The emergence of the pandemic has taken a toll on every industry, from real estate to service-providing industries, and it is huge for the automotive industry as well.
During the last two years, the industry has witnessed a double-digit fall all along. Segments like the entry-level four-wheelers and the two- wheelers have hit their absolute low and show no signs of recovery at this stage. However, the second-hand vehicle market, on the other hand, has seen immense growth over the past two years.
Talking to Mobility Outlook, Sandeep Aggarwal, Founder, Droom, said that the company has seen immense growth during the last two years.
He said the company averaged sales of 15,000-18,000 units of used vehicles every month as opposed to 6,000 units in the pre-pandemic times.
Aggarwal pointed out that people started preferring personal mobility over shared mobility because of the social distancing norms. “There is a clear shift in terms of personal mobility globally,” he said.
However, the pandemic also caused an issue in manufacturing new vehicles due to the semiconductor shortage, which turned consumers towards the used car market.
Moreover, the pandemic has also put a strain on the financial conditions of the general public. “Because of the weak economy and economic uncertainty people prefer used automobiles rather than new,” he added.
Besides, the emergence of the BS-VI norms also helped in the growth of the used car market. Before the BS-VI regime, the difference between a used vehicle (of a certain number of years) and a new vehicle was around 40% on average, as indicated by Aggarwal. However, with the emergence of the new emission norms, the gap widened even more, which refrained people from buying new vehicles.
Interestingly, the primary reason for Droom’s growth, as mentioned by the founder, is its ability to provide online services, from choosing the vehicle to buying it. However, he added that only 2% of the automobile market is online at present. People prefer to avoid crowded physical retail outlets located in the unorganised market, hence shifting to online shopping.
The company always believed in an online retail experience, said, Aggarwal.
Leveraging Opportunities
In view of the unprecedented demand, the automobile e-commerce company plans to leverage the situation by doubling its inventory of used vehicles. Aggarwal confirmed that the company has increased its inventory of used vehicles from 200,000 units a month in the pre-pandemic situation to 400,000 vehicles per month now.
The platform now also offers online loans and insurance, for which it has partnered with Tata Capital, Capital First, Cashe and Deccan Finance, to name a few. The founder noted that this service has allowed the company to double its margin in the last two years.