was there a perceptible spike in demand compared to previous festive seasons?
    The used car demand in Gujarat has seen about 30-40 percent rise. This is, in fact, higher than the exceeded pre-Covid levels. Pent-up demand helped along with liquidity in the market led to this spike.
    Which are the top brands / models in demand?
    Maximum demand is seen in entry levels and mid-segment cars. You see a steady flow of customers enquiring about the A and B segments – Hyundai, Maruti and Honda are the top contenders in terms of demand. In the C segment car range, Toyota and Honda models are seeing maximum demand.
    How has the introduction of BS VI impacted demand for used car demand/supply
    The used car segment has benefitted indirectly after the introduction of BS VI. The relatively higher price of cars that are BS VI-compliant has helped stir up demand in the used car space. More people are opting for used cars now.
    In the rural areas, we are seeing demand for entry level cars while in urban areas, the mid-segment cars are seeing more traction. Interestingly, almost 10-15 percent customers are first-time car users who are now looking at used cars instead of new ones, given the difference in price.
    How is the current demand-supply situation in the pre-owned car market?
    Demand is higher than inventory; higher demand is also leading to a supply choke and even at higher rates, the supply is still significantly low. The demand for personal mobility after Covid led to a supply side bottleneck. Needless to say, all of this is helping demand for used cars and as a result the prices of used cars are also rising.
    Can you elaborate a little more on the impact of the pandemic on the used car prices?
    There has been almost a 10-15 percent hike in prices. This is true for both the price for procuring used cars and also the final selling prices, especially in the A and B segments. In sharp contrast, the premium segment used cars have seen a drop in demand, almost 10-15 percent drop in the overall pricing.
    Covid has also led to an increased digitisation in most businesses. What’s the scenario in the used car segment?
    The digital platform is helping expand our customer base. Customers also getting more options due to the use of digital medium. The market dynamics has also improved as a result. There has been a 10-20 percent rise in customer base as a result of the digital reach. The overall certification process is also getting a fillip as a result of the digital presence. Most importantly, the trustworthiness of the business is also getting enhanced; there is almost 10-15 percent rise in customers as a result of this transparency.
    Has the ease of financing for used cars also helped improve demand?
    No doubt that the support from NBFCs is a key factor in the growth of used car segment. The overall policies are more supporting but the interest rate for used cars loans almost at the same level as earlier. There has been no major difference. We have close to 22 NBFCs operating in Gujarat in the used car segment. One interesting trend that we have noticed after the lockdown is that the more people are opting to buy in cash, especially in the A, B segment – almost 60-70 percent of them. In percentage terms, there is nearly 20-25 percent rise in customers opting for cash buys.
    What are the key customer preferences when they come shopping for used cars?
    Customers are very clear about the brand and model when they come to buy used cars. Almost 80 percent clients have already decided about their choice, based on their budget and requirement. When they come to an outlet like ours, what they want to check is the condition of the car, the mileage it offers and the kilometres that it has run.
    How many point checks does a used car typically go through at your dealership?
    We ensure that we procure only no-accident cars and then undertake a thorough check of the  mechanical condition and the overall engine condition. We also refurbish the cars as best as possible. On an average, there are 260 checks and we make sure that the cars that we procure meet at least 120-150 of these.
    Disclaimer: The opinions expressed in this article do not purport to reflect the views or opinions of AU Bank or its employees.