Mobility for essentials drives used-car sales as Ola, Uber bookings drop

Topics Ola | Uber India | Coronavirus

Over the next six months, the company expects to see trade-ins increase from a historical 25 percent of sales to at least 40 percent of total business. Photo: Shutterstock
Mahindra First Choice Wheels (MFCW), the country's largest multi-brand used car platform, has seen its sales velocity over the last two months decrease by around 50 per cent, however the good news is that bookings are still happening with orders having been executed, post the coronavirus-led lockdown. 

Ashutosh Pandey, CEO at MFCW says that the decline of traction in Ola and Uber bookings has led to growing inquiries for smaller and used cars on their platform. It isn't just inquiries and window-shopping, the company has also seen close to 1,500 bookings being executed the past two months for cars that would likely be used for short-haul drives and trips by family-members during the lockdown. 

Earlier, MFCW would see sales of anywhere between 12,000 and 13,000 vehicles a month, which started to slide with the general auto slowdown before the lockdown even began Pandey says. "The sales and bookings we see are also being driven by trade-in action. Tat means they company is also buying a lot of vehicles." There is greater supply of high-range older vehicles during trade-ins.

Over the next six months, the company expects to see trade-ins increase from a historical 25 percent of sales to at least 40 percent of total business.

According to research by MFCW, consumers are likely to opt for personal vehicles, over public transport, shift from two-wheelers to four-wheelers  and revise their budget downwards given the economic malaise spreading over the country, Panday said. Some top brands that consumers have on their list included Maruti Suzuki, Honda, and Hyundai. 

MFCW has revenue of about Rs 373 crore a year and  its other business lines also include an auto portal that serve as as an advisory as well as a fleet business for b2b clients that is driven by repossessed cars that are acquired by corporate fleets and is growing fast. "The repossessed vehicles which come from NBFCs, banks and entities that have seen purchase defaults is a part of the business that has been growing 100 percent year on year in the recent past," Pandey said. "We expect that to continue too happen."

Arshdeep Singh, director of marketing at Spinny, a used car platform that is backed by SAIF, and Accel Partners and launched in 2105. "Our model is based on owning the entire chain of action from research to purchase and a customer can look up cars on our website which aggregates inventory across five metro locations," Singh says. "Select a car and a Spinny executive will bring the car to you, who gets on a video call before he leaves and then test the product and proceed with the purchase fate which the car is delivered on a truck." Spinny has sold around 6000 cars to date. 

Singh says the top models are the Hyundai Eon, Hyundai i20, Volkswagen Polo, Honda Amaze and the Maruti Suzuki Swift. "Its the price point between 4 lakhs and Rs 6 lakhs that is getting demand for."  Singh says that Spinny recently sod 60 cars in the last two weeks in Bengaluru and Gurgaon to younger buyers mostly to consumers under the age of 40. 

What do clients look out for most in the used car market? "People value reliability more than anything, in this business," Pandey says.  

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel