Former Maruti Suzuki export head Rajesh Singh, who was last working with American car maker General Motors, has launched a used car selling platform, Driveo, which promises a hassle-free sales experience by buying directly from customers.
The crowded used car market in India has several formats, including the traditional car exchanges, where manufacturers acquire older cars and sweeten the deal for the new car with a loyalty bonus. Online sale on commission is another format where several new web and mobile apps are doing brisk business.
Driveo is a technology-driven platform. Instead of going C2C, it has gone C2B (customer to broker) - it acquires cars from individual owners and sells them to offline used-car dealers through bidding.
"Our technology ensures that sellers get the best value based on the condition of the car. Our pricing engine ensures that the seller is offered the best value based on broad parameters such as car life, mileage, history, etc, based on the demand for the car in the market," Singh told Business Today.
The Indian market for used cars, commercial vehicles and two-wheelers is estimated to be in the range of $30 billion. It is expected to double to $60 billion by 2020. India is the world's third-largest market for new vehicles after China and the US, with transactions worth $100 billion each year, and expanding at 5 per cent annually. An estimated 1.3 used cars are sold for every new car. Used car sales total four million a year. Around 1.6 used two-wheelers are sold for every new one; this means more than 20-million units are sold every year.
The booming market has seen a host of entrants, beyond the older classified sites. Spinny, GoZoomo, Car24 and Droom have imitated American and European business models of selling used cars and two-wheelers in an attempt to take on larger players such as Maruti True Value and First Choice, owned by M&M.
But Driveo is unique in the sense that it will buy the cars and not just list them. "Our aim is to create a transaction-driven business with sustainable unit economics. We have successfully bought cars from customers without leaving scope for suspicion and disposed these through our dedicated online bidding channel," said Singh. "Our model will be viable even if we capture 2 per cent market over the next five years and ensure 5-6 per cent revenue on each transaction. This should make Driveo a $1.2-billion entity," he says.
Driveo, started in December last year, has done 700 to 800 transactions and 15,000 evaluations (of cars) till now. It has clocked a turnover of around Rs 25 crore for the National Capital Region.
"We are raising funds to expand into other northern markets during the next phase. Netting more than a million cars every year, north India is the largest regional market, which means there is a big potential for us to grow in the short term," said Singh.