Competitive Scenario of used-car Industry and Consumer Perception of used-car purchase in India

Submitted by: Amarpreet singh Aman Bagai

Table of Contents

Executive Summary........................................................................................ Error! Bookmark not defined. Introduction .................................................................................................................................................. 4 Methodology................................................................................................................................................. 8 Indian Auto Industry ................................................................................................................................... 10 Indian used-car Industry ............................................................................................................................. 17 Major Factors affecting segment growth ............................................................................................... 19 Drivers and Challenges............................................................................................................................ 20 Literature Review ........................................................................................................................................ 23 1. Evolution of Indias used car industry ................................................................................................. 23 2. The Anatomy and Physiology of the Used Car Business ..................................................................... 26 Objective of the Study ................................................................................................................................ 29 Scope of the Project .................................................................................................................................... 30 Limitation of Project ................................................................................................................................... 31 Questionnaire Design for Data Collection .................................................................................................. 32 Research Process ........................................................................................................................................ 33 Hypothesis................................................................................................................................................... 35 Hypothesis 1............................................................................................................................................ 35 Hypothesis 2............................................................................................................................................ 36 Hypothesis 3............................................................................................................................................ 36 Hypothesis 4............................................................................................................................................ 36 Analysis and Findings .................................................................................................................................. 37 Organized Format ................................................................................................................................... 37 OEMs in used-car Industry .................................................................................................................. 40 2

Non- OEMs in used-car Industry ......................................................................................................... 51 Unorganized Format ............................................................................................................................... 56 Consumer Perception of used-car purchase in India .................................................................................. 61 Hypothesis Testing .................................................................................................................................. 61 Qualitative Analysis ................................................................................................................................. 68 Summary .................................................................................................... Error! Bookmark not defined. Scope of Future Study ................................................................................................................................. 72 References .................................................................................................................................................. 74 Annexure ..................................................................................................................................................... 76

Introduction

..From the singsong rhythm of the bullock cart to the jet air India has travelled a long way. It was in 1898 that the first motor car rode down Indias roads and until the First World War, about 4000 cars were directly imported to India from foreign countries. The Hindustan Motors was set up in 1942, to manufacture automobiles in India. International Journal of Engineering Sciences and Management, Apr-Jun 2012

A car-purchase has always been an aspiration decision for the customers. In India purchasing a car is a long cycle for the customer. Though the cycles have a wide range from being short for customers who have been buying cars every now and then, there are thousands of them who purchase a car after very careful and deliberate discussions and find their entry into this elite group. Gone are the days when the customers had to queue up and wait for months and sometimes years before they are the proud owners of their cars. Gone are the days when the customers had to choose the only available option for a car or at best from the only available 2-3 models. Times have changed and automobiles have crawled into the lives of people who would once only dream about having a car when they retire. For a considerable chunk of people now, life without automobiles is not just difficult but to an extent unimaginable. Looking at the number of passenger vehicles being sold every year, a country might enjoy the economical progress it infers from the automobile growth story, another aspect to this story is the individual progress. As mentioned, owning a car for the larger chunk among the car owners is still an aspirational purchase. Along with the functional attributes that a 4

customer enjoys on purchasing a car, he also looks forward to the prestige and esteem that comes along. Of course the idea of owning a car disburse into the society the success that the individual has achieved and wants fellow-people to know. With all the hue and cry of the growing auto market in India and the OEMs, Indian and International vying for consumers attention to their cars, there is race between the auto players to be able to attend to the customers requirements and how they can cater them well with their offerings as compared to that of the competitors. When India was liberalized and foreign auto manufacturers were allowed to set shops in India, though collaborations and then on their own, the market was thrown open to competition and consumers soon were spoilt for choices. But who were these customers? Were all the customers that the OEMs were targeting ready to pay the prices which were still high and intimidating to a large chunk of aspirants to enter into the elite four-wheeler owner group? The answer was NO. Owning a car was always known to be a rich mans game. But their were other who also wanted to be the proud owner of the four-wheeler but fell short of the mark to make it to the elite group. This led to the rise of selling of pre-owned cars in India. The market was completely unorganized without formal structure, ways and mechanism for the cars to be sold and then bought by customers. This however, brought into existence the pre-owned car industry in the country. However, since the queuing up for the news cars and the availability of the old cars which were to be sold was still challenging, the industry for pre-owned car never took off the way it could have been. Another reason was the fact that since the new cars supply was less than the demand and they were not available easily, even the old cars attracted huge brand equity and hence they were not sold at a high difference from the new cars. This meant that the old cars were not cheap either and hence a new market was not tapped which was waiting to be. Things changed when the liberalization hit India and lot of international players cam and the Indian companies like Tata Motors and M&M started to fly as well in terms of their productions and offerings. The demand supply gap started to dilute and soon there were lot of cars. There were cars for people to afford. The customers were spoilt for choices. When the new car market started to fly, so did the pre-owned car market. The reasons were simple More new cars were sold and hence there were more pre-owned

cars to be sold. The large number of pre-owned cars for sale meant that the brand equity for pre-owned cars was not high anymore either. Hence, the price difference between the old and new cars shot up leading to a strengthened customer penetration and creating new markets and customer sets for the pre-owned cars. The changed market scenario saw new players entering into the market every now and then. However, it remained to be a forte for unorganized players and the buying and selling structure remained largely informal. It was not until Maruti started its true value initiative to give a forma structure to the preowned car market. The effect was almost immediate on the counterparts with Tata Motors, Hyundai and other following the suit. The challenges faced by the organized players however, were very different than that of the ones which were faced by the unorganized sector. For example the major challenges and threats that are faced by the organized players were related to the areas like higher pricing justification, Lengthy procedures for owning the vehicles, buying the vehicles and hence associated costs bored by them etc. However, they do enjoy the benefits like higher trust and higher stock availability for customers. On the other hand the unorganized players have problems in making their pitch credible to customers. They also do not have the funds to own vehicles and hence cannot command that among customers. Of course the bigger problem is getting hold on the right vehicle at the right time without investing money into it. However, they do have benefits to offer like competitive pricing and personal relationships. Once the formal structure had come into being, the pre-owned car market was expected to fly but it did not. It was since an important link was not made party to the growing and strengthening structure, formal and informal, for pre-owned car market. It was the customer. The customers had always been apprehensive about buying pre-owned cars for a multiple reasons which we will discuss in details in coming sections. However, the major apprehension lied in the authenticity of documents and quality of the vehicles that were sold by pre-owned car sellers. Since the category was established by the unorganized players which had informal structure for selling cars, the mechanism and credibility were both dubbed dubious and sometimes sham-ful by the prospective customers. The customer had to be shown the value of the purchase decision which is a mix of functional and emotional attributes. It was clear, the customer was never educated about the category and how he can be serviced by it.

Value Advantage Attributes

Functional Aspirational

Purchase Decision

Reasons were simple, a lot of people had started to get into the car-owners group and the supply was not ample. This gave bargaining power to the unorganized players and they started to exploit and at occasions cheat customers. Since the demand was still high nobody bothered much about the important factors like customer relationship and trust building. It was until the demand supply again started to get balanced when the importance of these factors was acknowledged by the unorganized players and a relationship based selling started. It was not long since then that the big players like Maruti, Tata, M&M forayed into this fast growing market and set the processes.The apprehensions of customers started to get addressed and the customer was back to be the king. Formal and organized players offer their own set of benefits to the customer with a surcharge which was accepted to some while not to all. Hence, insipite of all the hunky dory expectations and estimates, the organized sector in pre-owned cars has not been able to break the 10% barrier. The reasons are again aplenty and we will look into them in detail in coming sections. The perception that the customer have for the pre-owned car industry is mixed. Customers do acknowledge the benefits of buying a pre-owned car and buying it from a particular format, organized or unorganized, but they are also apprehensive of the deals that are offered to them in the pre-owned car market. The perceived risks by customers associated with the purchase of a pre-owned car are higher than that of the new car. 7

Financial - Medium Social - High Functional - Medium Physical - Low Psychological - High

High social and psychological risks stems from the realization of the fact that people may associate the person with second-hand car which may not serve the aspiration value which is usually the bigger reason for purchase of cars.Overall, the pre-owned car market is in a very interesting position in the current scenario for a number of reasons like dwindling sales of new cars, entry and growth of organized players, changing perceptions about the pre-owned car, demographic, social and economic changes in the population.

Methodology

Since the objectives are diverse in terms of overall impact, a multi-pronged methodology has been followed to achieve parts and sub-parts of the objectives. Setting up Objective o o Study competitive scenario of used-car Industry Understand consumer perception about the used-car purchase in India

Finalizing Approach o Multiple data collection techniques

Theoretical Frameworks Competitive analysis frameworks Consumer perception

Information Required Dealer Information Organized and Unorganized Format

Consumer Information Perception on used-car purchase and market

Research Design and Data Collection o Primary Research Personal and Online o Dealer survey (Organized and Unorganized format players) Customer Survey

Secondary Research Organized players official websites Research Reports Academic Journals Related Review, Blogs and Reports News

Data Analysis and Findings 9

Reporting

Indian Auto Industry

Indian Auto Industry has been a sunshine sector in the Indian growth chapter, until recently when the growth started floundering due to many reasons. However, we take into consideration the golden period of auto industry in the last decade for the course of this project and hence, this report. Though auto sector comprises of multiple segments and sub-segments we will concentrate majorly on the passenger vehicles. A quick look at the segments of auto sector will give us the following four major segments. Two-Wheelers Passenger Vehicles Commercial Vehicles Three-Wheelers

Two-wheelers segment is the biggest segment with almost three quarter of the total share. An estimated 3 million passenger vehicles cars are sold every year, 2.5 millions of which are passenger vehicles and the rest is the fastest growing and the sole grace of automotive growth in the past few months, the UV segment. Though the share is small but this is the segment which has been keeping the growth story of auto sector from being subdued dramatically. The Indian customers have mre options than they every had in terms of the car manufacturers, the country or continents these cars are manufactured in, the engines built, the models, price points etc to choose the car they want to own. But the scenario was not always the same. In the first stages of the development, the Indian automobile industry was largely relying upon the foreign technology which was a major dependency foe the industry to survive. However, thereafter the Indian manufacturers have started to spend heavily on research and redesign which allowed them to reach several milestones in terms of newer technologies their over the years. This allowed them to deploy these newer innovations and technology into their vehicles. Premier Auto 10

back was first producing cars in India in the year 1946. Hindustan Motors, during that time concentrated majorly on auto components. They came up with their first car in 1949. However, it was in 1980s that the Indian car Industry witnessed and unprecedented resurgence. This was due to the entry marked by Maruti Udyog Limited. Later opening up of the sector for foreign manufacturers also led to the rise of this sector. The Indian auto industry since then has seen multiple innovations and customer centric approach has been the word in the industry. Be it the first Indian car manufactured with indigenous technology, Tata Indica or creation of a mini segment by the worlds cheapest car Nano which was introduced at an astonishing price of Rs 1 lac as promised by Ratan Tata, the then chairman of Tata Group. The rising of auto sector could not have been just due to the changing technologies and innovations in the industry if there was no market. Hence, the rising customer base was the biggest reason which has led to this phenomenal rise of auto industry in

India. The Indian auto sector(combined) have standings for multiple segments it caters to. Largest three wheeler market in the world 2nd largest two wheeler market in the world 7th largest passenger car market in Asia & 10th Largest in the world 4th largest tractor market in the world 11

5th largest commercial vehicle market in the world 5th largest bus & truck market in the world

Source- http://ciiautoserve.in/autoserve. The share of various segments in auto industry is depicted in the given figure

Source: Confederation of Indian Industry

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Source: Confederation of Indian Industry

Source: Confederation of Indian Industry

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As per a presentation by Maruti Suzuki Ltd on the Indian Auto Industry, India is turning out to be a new global hub for the manufacturing of cars by international and national players. Most of the players are not looking at India not only as market but also to be their preferential manufacturing hub to produces cares that can be sold not only in India but to other emerging markets as well. There are multiple reasons for this SEZ and policy concessions for manufacturing operations Cheaper labour cost Increasing R&D facilities made available Rise in skilled professional in auto industry Expected rise in the consumption pattern in auto sector in coming years Proximity to China, one of the biggest market which has started to turn some investors away due to complex regime India being hub for small and compact cars can be a production hub for emerging markets

Government has been making efforts from its side as well to help India turn into a manufacturing hub for auto Industry. A recent news report from Indian express said that government is conducting a mid-term review of the Automotive Mission Plan (AMP) 2006-16, which envisages India to become a global hub for design and manufacture of automobiles. The extrapolation that have been drawn clearly indicate that the output of the automobile and auto component industry would reach $145 billion by 2016, which is 10 per cent of the Indias GDP The Indian automobile industry has grown over the years since the announcement of the AMP in 2006 when the overall production of vehicles rose from 9.7 million units to 20 million in 2011-12. It is also evident that India is getting converted into a global hub for manufacturers across the world. Source- http://newindianexpress.com/business/news/article601470.ece

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Source: Indian Auto IndustryThe way forward - Mr.Sunil Kakkar , General manager(Supply Chain), Maruti Suzuki India Ltd.

Some of the other figures which affirms Indias stand as a growing manufacturing power house of automotive industry globally are as mentioned below The Passenger Vehicle market of India will even cross Japan by selling about 5 million Vehicles by 2017-18 The Indian auto exports will be upto $5.62 billion in the year ending March 2011 and the same will grow to $17.64 billion in 2015-16 Indias share in global auto exports may also triple by 2016. Indias passenger vehicle production projections : 15

o o o

In 2010 2.6 million Vehicles By 2015 5.1 million Vehicles By 2020 9.7 million Vehicles

Sources: SIAM, ACMA & FICCI

Current Scenario of Auto Industry

The below figures shows the category growth under the auto sub-segments and passenger cars.

Source: JP Morgan India Auto Industry, Jan 2013 Since it will be interesting to note that which are the OEMs which have forayed into the used-car sales players in organized format, we will not see how do these players actually stand in their primary business, which is to sell new cars. Maruti Suzuki remains to be the market leader which unassailable lead. Selling almost 100,000 cars every month with the next player being Hyundai with average monthly sale to be around 60,000, it is 16

clear that Maruti Suzuki is sitting at the top. The Auto industry has been taken by storm with the impressive growth of UV segment. Obviosuly, Mahindra and Mahindra with its table consisting of mainly SUVs have gained most. Tata Motors have been the biggest loser in terms of market share in all the front, the UVs, PVs and even in its forte, the commercial vehicles. Source: JP Morgan Indian Automobiles Sales Tracker, Jan 2013

Source: JP Morgan India Auto Industry, Jan 2013

Indian used-car Industry

Current Scenario
The Indian used-car segment has been growing at a faster pace than that of the used car segment. The user-car segment also caters largely to the middle class which is the fastest growing population segment in the country. When the Indian new-cars industry got hit by the recessionary factors and the sales growth were largely flat, the used-car market showed an exemplary resilience towards this slow down and went on to reduce the gap with the new-car segment. While the new car market showed negative growth in the past few months, used-car market has been growing at a pace of 22% year by year. The current Indian used-cars market is pegged at around 2.5 million units a year. The Industry is said to be worth around Rs 52,000 crores. (Source: Crisils report on used car industry. Secondary Source: http://timesofindia.indiatimes.com/business/indiabusiness/Despite-slowdown-used-car-sales-stay-in-top-gear/articleshow/18585174.cms)

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The Industry grew at 20%+ rate for last 5 years bringing the industry from 1 million unit per year to 2.5 million units per year. Even higher growth is expected from the industry in coming years till FY2017. This is because the usedcar market has shown strong signs of growth inspite of a dwindling overall auto sector in the country. The coming years are expected to bring respite to the new-car sector and used car sector is expected to grow at a higher rate based on historical data. Mr. Nagendra Palle, CEO, Mahindra First Choice Wheels, the used car business of Mahindra & Mahindra mentioned in a press release that the ratio of used car sales to new car sales is about 1.5:1 currently which is still almost half to that of US and hence there is lot of scope for growth and opportunities are aplenty He also expects the total sales volume of used-car sales to be upto 7.7 million units per year by 2017. In 2007 when the used car market was trying to catch up wits its big-brother that time, the new-car sales market, it managed to sell 1.4 million units while 1.7 million new-cars were sold. The figure was still low as compared to global standards for the used car versus new-car sales. For example, by 2010 when the ratio of new cars to used car in US was about 2.8:1, India was still at around 1:1. The opportunity and scope were quickly picked by the OEMs and they aggressively went on to reduce this gaps by expanding their franchisees for used-car sales.

Source: Research on India, Used-car Market study + used car market figures from related news

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Major Factors affecting segment growth Though the used-car segment has faces some major problems in past which checked it growth, like higher interest rates (interest rates for used-cars are typically 3-5% higher than that on the new-cars. Another problem is the financing routes, not many banks or financial institutes wanted to take up the used-car market for financing initially, though late r the scenario changed. ICICI Lombard, Kotak Mahindra started to finance the vehicle sales for used-car vehicles and the other financing institutes soon followed the suit as ignoring a market that was growing at almost 20%, much higher than the newcars market was growing at less than 10%. However, as the interest rates went down and more and more firms were there to finance these deals the difference in the sales volume per year between he used cars and new cars kept on diminishing. Some reports places the Indian automobile sector as the sixth largest market in the works and is ranked as one of the fastest growing markets for the passenger cars. This means that the people are increasingly buying cars at a faster rate than they were earlier. It also means that lot of people are upgrading from their existing vehicles. Hence it can be safely inferred that a lot of people will be having cars which they would want to replace with a higher segment car and hence the one that they hold needs to be sold. This is a very significant reason why the sale of used-cars has zoomed past the newcars sales since the used-car sales is contributed by the first time buyers as well as the buyers who want to upgrade to a newer car and hence have to get rid of their existing car. Having deciphered this algorithm of the used-car market, a bigger chunk of the OEMs that are based in the country are working hard to ensure that no stone is left unturned while trying to entice the prospective buyers. This in turn is resulting into expansion spree for their pre-owned car stores through franchise or owned model. Apart from this, another important reason is rising aspiration among the middle class and the need to identify themselves as Arrived class. Owning a car is one way to do that. But spending 4-5 lacs to buy a car to accomplish this may not be the logical thing in terms of financial risks involved and hence they want a less expensive alternative to achieve that. A used-car fits the bill perfectly. The rise of middle class of India has been phenomenal and hence there is little apprehension about this segment is going to contribute the used-car industry in India. As per a report in HinduBusiness line, Rising disposable income has also induces various social and psychological patterns among individuals which in one way or other has contributed to the growth fo the used-car segment. For example, the average replacement years for a car have gone down to 5 years

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from an average 12 years earlier. This means that customers who have bought a vehicles are coming back to upgrade, change or sell a vehicles more often than they earlier used to. This has also brought a huge supply as well as demand for the used-cars in the market. (Source: http://www.thehindubusinessline.com/industry-and%20economy/) Of the total used-car market in India currently, close to 50% is customer to customer. This means that 60% of transactions happen between the buyer and seller and no third party is involved. Another bigger chunk is the brokers which accounts for around 24% of the total deals while only about 16 % of the total markets falls under organized format of used-car industry in India. (Source: http://timesofindia.indiatimes.com/business/india-business, CRISIL Auto India Report features in , http://autocarpro.in/contents/columnDetails.aspx?ColumnID=62)

Drivers and Challenges

There are multiple factors that acts as drivers as well as challenges for the used-car industry. The major drivers that have led to the growth of the industry are related to the OEMs entry and Demographic changes leaded to changes in customer segment and penetration. OEMs do realized that the growth of used-car industry in India is an important avenue to tap but what is also important is to keep the brand creation and expansion through new-car sales on its way as well. Hence, along with managing a foot step in the used-car industry, OEMs are also ensuring that they close the bridge between a used-car price and new-car price as much as possible. This is being done by introducing small and compact cars which are Indias most successful car models and are priced very competitively.

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There are however other factors related to the external environment(Economy, Social and Regulatory) which does play important roles in leading the sector towards a particular direction. The below chart gives a picture of how the automobile industry is segregated into multiple segments and where does the used-car segment finds itself placed. Further details on the industry players for used

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car segments will be furnished later in the findings and analysis section.

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Literature Review
1. Evolution of Indias used car industry
by Jagdish Khattar Chairman and managing director, Carnation Auto

Indias automobile industry is one of the fastest growing in the world and it is already the sixth largest globally. According to a SIAM report, annual car sales could reach 5 million vehicles by 2015 and more than 9 million vehicles by 2020. Fast-growing pre-owned car market Till about a decade ago, in the absence of organised players, more than 60 percent of all used car sales were C2C (customer to customer) among friends and relatives, with a Circle of Trust. The remaining sales were managed by local unorganised dealers. In 2001, Maruti became the first major organised player to enter the market with the launch of its used car brand Maruti True Value. Today, the Indian consumer has woken up to the positive value equation of pre-owned cars, and rightfully so. Pre-owned cars give higher flexibility and reach to prospective car owners, whether first-time buyers or repeat, due to the price advantage they offer. The economical prices of pre-owned cars help all types of buyers.

First-time car buyers: Lower price point and wide variety ensure that a used car buyer gets a technologically advanced and wide range of cars at fair prices.

Second car at economical price: Several Indian families have a need for more than one car and used cars offer them a more economically viable option.

Upgrade to a bigger car at a lower budget: This is especially true in case of people from Tier 2 cities and towns. A used car allows them the opportunity to upgrade from a two-wheeler to a four-wheeler without stretching their budget.

Other factors responsible for the increasing popularity of used cars is the multitude of quality choices available coupled with an increase in income. All this has created a situation where people want to upgrade their vehicles more frequently. The paradigm shift from buying new cars to used cars can be attributed to the increasing organisation of the pre-owned car players. Apart from these obvious reasons, there are other benefits that make buying a pre-owned car a popular practice, 23

such as lower rate of depreciation, easy finance options, and hassle-free documentation along with clean history.

Current state of used car market in India According to estimates in the US, for every new car sold, around three used cars are sold.In Europe, this ratio is 1:2, while currently in India it is 1:1.1 and expected to become 1:1.3 by 2015. In Europe and other mature markets, the number of intended new car buyers is increasing, while the number of intended used car buyers is declining. In India, its a reverse trend that can be attributed to the rising cost of fuel and increasing disposable income. Though the general economic slowdown has hit new car sales numbers, the used cars market has seen an uptrend, clearly indicating that used cars will continue to move forward.

There are several reasons for the evolution and subsequent shift and growth of the used car market in India. Prime among them are:

Improved quality: Used cars available nowadays have an improved and, hence, longer life due to technological advancements.

Better maintenance: Due to improved quality and performance of mechanical parts, todays cars are easier and better to maintain. Even a used car with 40,000-50,000km on the odometer will be much easier to maintain than a car with similar mileage 8-9 years ago

Less usage: Several urban families have more than one car. And the second or third car is relatively less driven and well kept. These are great used cars to be bought and offer excellent value for money to car buyers.

Internet access: With easy availability to high speed internet, more and more people are able to buy or sell cars on the web. Search costs have also come down, thereby reducing the dependency on word-of-mouth advertising.

Reducing dependency on used car dealers: People did not prefer to sell/buy used cars through self-appointed used car dealers because they could not be sure of the quality as well as the

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history of the cars sold. Organised players like Carnation buy only 2 of the 10 cars evaluated. This ensures high quality of the used cars sold. Expansion of organised used car players: With the organised players stepping in, the used cars market has benefited from fair deals, warranties, better retail network, credibility, transparency, easy availability of finances. Carnation provides an assurance that all cars sold through its showrooms are bought by the right people. Hence, both the seller and buyer are assured of their investment. These have all made buying a used car easy. Organised used car showrooms also allow prospective customers to pick and choose cars from various brands and segments.

Even though today less than 20 percent of the used car market is organised, the lack of organised players has not proven to be an obstacle. That said, there is a huge scope for growth as most of the market remains untapped.

CRISILs graphs alongside reveal the growth in used car sales volumes and clearly indicate that the growth prospect for used cars is more as compared with that of new cars by 2017. Also, since the ratio of new versus used cars in India is still 1:1.1, the old car market will grow much faster than the new and within that segment the organised sector will grow the fastest to bring the ratio closer to the 1:3. Thats the norm in developed markets.

As per the CRISIL report, till 2006-2007, the used car market was dominated by unorganised players, and C2C with more than 96 percent of the market share. The number of organised players was just 4 percent

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in 2006-2007, increasing to 16 percent in 2011- 2012. In the near future, the role of these organised players will increase substantially.

The future of the used car market The used car market in India is expected to grow by a CAGR of 20 percent in the next five years, with the organised sector playing a big role in this growth story. At present, there are about 750 organised used car outlets in India. In order to keep up with the projected growth, there is a demand for 3,500-4,000 outlets. Yet another important fact to consider is the likely implementation of GST. There will be uniform tax laws across all states making selling and registration of used cars a simpler and economical process.

2. The Anatomy and Physiology of the Used Car Business

By, Car Internet Research Program II and Capgemini Car Internet Research Program II and Capgemini. Buying a new car is the end point of a process that, on average, takes six months2 and involves much research and complex decision-making. In the past, the power struggle between customers and dealers generally played out in favor of the later.The development of the Internet has changed the power struggle between dealers and consumers. Buyers can now potentially gain the upper hand. Customers are increasingly knowledgeable about cars, their quality, residual value, prices applied, finance charges, availability, and, more and more frequently, the exact profit margin that the dealer makes in closing a deal. Dealerships have had to adapt. The most shrewd and dynamic have managed to turn customer intelligence to their advantage, by focusing on what consumers really want, namely transparency and respect. (For more on this, see Inside the Customer/Dealer Relationship, published by CIRP and Capgemini, 2006.) Has the used car market changed in the same way as the new car market? Although in some countries, used car sales represent two or three times the volume of new car sales, there are very few studies that fully explore the used car business. The four main countries were chosen for this study for the following reasons:The United States and Canada are part of an integrated economic system, with the majority of the population speaking the same language and affected by similar trends, constraints and influences. The same brands are found in both countries, with competition around

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the same models. Distribution is also carried out in both countries by the same system of exclusive dealerships. France and Germany both work within the same European regulatory framework in terms of car distribution. The two countries have strong national traditions in the automotive industry and develop brands that have worldwide coverage. Distribution networks are well developed.

Key Findings Our research identified a number of key findings that characterize the development of the used car business:

The importance of the used car market is growing significantly. In both the U.S. and France, for example, the used-to-new vehicle ratio (which demonstrates the level of used market activity) has increased since 1999 from 2.4 to 2.6, showing a steady growth of used vehicle sales by volume. In addition used vehicle sales in the U.S. are today more than twice as profitable for dealers as new vehicle sales (roughly 2.7% profit margin, compared with 1.2%). Moreover, the used vehicle financing and insurance segment is often the most profitable operational unit of a franchised dealership, posting 11.3% profitability in 2005 in the U.S.

The key to growth will be transparency and symmetry of information, as consumers continue to apply the same approach to research and collection of information in their search for used vehicles as they do in the new car buying process. We expect to see greater use of the Internet, more savvy consumers and more product proliferation. As with new car sales, the relationship between dealer and customer will need to be based on respect and trust, as well as ease of purchase. Such a symmetrical relationship will presume that buyers and sellers possess the same information by which to determine a products quality. For example, the growth of CarMax has been partly attributed to this approach.

The Internet is increasingly becoming the information source of choice for used vehicle buyers. Although consumers still use local newspapers and word-of-mouth when researching used car purchases, they are turning to the Web in increasing numbers, highlighting the importance of having a strong Internet strategy for used vehicle programs. A recent study from J.D. Power points out that more than twice as many late-model used vehicle buyers in the U.S. find the vehicle they purchase through the Internet than through both newspaper and magazine classified ads combined.5 Dealers that have

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focused more attention on multichannel communication strategies are beginning to reap benefits, with an increasing number saying their Web activities have improved sales and extended their trading range.

The maturity of the used car market varies considerably according to country, and geographic proximity does not necessarily result in similar used car markets. It was initially hypo-thesized that the markets in Canada and the United States would be similar to each other and different from the French and German markets. However, in many cases these relationships did not hold and surprising patterns emerged. Each national market has its own peculiarities, which are a combination of socio-cultural, economic and historical circumstances. For example, the used-to-new ratio is similar between France and the U.S, with Canada being surprisingly low.

The most important success strategy in the used car business may be the development of trustinducing initiatives such as certified used vehicle programs. These programs provide the best protection against channel competition and allow dealers to improve margins significantly while offering an additional source of revenue for OEMs. In the U.S., where the certified vehicle market is strongest, sales of manufacturer-certified vehicles have more than tripled between 1997 and 2006, totaling approximately 1.5 million units in 2005. Other countries are moving in this direction as well.

Franchised dealers are in a strong position to benefit from growth in the used vehicle market, supported by OEM involvement in marketing and certification programs, access to high-quality off-lease vehicles, online inventory pooling and a more professional image in the mind of the consumer. In the United States, franchised dealers earned higher gross profits on used vehicle sales than independents,7 had the highest closing ratio (with 44% of visitors making a purchase, compared with just 27% for independent dealers),and benefited from significantly greater customer loyalty,9 with more repeat customers across all vehicle age groups.

Used and new vehicle sales are interrelated and complementary; both are a function of dealer excellence. Successful dealerships end to have strong sales in both the new and used vehicle

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departments. An American study found that new vehicle sales per dealer correlated positively with used vehicle sales, despite the counter-cyclical nature of the used car business

Management of new car incentives is critical to ensure profitable used and new businesses. With the increase in the quality and image of used vehicles and the popularity of certified programs, late-model used cars are increasingly becoming a substitute for new vehicles and vice versa. As a result, incentives in the new vehicle market act to depress used vehicle prices, lowering residual values and new vehicle sales prices and reinforcing the incentive cycle. This impact is particularly pronounced for latemodel used vehicles and for more expensive (and image-conscious) market segments.

Greater professionalism will increasingly characterize the international used vehicle market over time . Although less professional players can survive in the used car business when the sales cycle is long and purchase quantities are small, eventually the cream will rise to the top. This presents a tremendous opportunity for automotive companies.

Objective of the Study

The research objectives of this study are jotted down below To understand the growth of used-cars segment in the Indian auto industry in recent years o o In relation with the new-car segment In isolation

To study the organized and unorganized formats of used-car industry in Indian auto sector 29

o o o o o

Players Involved Business Models Marketing Strategies Competitive Scenario (Inter and Intra Format) Internal and External Drivers and Challenges

Consumer perception about the used car industry o o Customers take on used-car segment and services Comparison of perception for organized and unorganized format

The study is aimed to understand how the basic business model for organized format of used-car industry is different from the long-time incumbent unorganized format. This will help us understand two specific pointers How are the organized format players trying to woo customers from the unorganized players which still hold the major chunk of the customer transactions? How the unorganized format players are preparing and adapting to challenge these new-found competitors? The research is also expected to reveal difference in market and consumer requirement perceptions among the organized and unorganized format players The study is also expected to answer questions related to business strategies and models of different players inter and intra format The second part of the study is to find out how consumer perceives the overall used-car segment industry The study will help to establish how the two formats fare against each other in consumers perception

Scope of the Project

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The project has been taken up to study only the passenger car segment of the Indian used-car industry

The project will study only the brick and mortar format of retailers though, e-auction retailers will be cited during the findings and analysis

For organized format, though an exhaustive list of players will be mentioned, detailed analysis will be conducted only for the top three players

The project is taken up to understand the used-car industry scenario in India, though the data collection has been done primarily from the Delhi region and the insights hence generated will be projected instead of being actual ones

The consumer perception survey and data collection will be used to generate insights about the consumer impression of the used-car industry and hence the insights generated will be qualitative and descriptive

The study of competitive scenario and business model for organized and unorganized formats is based on personal interaction with dealers and hence direct insights generated are employed in data analysis

Limitation of Project
A large number of dealers are very apprehensive about sharing information for various reasons

The boredom and lack of attention that sets in among the respondents while answering at the last leads to inconsistent answers a few times

Sampling error: the research include a sample size of 70 customers which is not enough to determine the actual consumer perception. However, around 15 responses from the Dealer side were good enough to create a common perception though with every new response there is an isolated case in some or the other parameters and hence it is impossible to bring in every single detail with the number of responses.

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Since it is not a census survey there is always a chance of error while extrapolating the results of a sample study over the population especially in those researches where the qualitative aspects are concerned. So it is always doubtful to map the qualitative aspects using a quantitative measure.

The study was limited to the geographical region of Delhi.

Questionnaire Design for Data Collection

The Data collection was undertaken with the help of two different questionnaires, one each for the Dealers and customers. The research was conducted out as primary research as well as secondary research. The questionnaire for the dealer had 28 questions. The questions were mainly divided into following blocks Business Model How does the particular dealer runs his/her business o Procurement, Finance, Stock Maintenance, Sales, Vehicle-types

Dealer specific competitive strategy o Strengths, Weaknesses, Competition, Challenges

Respondent perception o Organized versus Unorganized

Customer Profiling o Information about the customers

Due to the comprehensive nature of the survey, all of these surveys were conducted as personal interviews. The questionnaire for the customer had 15 questions about the customers perception on the used-car purchase and the affiliated format for buying used cars. A couple of questions also tries to find out the level of research and preparations a customer does before visiting dealers for car-purchase. 32

These questionnaires were personally administered as well as distributed electronically. The questions started with easier questions on personal information Journals, research reports, articles and news releases were also reviewed during the course of the project in order to gain insights.

Research Process
Research process was carried out in multiple levels Primary Data

Collected from Dealers and Customers Two separate survey questionnaires used

Personally Administered - Collected by getting questionnaire filled by the respondents.. The respondents were contacted at Karol Bagh and Rohini area of New Delhi. Karol Bagh boasts the biggest auto market in the NCR region and Rohini has a few shopping areas where a lot of used-car dealer are based at hence the two areas were chosen for personally administered surveys (also included informal personal interviews with a couple of dealers). The data was collected by interacting with a mixed set of respondents of the two surveys. Mainly Dealers (Organized and Unorganized formats) and few customers were part of the data collection exercise. Customers were the ones who were either with the dealers or scouting for a dealer for purchasing the used-cars form the dealers present there. This gave a highly relevant data set for the study since the customers were actually going through the decision-making cycle for the used-car purchase. A total of 21 responses were collected by this method. The target population represents the Delhi regions. The customers were from different professional backgrounds. The samples were selected by simple random sampling procedure

Electronically collected Collected by getting questionnaire filled by the respondents online. The respondents were asked to fill survey questionnaire online. The data was collected from audience in various age brackets coming from different economic and social backgrounds on the idea of used-car purchase and the corresponding format available to purchase from. A total of 72 responses were collected by this method. The 33

responses were restricted majorly for people who have bought or are prospective buyers of a vehicle in order to keep the data set as relevant as possible. The target population largely represents the Delhi regions. The customers were from different professional backgrounds and age groups.

Non-probability sampling was employed for the primary research methods. Two major types of non-probability sampling techniques were used to conduct this research. The rationale for choosing the given two techniques was due to the different nature of research undertaken.

Convenience Sampling based on convenience to send questionnaire and receive responses electronically. Due to the very channel, internet, the sampling size is a bit biased and most fo the respondents are in the age group of 20 to 35. However, we have tried to reach to a few respondents beyond this age group too.

Judgmental Sampling has been used to collect response from the people who we fee are most suited to respond to the survey. Hence, dealers and customers were tried to be reached in areas which are known for their motor business. Karol Bagh and Rohini in New Delhi.Also, more often than not those users were send the questionnaire which we though were right respondents for the survey, personally or electronically.

Secondary Research Collected from secondary resources like o o o o o o Research Reports Journals Articles, Blogs and Reviews News content Press releases Official decks from organizations

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o o

Companies official websites Association and Agency websites

Details are mentioned in the References section The given below theoretical framework was applied while conducting the descriptive research:

Statement of the problem Identification of information needed to solve the problem Selection or development of instruments for gathering the information Identification of target population and determination of sampling Plan. Design of procedure for information collection Collection of information Analysis of information Generalizations and/or predictions

Hypothesis
Following simple hypothesis are laid down for the second part of the report which is about finding the consumers perception about the used-car purchase and formats offering used-car for sale. These will be tested for passing in the later sections.

Hypothesis 1
Tight Budget is the primary reason for people to buy used-cars
Buying a car is a big decision for most of its customers. The qualitative and quantitative risks associated with a car purchase are aplenty. Through this hypothesis we try to find out if the decision to buy a usedcar which may have social implication for customers usually come from tight budgets

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Hypothesis 2
Customers do extensive research before visiting a dealer for a car purchase
Due to the significance and risks associated with the product the amount of research that customers take up is expected to be extensive to mitigate risks associated

Hypothesis 3
People are well aware of the organized format of used-car sale industry
Organized format for used-car has been in India for many years now. Hence, it must have been able to win some share of mind recall and awareness by now. With this hypothesis we check if people are aware of organized format being present in India for used-car sale.

Hypothesis 4
Price offered is the most attractive feature of a seller for customers decision making
Each dealer in each format has its own usp and drawback. We aim to check by this hypothesis if the price offered is the most important feature of a dealer to making him more attractive than other dealers to the customer. This question tries to unearth what is the most important trait a dealer must posses in order to attract more customers and close more number of deals

Hypothesis 5
Used car buyers are usually unhappy with their decision
Buying a used car is always a risk and many times its possible that the purchase decision can turn out to be a failure if the car does not meet the customers expectation. Through this hypothesis testing we will check If the customers are generally unhappy with their decision of buying a used car.

Hypothesis 6
One time used-car owners do not prefer to buy another used car again A used car comes with its own advantages and disadvanatages. There are chances that the car purchase may not do well for the very reason that it was not checked properly before purchase
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and closing the deal. This means that in such case the customers who have purchase the usedcar once may not be up for buying a used car again. We test this condition with the help of responses collected from the customers who own used-cars.

Analysis and Findings

Organized Format

The organized format in used-car industry is a rather new entrant. Before it started its game, the usedcar market in India was left to unorganized players. 60% of the total volume was dealt with by the acquaintances or people who knew each other. This is called customer to customer format. The remaining 40 % was managed by the local brokers and agents who worked on commission and got the deals done between sellers and buyers. Maruti was the first player to enter into the used-car market in the year 2001 for organized format. There are multiple reasons for the market leader in passenger vehicles category to jump into used-car foray which also attracted the other OEMs soon. Reasons for OEMs and other players to to enter into the used-car space of auto industry Expand the consumer base beyond the existing ones which have bought a new vehicles o The consumers who have bought the new car are the existing base of the company, but when the company is also present in the lower segment of used-car industry, it gives it an opportunity to expand it user base which will help it when these customers will upgrade to a newer more expensive vehicle since they would already be connected to the brand Fast growing market as compared to the new-car market o The recent data shows that the number of used-cars sold per annum has crossed the number of new cars sold. The new-car market is in slump with almost all major OEMs facing loss in volumes and revenues. At such a time having a related avenue like usedcars seems to be golden opportunity for the OEMs to concentrate and build upon. A

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total of 2.5 million used-cars were sold in 2012 as against 2.2 million new cars.The market is valued at 52000 crores Rs and is expected to be be able to sell 7.7 million units by 2017(Source: http://timesofindia.indiatimes.com/business/india-business/Despiteslowdown-used-car-sales-stay-in-top-gear/articleshow/18585174.cms) Leverage competencies and expertise o Being in the new car business gives OEM great understanding of the consumer perceptions and buying behaviour in terms of cars. Also, these OEMs are settles with their exising distribution models with the franchisee or owned outlets to sell their vehicles. This means that the existing expertise and competencies can be very easiy employed to achieve success in the used-car domain of the auto industry. Hedging against poor market run o These OEMs usually have a lot of distribution capital invested in the market and hence when the market is not doing well like in current state, they can help get number through the secondary channel of used-car sales. Under severe profit pressure, such a move may bring much needed volume and revenue Controlling the residual or resale value of the vehicle o Getting into the used-car business also ensure that the OEMs can enhance their vehicles residual value by offering higher prices for their pre-owned vehicles in promotional or exchange events and sell their new vehicles in return. These pre-owned vehicles are then sold at premium price hence improving the resale value over a due course for the brand. In turn, higher pre-owned vehicle prices usually increases the sale of new cars since the difference on price point is not substantial. Higher commission for dealers make them take up the cause of OEMs easily o Since a used-car can gives a profit of 10-20% to dealer as compared to what is earned on a new-car sale, which is between 2-5%, it is easier to build partnership with dealer on this format. This also maximizes the utilization by a dealer of its distribution network Allowing multiple price-points for car manufacturers

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An entry in used-car segment means that the OEMs will have an entry to offer to consumers at lower price-point and hence it can be looked upon as an ultra low category for some othe car manufacturers who do not sell vehicles in the range of say 24 lacs since the vehicles they will offer may be prices a tad higher than that. For example, the lowest priced offering of Hyndai is Eon at 3 lacs and hence it cannot cater to a segment looking for a vehicle in 1.5 to 2.5 lacs range. Hence, a pre-owned car coming from a Hyundai owned or franchisee showroom will allow customers to have entry point to Hyundai brand at a much lower level

Used-car Industry players in Organized format

Due to the reasons mentioned above, a lot of OEMs and non-OEMs have forayed into the used-car segment of the auto industry. Following is the list of some players in the used car segment Brick and Mortar o o o o o o o o o o o Maruti True Value - OEM Mahindra First Choice - OEM Advantage Hyundai- OEM Tata Motors Assured- OEM Auto Terrace (Honda) - OEM Toyota U Trust- OEM Das Welt Auto (Volkswagen) - OEM BMW Premium Selection- OEM Audi Approved Plus- OEM Proven Exclusivity (Mercedes Benz) - OEM Car Nation- Non-OEM

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Online o o o o o o Carazoo.com Carwale.com Gaadi.com Cartrade.com Cardekhio.com Carsalesindia.com

OEMs in used-car Industry

Maruti True Value Maruti ventured into the second hand car market in 2001. It was a move keeping in mind the future growth prospects. Maruti wanted to further increase its consumer base. Not by just targeting the new customers but by also capturing the existing ones from its competitors. It was a strategic move on Marutis part to enter the second hand car market. The rationale behind this move was that it can attract more customers by increasing the resale price of its car. And thus Maruti True Value was born. Maruti True value has within a decade changed the dynamics of the business and has forced players like TATA motors and Hyundai to start their own second hand car businesses. Maruti has been able to establish itself as the dominant player mainly due to its emphasis on customer satisfaction. This case study looks in the strategies and processes that have lead to Marutis success As quoted by Hindu in 2001 when Maruti started its venture into the used-car industry The preowned cars business is being introduced under the sub-brand name `Maruti True Value' and is aimed at catering to customers who are both first-time car buyers and those who are looking to upgrade themselves to a passenger car in a higher segment. MUL is also hoping to retain its customers by offering a range of cars, resale and financing options all under one roof. (Source: http://www.hindu.com/businessline/2001/10/19/stories/021907z7.htm) Maruti True Value features

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India's largest certified used car dealer network 358 outlets in 210 cities and growing All car related services under one roof

As a mark of confidence, and to provide reassurance to customers, every vehicle bought under Maruti True Value is inspected and certified by Maruti Engineers and the Car carries a one-year warranty and three free services. Convenient finance options are also offered to buyers of Maruti True Value cars. Source: http://www.marutitruevalue.com/AboutUs Maruti True value follows a franchisee model. It started its service from October 19th,2001 in Banaglore. Maruti True Value Business Operation Model MV accepts cars which are not more than four years old (in certain circumstances older than that) or the ones which have not run for more than 60000 kms .Cars with more than two ownerships are not accepted by MTV. Once the car satisfies the above criteria, a team of experienced engineers from Maruti who are available at Maruti True value showrooms will conduct a standard 120-point check of the vehicle brought to the showroom. The documents of the seller are also checked for any irregularities. MUL has trained it s staff at the select dealer outlets to handle its pre-owned cars business. The engineers at the True Value counter are expected to adopt a transparent and fair evaluation process to ensure that the seller gets the right price. The outlet will also offer finance options to the customers, to enable the second-hand car seller to purchase a new car of his choice. Consequently, the seller will have the option to be paid in cash, or get another True Value car in exchange or even a new Maruti car in exchange. After this, the purchased used car is readied for refurbishment. Using Maruti Genuine Parts, technicians at the True Value outlet will refurbish the car, which will then be offered for sale. For the buyer of a second hand car, MUL is going a step further in offering a one-year warranty and three free services along with the refurbished car. Again, finance options are being offered for the True 41

Value car, which will be certified by the compan y after allowing the potential buyer an opportunity to personally evaluate the car. Source: http://www.hindu.com/businessline/2001/10/19/stories/021907z7.htm, Corroborated by the personally administered survey by Maruti True Value executives at Rohtak. Key advantages to seller and buyer Stringent Quality checks at multiple test points o 120 points check by experts

Transparent and fair price evaluation technique o Standard technique to price a particular car with a fixed cap, lower and upper on the car and model (make)

Warranty o Each car comes with a one year warranty and a customer is also eligible for 3 free services at Maruti service centres

Financing Options o In order to help its customer with financing the Maruti True value encourages its dealers to have relationship with banks and lending institutes so that financing options can be made available to its customer. The process is also simplified making the average time for laon sanction two days as compared to four days in other showrooms.

Post sales follow up (PSF) o This is an innovative feedback and follow-up approach adopted by Maruti True value. Once the vehicle is delivered to the customer, the PSF happens at multiple. It first happens after 72 hours of delivery to find out the feedback of the dprocess and delivery that the customer has undergone. Then the feedback is requested for the vehicle after 21 days of the delivery. The last customer call happens after 60 days of the vehicle delivery.

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Franchisee follow-up The sales executive associated with a particular account handles a group of customers and follows up with them and guides them in case there are any queries.

Maruti True Value Dealer information A second hand car at maruti true value will cost 10,000 15,000 more when compared to other players in the unorganized sector. 250-300 new cars are sold by Rana motors, the Maruti True Value Dealer at Jhandewalan are in Delhi, as compared to 40-50 old cars Maruti Udyog Limited take 15% of the franchise profit. There are a lot of repeat customers, who sell their old car to true value and buy another car from them Rana motors have consistently outperformed other True Value franchises especially in customer satisfaction. They have received multiple awards for providing outstanding customer experience.

Survey Findings (i.) Business Model

Business model How do you procure vehicles for sale How do you finance your procurements How do you manage stock-keeping How much is spent on pre-purchase service How is servicing managed Who pays the cost of servicing Average number of vehicles sold a month Commision type Average Transaction cost Financing options Average running of vehicles being sold Average running years of vehicles being sold

Owners approach us Buy and own the vehicle Owned space 5%-10% of Quoted price Own Mechanics Self More than 30 Fixed 1.lac - 3 lacs All cash / Financing help from Bank Less than 40000 kms 2 years - 6 years

(ii.) Competitive strategy (Dealer specific) 43

Competitive strategy(Dealder specific) Trust(Reliability) Stock Customer focus Variety Brand Name Trust(Reliability) Trust(Reliability) Unorganized Stock/Variety maintenance

Rank these based on their importanceto attract (Key success factor)

What is your USP against other Organized players What is your USP against other Unorganized players Who is your immediate competitor Challenges/Threats faced

(iii.) Organized versus Unorganized

Respondant Perception Perceived Position of Organized

Strengths and Opportunities for Organized payers in this market Challenges and Threats to Organized players in this business What are the weaknesses of Unorganized players What are the major differentiating factors between organized and unorganized playersRank in order of importance

Good Long-term planning Customer Focus Available Funds Price point difference Relability perception Stock Availability Reliability Price Customer focus

(iv.) Customer Profiling

Customer Profiling Age - 25 - 35 Working Professionals Businessmen Students Trust Price

What are the ideal customers for the given segment

What factors you think are most important for customers for a purchase How would you rate the preparedness(prior research, awareness, knowledge) of a customer before buying a vehicle Good

Mahindra First Choice Wheels Ltd Mahindra First Choice Services, a wholly owned subsidiary of Mahindra & Mahindra Ltd., is a chain of multi brand car workshops across major cities in India like Bangalore, Nasik, Hyderabad, Mumbai, Pune, Surat, Vapi and Chennai. It is Indias largest multi-brand certified used car company which sells high quality used cars. It has 223 outlets in 125 cities in India. Mahindra First Choice Wheels Ltd provides

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warranty in the form of CertiFirst & WarrantyFirst. The company sold 34,000 cars last year and expects to sell around 50000 vehicles in the coming year. Source: http://articles.economictimes.indiatimes.com/2012-10-08/news/34323136_1_car-market-eauction-mahindra-first-choice-wheels The company was established in 2008 and aims to offer a world class car servicing experience in India at value for money prices. The company employs well trained technicians who can cater to the various servicing needs of multi-brand cars The company has been growing at a rate of 30-40% in the last 5 years and aims to open upto 500 outlets by 2015. The company also claims to see 1 car every four minutes and hence is towards making the organized used-car industry even more professionally run one. MFCL Business Operation Model MFCL accepts cars from just Mahindr stable but from other brands as well. This is in line woth the business strategy of MFCL to be the biggest and most efficient multi-brand retailer in the country. MFCL accepts cars which are of decent quality and are not involved in any legal issued. MFCL is especially cautious about accidental vehicles and does not accept vehicles which have any history of being involved in an accident. A though check is performed about the owner and vehicles to detect this. Cars with more than two ownerships are accepted only with additional health check-ups of the vehicle and owners history. Once the car satisfies the above criteria, a thoroughly trained engineer is bestowed with the task of conducting quality check-up of the vehicle. A set number of tests are conducted on the vehicle and its parts. 118 checks are performed before the vehicle gets ok from the quality check-up. Once the quality is approved, the documents of the vehicle and owners possession are analyzed to look for any issues. After the vehicle gets node from the above processes, the vehicle is bought or consigned from the owner and kept at MFCL outlet. But this does not happen before a refurbishment of the vehicles to make it not just acceptable bur also attractive for prospective customers.

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For the buyer of a second hand car, MFCL helps him by offering him loan options though various banks. Mahindra First Choice also has retail finance relationships with major banks and NBFCs in the country. For helping car consumers buy their dream cars through loans, Mahindra First Choice has tie-ups with leading companies like HDFC BANK, MAHINDRA FINANCE. MFCL advantages Mahindra First Choice claims to offers several advantages, including quality assurance, safety and a hassle-free driving experience. To give complete peace of mind to the used car buyer, the company has recently launched two new Warranty products named WARRANTYFIRST and CERTIFIRST. Mahindra First Choice offers several advantages, including quality assurance, safety and a hassle-free driving experience. To give complete peace of mind to the used car buyer, the company has recently launched two new Warranty products named WARRANTYFIRST and CERTIFIRST

Source: http://www.mahindrafirstchoice.com/why-mahindra-first-choice-wheels.aspx http://www.mahindra.com/News/Press-Releases/1351786469 http://www.mahindra.com/News/Press-Releases/1358859561

MFCL Autobid (e-auction platform for Mahindra and Mahindra) Recently MFCL announced that it has sold one lakh vehicles through its Autobid auction platform (formerly called eDiig). The platform has conducted nearly 7,500 auctions with over 6,500 buyers across nearly 900 locations, making it the leading used vehicle b2b platform in India. MFCL Autobid Advantages Transparency 46

End-to-end analytics to our corporate and dealer customers Value added services Flexibility

The MFCL autodig is an attempt by Mahindra to align with its bricks and clicks hybrid model by the used vehicle industry. Mahindra First Choice Wheels claims that it is already number one in the e-auction market with 35% of the e-auction space. They have acquired a group of young techies who are doing e-auction as part of MFCL. Source: http://www.mahindra.com/News/Press-Releases/1360845806

Survey Findings (i.) Business Model

Approach Owners Owners approach us Consignment way Buy and own the vehicle Rented space Keep with owners 5%-10% of Quoted price Own Mechanics Leased mechanics Self Between 21 -30 Fixed 1.lac - 3 lacs All cash Financing help from Bank 40001-70000 kms 2 years - 6 years

How do you procure vehicles for sale

How do you finance your procurements How do you manage stock-keeping How much is spent on pre-purchase service How is servicing managed Who pays the cost of servicing Average number of vehicles sold a month Commision type Average Transaction cost

Financing options Average running of vehicles being sold Average running years of vehicles being sold

(ii.) Competitive strategy (Dealer specific)

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Competitive strategy(Dealder specific) Stock Pricing Trust (Rliability) Variety Brand Name Trust(Reliability) Variety Organized Stock/Variety maintenance

Rank these based on their importanceto attract (Key success factor) What is your USP against other Organized players What is your USP against other Unorganized players Who is your immediate competitor Challenges/Threats faced

(iii.) Organized versus Unorganized

Respondant Perception Perceived Position of Organized

Strengths and Opportunities for Organized payers in this market Challenges and Threats to Organized players in this business What are the weaknesses of Unorganized players What are the major differentiating factors between organized and unorganized playersRank in order of importance

Good Long-term planning Customer focus Available Funds Price point difference Limited Options Relability perception Reliability Price Customer Focus

(iv.) Customer Profiling

Customer Profiling Age - 25 - 35 Working Professionals, Businessmen, Students Male:Female::0.8:02 Trust Price Maintenance cost

What are the ideal customers for the given segment

What factors you think are most important for customers for a purchase How would you rate the preparedness(prior research, awareness, knowledge) of a customer before buying a vehicle Good

Advantage Hyundai Hyundai Motor India Ltd. started its certified used car program under the brand name Advantage. The mission for this initiative was to give good quality used cars to Indian Customers. Vehicle are certified by Hyundai Engineer using 147 check points and comes with Hyundai Warranty upto 1 year/20,000Km 48

(whichever earlier from the date of delivery) & two free services Through this program customer is assured of Trust, Transparency, Convenience and Peace of Mind. Quality checks Every Hyundai car that is sold under "Advantage certified pre-owned car program" goes through 147 quality checks. Qualification Checks Area Check Points

Vehicle Age Mileage Integrity Structural Damage

Not More Than 10 years old Not more than 1,00,000 KMS driven Free from all legal issues No original welding should be damaged.

Under hood / Engine Compartment Inspection Passenger compartment Inspection Under Body Inspection Exterior/ Body Inspection Road Test

Hyundai Certification process 147 Quality Checks o o Every car is checked for quality & documents before buying Car meeting Hyundai Standards are sold under Hyundai Advantage Brand

Refurbishment o Refurbishment is done at the state of art Hyundai Workshop by Hyundai Trained Technician as per Hyundai standards 49

Refurbished using Hyundai genuine parts only

Inspection & certification o o Inspection is done by Hyundai Advantage Engineer Certificate & Owners Manual Signed by Hyundai Advantage Engineer

Sales & Finance o o Certified cars are sold with Hyundai Warranty of up to 1 year & 2 Free Services Attractive interest rates & finance option available

Source: http://advantage.hyundai.co.in/certification-process.asp

Tata Motors Assured Tata Motors Assured is the pre owned vehicle brand from Tata Motors Limited, Indias largest automobile company. These are the offered services under this platform Buying and selling pre owned cars. Exchange your existing car with new/ used Tata vehicle. All services under one roof.

Tata Motors Assured cars are handpicked units carefully refurbished in Tata Motors dealers modern workshops by expert technicians. Moreover, each certified category car finally undergoes a stringent certification done by Tata Motors engineers. The Tata Motors Assured certified car brings ultimate assurance of reliability and good ownership experience. TMA also offer free assessment for customers existing cars should they be willing to sell/ exchange it . The assessment is done scientifically using a special assessment sheet. The prices are arrived based on the car condition and price matrix designed by TMA. Eligibility requirement for Tata Motors Assured Certification: Only Tata vehicles are certified 50

Shouldnt be more than 7 years old Maximum mileage 1,20,000 Kms Shouldnt have been owned by more than two people Shouldnt have met an accident, resulting in structural damage Shouldnt have been used in Taxi/Commercial applications

Source: http://www.tatamotorsassured.com/ Thought Honda, Toyota, MBA, Mercedes, Audi and VW are also present in the use-car segment but the presence is very small, though growth is expected to come with expansion and long-term strategies for used-car businesses.

Non- OEMs in used-car Industry

CarNation Carnation Auto is an initiative by Mr. Jagdish Khattar, with a vision of developing Indias largest independent multi-brand automobile sales and service network. Carnation provides complete car care solutions for almost all brands, starting from standard servicing, mechanical repairs, body repairs, accessories, insurance, used car sales/purchase, car exchange, and also doorstep service through a chain of workshop on wheels. In an effort to provide total auto care to its customers under one roof, Carnation has tied-up with leading names in the automobile industry. Tie up with 3M & Gard X are for value added services, Castrol for lubricants, Bridgestone for tyres and Asian PPG & Akzo Nobel for paints. By adopting world-class equipment and IT systems we have been able to implement thorough transparency in the system while enhancing the quality of service in all our processes. Carnation has implemented SAP Dealer Business Management suite in India. Carnation Auto already has 24 Auto Solution Hubs operational across India, one each in Ludhiana, Gurgaon, Karnal, Jalandhar, Chandigarh, Surat, Jaipur, Sahibabad/Ghaziabad and Kochi; two each in 51

Pune, Chennai and Noida, three in Mumbai and four in Hyderabad. Carnation already has over 2000 employees. CarNation advantages to sellers Right price calculation in the most objective manner No hidden costs or commissions charged by carnation Full payment through cheque or draft within 48 hours Attractive exchange offers Assurance of choosing the right owner for the car

Carnations systematic vehicle appraisal process and scientific pricing ensures that the customer gets the right price all the time and all concerns related to documentation are taken care of. Carnations selling process Carnation has trained evaluators to check various factors that affect the price of the car like age, mileage, number of ownerships, condition of various systems of the car like engine, transmission, interior, exterior, etc. After checking the above factors, they verify documents like RC, Insurance, service history, etc and offer the right price to the seller. Once a seller goes to the carnation, a trained executive completes the following documentation from the seller documentation kit:

Transaction related documents: Sale Letter where the amount paid for the car is mentioned Finance & Insurance related documents: NOC / Form 35 from financier, Insurance Transfer document.

Transfer related documents: Various documents are involved like Form-28, Form-29, Form-30, etc. based on the nature of the transaction.

Once the documentation is complete, the payment towards the purchase of the car is processed by carnation and the full payment is made to the seller by Cheque or Demand Draft within 48 hours. 52

Pre-owned cars certification Every pre-owned car that comes to Carnation is segregated into Certified Cars or Value Cars based on the make, age, mileage, number of owners, fuel type, condition, etc. Only certain make/models that are up to 7 years of age, not exceeding 2 ownerships and 80,000 Kilometers, and good condition vehicles (Non Accidental, Non Rusted, Non Flooded with no major defects) are certified by carnation. Further, the cars are reconditioned at multi-brand workshops using genuine parts. Then the designated service engineers inspect the cars and certify them, only then these cars are sold to the customers wth the Carnation Warranty. Carnation offers 2 free services and up to 1 year Engine and Gear Box warranty on all its certified preowned cars. Each Carnation Certified car also comes with a system generated Certificate and Free Service coupons that can be availed across all Carnation HUBs in India. It also offers it s customers a 6-month Carnation Roadside Assistance along with every Certified Car, which is a 247 break down rescue program which provides prompt service to its customers. 160-point check-up At Carnation, every car is put through a stringent 160-point check for various systems including engine, transmission, brakes, clutch, suspension, steering, electrical, heating/ AC system, body, documentation, etc. to ensure that the reliability & integrity of the vehicle and the documentation are not compromised.

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Carnation Advantages for Buyers

The assurance that the car is non-accidental & non-flooded Clean documentation Thorough reconditioning at state-of-the-art workshops using genuine parts Warranty up to 1 year and 2 free services 24X7 On Road Assistance Convenient finance facility through HDFC Car loans, Kotak Mahindra & Shriram City Finance

Financing options for customer Carnation have tied-up with 2 leading banks HDFC & Kotak Bank as well as Reliance Capital & Shriram City Finance to provide easy and convenient finance facility at attractive interest rates to all car buyers. Source: CarNation auto-solution website CarNation Pre-owned cars official website Dare.in article on Jagdish Khattar and Carnation 54

Forbes India Article on carnation's expansion and challenges

Survey Findings (i.) Business Model

Business model Approach Owners Through Brokers or agencies Owners approach us Buy and own the vehicle Consignment way Own space Road-sides/outside shops 5%-10% of Quoted price Leased mechanics Service center/garage (Dealer) Self Seller Between 21 -30 Fixed 2.lacs - 3 lacs All cash Financing help from Bank less than 40000kms 2 years - 6 years

How do you procure vehicles for sale How do you finance your procurements How do you manage stock-keeping How much is spent on pre-purchase service How is servicing managed Who pays the cost of servicing Average number of vehicles sold a month Commision type Average Transaction cost Financing options Average running of vehicles being sold Average running years of vehicles being sold

(ii.) Competitive strategy (Dealer specific)

Competitive strategy(Dealder specific) Stock Price Trust Stock Variety Reliability Service Stock Variety Organized Awareness Stock/Variety maintenance

Rank these based on their importanceto attract (Key success factor) What is your USP against other Organized players

What is your USP against other Unorganized players Who is your immediate competitor Challenges/Threats faced

(iii.) Organized versus Unorganized

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Respondant Perception Perceived Position of Organized Challenges and Threats to Organized players in this business Strengths and Opportunities for Organized payers in this market

Excellent Price point difference Awareness Customer relationship Integrated mechanism across Stock Funding Relability perception Reliability Price

What are the weaknesses of Unorganized players What are the major differentiating factors between organized and unorganized playersRank in order of importance

(iv.) Customer Profiling

Customer Profiling Age - less than 35 Working professionals, businessmen, Students Male:Female::0.8:0.2 Trust Price Stock

What are the ideal customers for the given segment

What factors you think are most important for customers for a purchase How would you rate the preparedness(prior research, awareness, knowledge) of a customer before buying a vehicle Good

Unorganized Format
Close to three-fourth of the used-car industry market is dominated by unorganized sector. According to a SIAM report, annual used- car sales could reach 5 million vehicles by 2015 and more than 9 million vehicles by 2020. Fast-growing pre-owned car. Among the unorganized sector, almost a third of card are sold by neighbourhood dealers. These are shops which buy and sell vehicles from people. These dealers usually do not own the vehicles. Most of the vehicles are kept by owners at these dealers to show to prospective customers. When a buyer approaches these dealers and chooses a particular vehicle, the dealer on finalizing the deal takes a variable or fixed commission from the seller and/or buyer. The commissions varies from Rs 3,000 upto Rs 10,000 for a car depending upon the car model, make, price etc. In our survey with such dealer following insights were generated on the business model, perception of used-car industry, strength and weaknesses of organized and unorganized sector in used-car domain and the visiting customers profile. 56

The survey questionnaire can be checked in annexure. The responses were taken during personal interviews with dealers of organized and unorganized format over a period of 2 weeks. Findings are as below The dealers in unorganized sector can be broadly segregated in two groups. o The well-funded bigger players who acts almost like the organized players but have some differences in respect to pricing, warranties, certificates and customer relationship. o The other group is comprised of typical small brokers who have exactly similar model with each other works as a cohort which has more similarities than differences in terms of business model, market perception and strategic focus

Higher-end dealers o Business model

For procuring vehicles, these dealers along with the ways established generally (approaching and being approached by customers), also get smaller brokers with car buyers and sellers along

The cars are usually procured on consignment as well as show-case basis which is similar to smaller brokers. Rarely does these brokers buy vehicles to sell

These dealers usually have a one or two another garages or warehouses where they keep the vehicles in stock

Almost 5% of expenses are bored by the buyer in order to ensure that these dealers keep their vehicles in their stock. This investment leads to a higher cost of the vehicles and hence buyers agree to this expense. Very rarely, they pay for the expenses

These buyers usually sell around 15-20 vehicles every month with the average vehicle cost being between 2 - 4 lacs 57

They have options of cash, exchanges and finance from banks for the buyers for financing

Mostly the vehicles sold are those which have an average running of less than 40000 kms and are 2-6 years old

Competitive strategy

High-end dealers keep variety and availability of stock as the top success factor while they duly value being reliable as an important factor as well

These dealers expects themselves to have an edge over organized dealers due to the personal relationship they are able to build with their clients which they think are very professional in case of organized format dealers

Recognizing that the biggest problem with unorganized dealers is trust and reliability, these dealers feel that since they invest time and money on service and quality of vehicles as well as on customer relationship they sit pretty against unorganized dealers on the parameters of better stock of vehicles and higher customer relationship

Unorganized sector is perceived as the biggest competitor due to the volume they handle and their higher approachability as compared organized format retailers

Organized versus Unorganized

Organized sector is not considered as a great challenge and its standing is said to be just fair in the used-car market at the present

Offering vehicles at a higher price (10000-25000 Rs more) than the ones being offered in unorganized market make them stand weak as many customers are not ready to pay that premium for the services and features being offered by organized dealers 58

Brand name and Available funds however are strong points for the organized players which help them offer wide service packages which is difficult to replicate for unorganized players

Price (in favour of unorganized) and Trust/Reliability(in favour of Organized) are major difference points between the two formats

Visiting-customer profiling

Biggest chunk of customers come from the age group 25-35 pointing toward a decreasing buyer age for cars. It also point towards the fact that at this age people want to own a four-wheeler, if not a new one, at least a pre-owned

Trust, price and model are top factors which are important for customers when then walk into the showroom or outlet

o o

Customer are well-equipped with information about cars and models Only 20% of the vehicles being sold are sold to females

Other dealers o Business model

For procuring vehicles, these dealers usually approach customers who they are aware of having vehicles that are to be sold. These dealers usually get into touch with the prospective buyers though personal or professional contacts. Buyers too approach these dealers which is again largely though acquaintances and personal relationships

The cars are usually procured on show-case basis which means that the seller keeps the vehicle at his own risk at these dealers and if the vehicle is finalized by a buyer, he ris informed. The final deal can happen with or without seller being present. In many cases, 59

the dealers inform sellers about a prospective buyer and ask them to come to the shop with the vehicle. Vehicles are never purchased or put in to consignment basis o These dealers usually keep vehicles around their shops. A few cases were found where a couple of dealers have rented a place commonly to stock their vehicles. They dont usually invest in place to stock vehicles. o Less than 2% is spent in pre-purchase expense to maintain profitability for the seller and hence a higher premium o These buyers usually sell less than 10 vehicles a month with the average vehicle cost being between 1 - 3 lacs o o They usually have options of cash and exchange of vehicles only Mostly the vehicles sold are those which have an average running between 40000 70000 kms and are 2-6 years old

Competitive strategy

o o

These dealers keep stock and prices as the major key success factors These dealers expects themselves to have an edge over organized dealers primarily due to the lower prices they offer for the vehicle and personal relationship they maintain

Interestingly, each of the dealer feel that he has a key advantage over his other peers on the basis of better customer relationship and Trust

Unorganized sector is perceived as the biggest competitor while getting hold of the right vehicle and being able to win trust of customers are major challenges for unorganized sector

Organized versus Unorganized

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Organized sector is not considered as a great challenge and its standing is said to be just fair in the used-car market at the present

Offering vehicles at a higher price (10000-25000 Rs more) than the ones being offered in unorganized market make them stand weak as many customers are not ready to pay that premium for the services and features being offered by organized dealers

Brand name and Available funds however are strong points for the organized players which help them offer wide service packages which is difficult to replicate for unorganized players

Price (in favour of unorganized) and Trust/Reliability(in favour of Organized) are major difference points between the two formats

Visiting-customer profiling

o o

Biggest chunk of customers come from the age group 25-35 Trust, price and model are top factors which are important for customers when then walk into the showroom or outlet, though the ranking may differ from dealer to dealer

o o

Customer are just fairly-equipped with information about cars and models Only 10% of the vehicles being sold are sold to females

Consumer Perception of used-car purchase in India

Hypothesis Testing
Hypothesis 1 H0 : Budget is the primary reason for people to buy used-cars 61

H1 : Budget is not the primary reason for people to buy used-cars

As seen from this multi-optioned frequency table generated for the various reasons as given by the respondents for buying a used-car, Budget appears to be primary reason with 46 respondents answering it as the primary reason out of the total respondents which were 79 in number. Also, each response was broken up into a single entity to reach to the total response list of 219. 21percent of these responses suggested budget to the primary reason of buying a used-car. Hence, the null hypothesis is accepted. Hypothesis 2 H0 : Customers do extensive research before visiting a dealer for a car purchase H1 : Customers dont do extensive research before visiting a dealer for a car purchase

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t(77) = 0.583, p=0.562 ; dof = 77 Taking the value of confidence interval as 95% and value of alpha being 0.05, the p value or the significance of difference is seen to be 0.562 which is more than the prescribed limits of 0.05 and hence the hypothesis is accepted. This means that most of the customers do extensive research before they visit a car dealer as part of the alternative evaluation of their decision making model. Please note that the responses are for the combination of new as well as used-car purchase event and hence no distinction is drawn in this question in particular. This questions was especially important due to the fact that the dealers perspective on customers preparedness for buying a vehicle elicited a response that deemed the preparation to be just fair, while here the customer believes that he is aptly prepared with the help of extensive research undertaken by him.

Hypothesis 3 H0 : People are well aware of the organized format of used-car sales H1 : People are unaware of the organized format of used-car sales

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Since the answers to the question were dichotomous, a frequency test was conducted to see the if the number of responses are clearly shifted towards one point. The cumulative percentage for variable one for aware was scored at 72.2 percent and hence clearly shows that the sample was largely aware of the use-car organized format segment. Hence, the null hypothesis remains accepted

Hypothesis 4 H0 : Price is the primary feature for attracting customer to a dealer H1 : Price is the primary feature for attracting customer to a dealer

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As we can see from the descriptive and frequency charts above, the total entries (multiple entries were allowed for users to be made during survey) have a mix of various factors that can be made the usp and hence the prime attractive feature for the dealer. However, unlike anticipated, price is not the most important feature which a customer look up to for valuing a particular dealer. As seen from the chart, Credibility of the dealer is the most important factor that the respondents have marked as the primary feature to attract them to the dealer. The highest percent has been taken up by the credibility of dealer while interestingly services being offered is the second important factor. These test results points towards a shift in user decision making process. Since the majority of respondents were those who have purchase or are planning to purchase a used-car, demand for better services and packages by the dealer comes as a pleasant surprise and a boost to business models of

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players in organized sectors since their usp is professional services to the customer, which seems to have become hygiene factors rather than motivational factors for users even in the used-car industry.

Hypothesis 5 H0 : Used-car buyers are unhappy with their purchase owing to higher post-purchase dissonance H1 : Used-car buyers are happy with lower post-purchase dissonance

t(79) = 5.494, p=0.000 ; dof = 78 With the value of confidence interval being 95% and value of alpha being 0.05, the p value or the significance of difference is seen to be 0.000 and hence is less than the p value. The null hypothesis in this scenario hence stands rejected. Qualitatively, this means that the used-car customers are not unhappy with their purchase. The responses suggest that the cognitive dissonance is not high in the used-car buyers. This may due to the subdued residual risk due to lower investment in case of a used-car as compared to an investment which can 2-3 times if the customer buys a new car. Used-car buyers are happy with lower post-purchase dissonance

Hypothesis 6 H0 : Used-car owners do not prefer to buy another used car again in future H1 : Used-car owners do prefer to buy another used car again in future

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t(34) = 5.494, p=0.000 ; dof = 34 The responses collected for this question were restricted to the respondents who have purchased a sedcar. This is done to have relevant set of users since with this question, the idea was to find out what does the owners of used-car think of the idea of purchasing another used-car as their next purchase. Interestingly, as the above chart shows, the owners were quite satisfied with their used-car purchase and were happy to opt for another old-car purchase in future. Quantitatively, the value of confidence interval being 95% and value of alpha being 0.05, the p value or the significance of difference is seen to be 0.000 and hence is less than the p value. The null hypothesis in this scenario hence stands rejected. Qualitatively, this means that unlike anticipated, used car owners are more than open to purchase another used-car. This may be for multiple reasons like lower post-purchase dissonance, lower risks involved in the purchase, levy to change vehicles quickly without losing a lot of money in the bargain since the resale value of used-cars are better than the new-cars and a new car in exchange may cost just a little over than the proceeds from the sale of the old-car. This gives a wonderful opportunity to the dealers to reach out to their one-time customers with deals they think will be well-suited for certain customers and hence try t get hold of a customer who might otherwise move to another avenue looking for a deal.

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Qualitative Analysis

Used-cars are not just bought by people who cannot afford new cars. More than a quarter of customers who own a used-car have an annual income of more than 9,60,000 pa.

Pre-owned car owners usually do not regret buying a used-car. The below chart indicate that 90% of its buyers are happy with the purchase

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Interesting things comes out when we analyze how much kms a vehicle can do before it loses its interest among used-car buyers. The below chart shows that most of the respondents believe that a vehicle which has run upto 60000 kms is still attractive to buy. However, when we go deeper and find out, how many of these actually own a used car and what is the perceptions of customer who owns or plans to own a used car, a different picture comes out. This means that though people may say that a used-car is acceptable till it has run for as much as 60000 kms, when it comes for them to buy (serious used car buyers and prospects), they prefer vehicles which are lesser run. This also means that the number is inflated due to respondents who either does not own a car or owns a new car.

Number of dealers which a customer visits depends upon the new or used-car he wants to purchase. New-car dealers or showrooms are usually single brand showroom hence a customer knows which manufacturers model he will own he buys car from a single brand new-car showroom. Also before buying a new car a customer has filtered out many manufacturers already and hence is partially aware of which manufacturers car he is going to buy. Hence, in this case the number of showrooms visited is less than that of pre-owned car outlets. Pre-owned car outlets on the other hand, offers multiple brands under one roof. Also, the biggest problem in pre-owned car dealers is the trust deficit and hence a customer wants to assure himself of a good deal before closing it, hence he prefers to visit many more outlets than what a new-car buyer visits.

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More than 72 percent of the respondents were aware of the organized format for used-car sales. The below chart shows brand recall for the players in the used-car segment. Maruti true value is far ahead of its competitors.

Following are the financing options which customers prefers and wants them to be available with their dealers to help them in closing a deal.

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Conclusion
Used-car industry has flourished in India in past few years in an extraordinary way. This sister-industry of the new-car sector has came a long way from selling a few thousand cars every year to the current situation when it is selling cars almost one and a half times more than that of the new car industry. The core reasons for this growth have been multi-faceted. Right economic environment has enabled a large chunk to earn, consumer and hence spend more. The rise of the middle-class and hence the overall income has been greatly responsible for this consumerism and the growth that has come by. Specific to the used-car segment, the growht

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Scope of Future Study

The project can be extended to study further the significance, challenges and growth drivers for the used-car industry. An extended study in detail can be conducted for all the players in the segment. o Brick and Mortar 72

Online

A study can also be taken up to closely segregated business models of individual OEMs, NonOEMs and Unorganized-format players

A strategy can be built up based upon inputs from the above pointers for making an entry into the used car format in organized segment. This can be for OEMs or Non-OEMs

Customer perception can be studied in detail to match it up with the challenges and opportunities that lies ahead for the used-car industry

The study can be extended to have dealers and customers respond to survey across geographies in order to have a consolidated view of the used-car industry across country

Individual players impression and perception among customers can be recorded to come up with the difference in demand and supply that exist in the market and recommendations can be made to close that

The study can also be extended to research in detail on how the perceptions differe majorly between the used-car buyers and new-car buyers. This will give an idea on how the exisiting strategies of OEMs who have experience in selling new-vehicles must be altered to meet the customers expectations

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References
Research papers Anatomy and Physiology of the used Car Business, Capgemini Consulting and Research Pre-owned car market in India A study of marketing strategies, International Journal of Science and Management, Krati Sharma The Pre-owned Car Market : Purchase Behaviour and Satisfaction of Customers, India Management studies Journal, Gagandeep Banga, Babita Kumar, Pratibha Goyal and Jasmeet Kaur

A study on consumer buying behavior for used cars, Institute of Science, Poonas Institute of Business, Dr. Shriram Shimpi Reports JP Morgan India Auto Industry, Jan 2013 JP Morgan India Automobile Sales Tracker, Jan 2013 Used car market on a roll, set to grow 11%, Globalaxis,, 2012 Public Documents Car Trade deck on used-car business in Inida, Vinay Sanghi, CEP Car Trade Indian Auto Industry, Suni Kakkar, General Manager (SCM), Maruti Suzuki Used-car Markeitng in India, Research on India, 2010 Understanding Certified Pre-Owned Cars, Keith Girffin Evolution of Indian Autocar Industry, Autocar Professional

Websites

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www.marutitruevalue.com www.advantage.hyundai.co.in www.mahindrafirstchoice.com www.tatamotorsassured.com www.cartrade.com www.carnation.in/ www.carwale.in CarNation auto-solution website CarNation Pre-owned cars official website News Releases as mentioned during the report

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Annexure

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