Growth in Used Car Business | AU Small Finance Bank
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Used Car Business Has Seen Nearly 40% Jump From 2019 Levels

     
    By Sumana Sarkar, Autocar Professional
     
    Kiranpal Singh Oberoi, a successful used car dealer from Aurangabad, says enhanced affordability and easy access to used car dealers coupled with easy financing plan is helping boost demand.
     
    Kiranpal Singh Oberoi is the owner of King Motors, one of the most trusted used car dealers in Aurangabad, Maharashtra. King Motors has been in the used car business for more than 10 years and, on an average, there are at least 60 vehicles in stock at any point to ensure the buyer is spoilt for choice. The variety of cars along with trustworthy services is the USP for King Motors, which operates with the ‘customer first’ motto.
     

    How did you start the business?

    My elder brother was in this business and I was fond of driving a wide variety of cars. I entered this business in 2011. We provide used cars to customers in Aurangabad. My passion for cars and superbikes is driving my business.
     

    What was the sales scenario during Diwali last year?

    We got a good response from customers. The support from AU Bank in terms of financing also helped. We average about 30-40 cars a month. Interestingly, we are seeing the near-doubling of car sales every month. People are now keen about using their own vehicle due to fear about Covid. This factor, coupled with higher prices of new cars, has given an impetus to used car sales.
     

    Was there a perceptible spike in demand compared to previous festive seasons?

    We have seen almost 40 percent jump in business from 2019’s level. Right now, our sales are well past the pre-Covid levels. People are becoming more open about buying used cars. Our assurance of a buyback within a select period, if they don’t like a vehicle, is also helping customers take the plunge in favour of used cars more easily. Confidence is building up for used cars.
     

    How would you rate the ease of financing for used cars?

    Overall financing allows more people to opt for used cars. But the relatively higher interest rate for used cars is a hindrance no doubt. If the interest rates are rationalised, it will also help boost sales significantly.
     

    How is the current supply situation in the pre-owned car market?

    Quality cars are not easily available in the market. Given the huge demand, the supply chain is stretched but it is gradually easing out. This is because after Diwali, people who have taken delivery of new cars are now disposing off the old vehicles. This is helping ease the supply situation to a large extent.
     

    What type of digitisation is being seen in the used car segment?

    It is benefitting people no doubt. The association with the online platform is helping increase the reach of car buyers/car sellers and the process has become quite simple and much faster too. We have associated with online platforms like OLX, Cars24 and that has further boosted sales. Simultaneously, this is also cutting down time to procure fresh stock.
     

    What are the type of models/segment that are seeing maximum traction in the used car market?

    We have seen maximum growth in the ticket size ranging between INR 3 to 5 lakhs. Irrespective of the car brand or segment, this is the price range that is seeing maximum traction. There is close to 60-70 percent growth in demand for cars that fit in this price range. That said, the A and B segments are seeing very good demand; even premium/luxury cars are seeing good response. Most luxury cars don’t have diesel variants now in the new car space and used cars easily bridge this gap. While the A and B segments are seeing 60 percent growth, the luxury cars market is seeing 20 percent growth.
     

    Which are the top brands / models in demand?

    The Hyundai i10 and i20 are seeing very good demand and are very popular options. The Maruti Swift and Dzire too are popular amongst our customers.
     

    How many point checks does a used car typically go through at your dealership?

    We have 34 checkpoints covering the car’s entire functioning, looks, interior, exterior tyres, gearbox and engine. Essentially, we ensure we offer functional cars to the buyer.
     

    What are the steps you are taking for building customer confidence?

    We give customers a one-year guarantee and warrantee for any gearbox/engine failure and bear the cost for repair if it is not due to the fault of the customer. Our assurance of buyback within a select period has also added to their confidence in dealing with us. However, we do not provide suspension warranty, as there is a scope for wear and tear.
     

    What is the average age of a used car at your dealership?

    We don’t procure cars that are older than seven years. Generally, our customers prefer 5-6 years-old cars based on their budget and affordability.