The rapid growth of the used cars’ space in India amidst COVID-19

The used cars’ space in India has seen a rapid increase in demand amidst the COVID-19 pandemic. In a panel discussion on YourStory’s Daily Dispatch, Vaibhav Sharma, Founder and CEO, CarzSo; Rajat Mahajan, Partner, Deloitte India, and Akshay Singh, Chief Strategy Officer, Droom, joined together to discuss the factors driving this growth. 

During any transaction, customers face a lot of difficulties such as lack of transparency, discovery, price, trust, etc., pushing several used cars’ companies to come to the fore.

Rajat shared, presently, the biggest challenge is to convert the unorganised sector to an organised one. 

In fact, rising demand in non-metro cities is further pushing this growth. Besides, NBFC funding and rapid changes in technology are other factors driving growth in the sector.  

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According to Akshay, people shifted away from public transportation to personal mobility, especially used vehicles, because of financial uncertainty amidst the pandemic. Additionally, the supply crunch on new vehicles caused a rise in demand for used vehicles and a rapid boost in business at Droom. 

He added the company expects to see the used cars’ market move online, which has always been its key business model. Additionally, the startup is noticing a shift in demand from Tier I cities to Tier II and III cities, which, in his opinion, is happening because of the higher income of the populace or better infrastructure in the region.

“We believe, over the next five years, almost 70 percent of the used car demand would come from Tier II and III cities,” he said. Besides, Droom will also focus on the rising demand for bigger and premium cars like SUVs.

Vaibhav from CarzSo says the used cars’ market has grown massively in the last few years. “People are now moving from unorganised channels to organised channels,” he added.

Additionally, digitisation and the pandemic is giving birth to many new online players. CarzSo, one among many, is focusing on non-metro cities and is also working on virtual reality. 

“Technology indeed is going to be a key driver in the sector, but at the very core of the business is the experience,” Rajat said, adding, “If the customer gets the right experience, they will get the right trust.”

It will be a long term gain for the sector if all the players can mutually share the benefit while giving returns to their customers. 

Talking about Droom’s USP, Akshay said, customers can buy anything on wheels to get them from point A to B — cars, two-wheelers, bicycles, etc.

Going forward, the company will invest in categories other than cars, and among cars, it will focus on premium SUV vehicles. Besides, it will also focus on geographical expansion, starting with Tier II and III cities.

Akshay said access to finance or financial services, like loans, is an important aspect of the journey, and presently, Droom is working with various banks to get some funding. The company has plans to launch products in markets, including Southeast Asia, the Middle East, and Africa. 

Vaibhav said, CarzSo’s focus has been on building a technology that will take the entire used cars’ industry online, and it wants to stay at the forefront of this. “Our key focus has been around building virtual reality technology,” he added.

CarzSo plans on reaching eight cities by the end of this financial year and expects to capture north India by the end of the next financial year.