Showroom Experience must before buying a Used Car | AU Small Finance Bank
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Showroom experience crucial before customers make the final decision

    By Sumana Sarkar, Autocar Professional
    Nearly 60-70% of enquiries are digital, but customers still prefer to visit the showroom: Jitesh Biyani
    Jitesh Biyani, a used car dealer from Jaipur, expects the inventory situation to improve in January -February and as a result sees cost rationalisation going forward.
    Jitesh Biyani is the owner of Car Estate, one of the most trusted names in the Jaipur used car market. Primarily, a Mahindra First Choice dealer, it has been in the business for the past 18 years and served more than 15,000 customers. With a stock of over 80 vehicles on display at any point of time, Car Estate offers a full range of options from entry level cars to high-end ones.

    Can you detail your journey thus far?

    I am a mechanical engineer and have done an MBA. In 2003, I took the plunge and started the used car business in Jaipur and moved from Bangalore. Initially, there weren’t many models available and people were looking for smaller cars. The ticket size kept increasing over a period of time. It steadily rose from Rs 200,000 to Rs 600,000. The target segment, however, remains unchanged – the middle class to upper middle class. The easy availability of finance in this market is another catalyst for the growth of this segment. The rate of interest in the affordable territory is also helping.

    What was the sales scenario during Diwali? Was there a perceptible spike in demand compared to previous festive seasons?

    We have seen fairly strong traction in Diwali 2020 – a near-20 percent jump from 2019. The ticket size has also increased from Rs 525,000 in 2019 to Rs 600,000 in 2020. This is a significant jump in sales. We are seeing the value of used cars going up. The larger number of players in the market is also impacting the overall pricing trajectory. People are increasingly looking at upper model cars. This is a significant reason for the jump.

    How easy is the availability of loans for used cars now?

    Earlier, banks were not keen to finance used cars as the default ratio used to be very high. But now with better norms and regulation, landing has become easier. Greater penetration of finance companies is also helping. National-level NBFCs and banks have entered rural markets, and this has also brought down interest rates. We see a larger number of people opting for financing plans. Almost 65-70 percent of our customers now prefer financing. Bank dealings help bring in a lot more transparency in the system. But overall, it is still a fragmented market.

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

    We are facing certain supply side issues due to higher demand. We see the value of used cars going up given the lower amount of inventory and expect prices of used cars going down January onwards when new inventory will come in. The prices are right now on the higher side but expect rationalisation of prices when inventory situation balances out but demand for used cars will continue going forward.

    What type of digitisation are you seeing in used car segment?

    Nearly 60-70 percent of enquiries are right now via internet search. The digital platform is undeniably the first point of interaction for maximum customers. But in the used car segment, every model is unique, standardisation is not possible. Therefore, the look and feel is still very important and the driving experience is crucial. In the past six months, though we have aggressively increased our digital reach, we see customers preferring to see the cars physically before actually buying. The search happens online when they shortlist models and then go to the showroom.

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

    Traditionally Rajasthan has been a diesel-driven market. After the pandemic and BS VI and with many companies stopping diesel variants, we see a larger number of people willing to buy petrol cars. The category C cars are seeing significant demand compared to before when there was demand for entry level hatchbacks. We see customers climbing up the ladder gradually, especially first-time buyers. They are willing to buy sedans worth up to Rs 600,000.

    Can elaborate on the impact of pandemic on the SOPs in used car segment?

    We ensure adequate sanitation, maintain social distance and ensure masks are worn. The customer is sensitised and so are the people working to the needs of social distancing. There has been a nearly 20 percent increase in walk-ins on a year-on-year basis. After the test drive, complete sanitation of the car is undertaken.

    How many check points does a used car typically go through at your dealership?

    We only sell certified cars and follow about 118 checkpoints. We do not buy cars involved in accidents. After due diligence, we decide the valuation. All necessary refurbishment happens in our workshop. The Mahindra First Choice engineers check this, after which we put the car on display. We make sure that the quality of the cars is maintained.

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

    For cars that are a year old or less than that, there isn’t much depreciation in prices. We see maximum price depreciation at 2-3 years. As a result, this offers value for both sellers and customers. The average age of the cars sold is around three years. When the customer is selling it over three years, the cost of ownership balances out.

    What is the amount of paperwork involved and has the online process reduced this?

    The buying process for used cars is the same across the country. While the RTO cost, differs, the documentation is more or less the same. The process has improved after digitisation with RTOs being connected, the verification time has reduced, and the time taken for transfer of ownership has also come down.