Amid subdued incomes and low demand in the auto segment caused by the pandemic, leasing demand for used cars has increased in comparison to brand new vehicles, according to a recent surveys. The used car market is 40 per cent metro and 60 per cent non-metro as used car sales have overtook new car sales for the first time in decades. While there are multiple organized used car platforms that have made it big in India, a start-up called Okshan is eyeing the used car B2B leasing segment, making it among the first companies to enter this segment. We got in touch with Ranjeev Dhauja, Founder and CEO, Okshan to understand the business model and reasons why used cars are picking pace in India.
Q.Tell us about Okshan & its operations
Okshan is a used car market place which is getting the entire ecosystem of new car dealers, used car dealers, car brokers, corporates and even existing online players at one place. As an organisation, we support the sale & purchase of ‘verified used cars’ at ‘fair & transparent’ deal prices without any mark-up or hidden cost on the real inventory of dealers and brokers. We provide a platform for aggregating buyers and sellers where the inventory is liquidated with “Real Time Auction’ as well as ‘Buy Now Option".
Q.How does your platform support car buyers?
One of the unique features of our platform is the bidding process; wherever a car is listed on the platform a unique link is created that is sent to both buyers and sellers. From this link, both parties can live track the process. So when you list your car to sell, you can track the actual price quoted by the sellers. This creates transparency with the end customer who can be a buyer or seller and they get to decide on the car real time.
This is disruptive as no one else in the space allows the seller to view the bids. This process of transparency removes the extra margin on the cars which others are making, hence the buyer which is a used car dealer in our case gets the car at a lower rate. In return the end customer is also benefited as the car from the broker will also get the car at a lower rate.
Q.How different is Okshan from B2C used car platforms?
As already mentioned, we are the only player in the space which allows the seller of the car to see the bids, hence making the model 100% transparent in itself. This generates trust and both buyer and seller will work for a longer period of time with us because of trust. Other than this, we deal in real inventory only which means the vehicles standing with new car dealerships or used car dealers will be put for auction whereas in case of other online players in the market the inventory belongs to the customer who is the actual owner of the car.
Other players in the segment get customer cars listed for real time auction which are once auctioned for a price, the customer can turn down the deal. At Okshan there is no seller backout as only the confirmed inventory which is up for sale is put for the bidding process. Due to this our conversion ratio is 95% compared to other players 15% as as most of the time the actual seller will back out from the deal post knowing the bid amount or the amount which is offered to them from the online player.
Apart from this, once the bidding is accepted by the seller, the deal happens on the spot and there is no more negotiation. In case of other online players post bidding is over the negotiation will start between the online player and the customer which results in customers backing out. This happens because the aspirational price from the actual customer (seller) is always on the higher side.
Q.Used car market in India vis-à-vis global markets?
In the matured markets, the used car sales are 4.5 times the new car sales while in India it currently stands at 1.5 times the new car sales. Indian used car market is highly fragmented and unorganised so as more and more organised players enter the space the number is set to rise to 2.1 times in next five years. As per a recent report, by 2025 India will touch annual sales of 8 million units. The used car market in India has seen a growth of 5% YOY despite the Covid 19 Pandemic- while the new car industry contracted by 17.8% compared to previous fiscal year.
Q.Why do you think used cars are getting more traction?
Over the years, the used car market has been growing steadily, but of late, there is a trend which we have seen that customers want better cars at the price of an entry level car. This is evident with the dip in entry level car sales. So people who are owning a two-wheeler today want to own a Swift or Grand i10 Nios. Another reason is that people have now realised the importance of personal mobility due to fear of viruses. While this has been reflected on new car sales too, they have a long waiting period of upto 10 months on certain cars because of disrupted operations due to lockdowns and semiconductor shortage.
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