Used car dealers are expecting the demand momentum to continue. Bhopal-based Jitendra Rangwani says the ease of getting loans and transparency of paper work is helping drive demand.
Forty-one-year-old Jitendra Rangwani started working from an early age. He entered the automobile industry as a sales executive and soon rose to be a showroom manager. Yearning to become an entrepreneur, he began selling used cars from 2015. Currently, he owns two used car outlets with a steady flow of inventory.
How has your entrepreneurial journey been thus far?
I started my independent business from 2015 with a small stock of 2-3 cars and grew the business thereon. We have created a one-stop shop for our customers. Used cars are far more affordable (than new cars) but the lack of organised players and transparency was a major problem in the business. However, with a number of big players coming in has added to the improved dynamics of the market. The ease of getting financial loans and transparency of paper work and certification has boosted demand.
What is the demand-supply situation for used cars at the moment?
After Covid, we have seen a big boost in the demand for used cars. Social distancing norms and no public transport led to the growth of used car business. Better financing deals also helped shore up demand. Currently, we are seeing sales around 45-50 cars a month; this is an almost 10-15 percent jump from pre-Covid levels in the past 9 months.
Has the supply stabilised now compared to the past few months?
The supply situation is still not stable but it is no longer a huge problem. It was till December 2020 but the situation improved considerably in January. The overall supply-demand ratio is quite healthy now. We procure cars at par with demand in a way that we keep stock that can match sales of close to 45-50 cars a month. Having adequate space for keeping stock is also important. Organising funds and maintenance of cars are important factors to consider.
How easy is the availability of loans for used cars now?
Getting loans for used cars is relatively easier now. We have loan schemes between INR 100,000 to INR 25 lakh. It is much easier to get financial loans for all types of used cars. Sixty percent vehicles are bought using loans/finance schemes and 40 percent choose to buy through cash down.
What type of digitisation are you seeing in used car segment?
Digitisation is no doubt providing a favourable platform for used car dealers, helping increase their reach and exposure, even out of the immediate city limits. This has boosted enquiries and relative sales. However, the final sales are still conducted through the physical medium as customers want to see the car once before buying.
Can you pinpoint key policy moves that can benefit used car demand?
The RTO tax is too high in Madhya Pradesh, almost 1.5 percent of the original cost amount. This, if rationalised, can bring down costs a lot. The registration tax expenses also need to be rationalised.
What is the average ticket size for used cars?
The average ticket size of cars range between INR 200,000 – INR 800,000 inclusive of hatchbacks, B-, C-segment cars. The premium segment is also seeing robust demand in the used car space.
What are the type of models/segment that are seeing maximum traction in used car segment?
The mid-segment products of Maruti Suzuki and Hyundai see a lot of traction in urban areas. In the rural market, there is demand for Mahindra’s Bolero and Scorpio SUVs.
How many checks does a used car typically go through at your dealership?
From purchase to sale, there are roughly 8-10 checkpoints. We ensure that we deal with mostly non-accidental vehicles and mostly prefer localised vehicles. We look for vehicles that have complete ownership paperwork and then refurbish vehicles as required before selling.
What is the average age of a used car at your dealership?
We don’t keep cars that are more than 10 years old and we have seen maximum demand for cars that are less than 5 years old.
What is the amount of paperwork involved and has the online process reduced this?
Paperwork does not take a huge time. We do get support from the Bhopal RTO office. There hasn’t been much impact of digitisation in paperwork for buying used cars.