MAM

India on course to becoming a used car market: Droom’s Krishna Veer Singh

Droom has clocked a massive 260 per cent surge in sales in the aftermath of Covid.

https://www.indiantelevision.com/sites/default/files/styles/smartcrop_800x800/public/images/tv-images/2020/12/26/krishna-veer-singh.jpg?itok=SFnLENIN

NEW DELHI: The Covid2019 pandemic sank the automobile industry in India to abysmal depths this year. With the enforcement of lockdown, people retreated indoors, businesses and offices shut down, the streets were deserted; and auto sales plunged to zero in the month of April.

While the automobile market is desperately trying to rally and recover pre-Covid numbers, one category that has shown resilience in these troubled times is that of pre-owned vehicles. Growing at 6.2 per cent during FY16-20, it too was buffeted by the headwinds of the pandemic, but since then has witnessed a steady uptick in demand. Leading this segment are digital platforms that buy and sell second-hand cars and two-wheelers, which have logged manifold increase in online engagement and annual sales over the past several months.

One such company is Droom, a digital motorplace that claims to have captured 80 per cent market share of the automobile transactions happening online in India. The portal has clocked a massive 260 per cent surge in sales in the aftermath of Covid, along with a 175 per cent jump in traffic for new and pre-owned automobiles. Indiantelevision.com spoke to Krishna Veer Singh, president – marketplace, Droom to decode the recent upheaval in the used car business, how the platform is faring and what the road ahead looks like.

Singh started off by clarifying that while Droom is seeing unprecedented numbers now, it hasn’t all been smooth sailing.

“When Covid happened, we witnessed 90 per cent drop in orders within two months of lockdown. In June, we started seeing recovery even though we were far away from full recovery. Around August 2020, indicators like growth in traffic, leads and listings went up with huge numbers and we again achieved pre-Covid number of orders driven by two-wheeler demand. Also, we have achieved around 75 per cent of pre-Covid GMV by November 20,” he detailed.

As Singh pointed out, the resurgence of the automobile sector is led by two-wheelers and pre-owned cars. This is mainly due to a massive shift in consumer mindset: in the aftermath of the highly-contagious Coronavirus, public transport and ridesharing are no longer considered safe. However, the upswing in the desire for personal mobility has been compounded by the problem of limited means.

“With economic activity slowing down, people are more inclined towards lower-priced or smaller vehicles in personal mobility space which in turn has boosted sales of used vehicles. As a result, there is an increase in the demand for budget-friendly options like Swift, WagonR, Dzire, Honda City, i10, Scorpio and Santro, among others and two-wheelers,” he said, adding that these make up 70 per cent of total orders.

FY21 auto sales are estimated to be decadal lows, and the industry has yet to recover to monthly sales levels of new vehicles seen before the pandemic. But it’s a fact that the automobile sector had undergone considerable slowdown over the last 12-18 months, labouring as it was under the GST regime change, stiff competition from ride-hailing apps, general liquidity issues, and several other factors.

By contrast, the used car market is 1.3 times of the new car market, with the organised segment expected to register a CAGR of 22.79 per cent during 2020-25. Majority of the OEMs such as Maruti Suzuki, Mahindra, Hyundai and Toyota, and luxury car manufacturers like BMW, Audi, and JLR, have their own used car network. Online used car sellers have also reported good sales over the last few years. Government policies, for instance the reduction of GST rate on used cars from 28 per cent to 12-18 per cent, are also favourable – a key growth driver for the sector. Does all this portend that India is on the road to becoming a second-hand car market? Singh appeared to think so.

“Demand for used cars has increased manifold in the last few years. The economic slowdown caused by the pandemic has resulted in financial restraints which leads to an increase in demand for budget-friendly options of Rs 2-5 lakh and middle budget of Rs 5-10 lakh. Overall, 25,000 cars were sold this year,” he highlighted.

Post pandemic, the surge in sales has been powered, in main, by the top five to six metros in the country – Delhi, Mumbai, Bangalore, Hyderabad and Ahmedabad – and prospective customers are most interested in vehicles, germ shield and auto services, shared Singh. The site has clocked a 550 per cent jump in leads and an average MAU of six million over the last few months. An impressive feat, considering that 60 per cent of the traffic on Droom is organic.

The reason may be that apart from catering to vehicles, the platform has branched out into several complimentary ventures in the wake of Covid. These new endeavours were initiated after careful consideration of consumer needs and the rising hygiene consciousness among people. Droom now offers Contactless Commerce, an end-to-end contactless experience including online vehicle research, doorstep test drive and delivery, online documentation, and digital payments. The Jumpstart service was introduced in May to provide vehicle service at your doorstep.

Another big revenue driver this fiscal has proved to be Droom’s Germ Shield business. Not just limited to vehicles, the service has been extended to cover residences, offices and commercial spaces.

“Germ Shield is a separate P&L and currently driven by our proprietary tool, ECO, and its network. The technology is relevant to all kinds of surfaces and expanding to other categories like homes, schools, and commercial gave us an opportunity to bring more business, along with more awareness and adoption of the product utilising the same network of ECO services and without any additional capex,” said Singh.

All this doesn’t discount the fact that the used car market is a competitive space, with several players jostling for buyers’ attention. Curiously, despite commanding 80 per cent of the market share, Droom doesn’t really stand out. Its rivals, on the other hand, have greater brand recall on the back of their ATL campaigns. When asked about this dichotomy, Singh asserted that the brand doesn't believe in burning huge budgets on marketing. Instead, it has invested in building better solutions using technology and data science.

“We are trying to bring transparency, convenience, and trust by building the whole ecosystem around automobile buying and selling by building and enhancing proprietary tools such as OBV, ECO, History, Quick Sell, etc. Also, Droom is the only pure-play internet company while others offer offline services. We work simultaneously with dealers and sellers instead of holding inventory. Droom has built an entire ecosystem around used automobiles for the digital economy,” he elaborated.

The consumer uptake has been significant, particularly during the Dussehra-Diwali period this year. As families and friends met after a long time, and people thronged malls and markets for festive shopping, Droom registered a fivefold increase in bookings for germ shield sanitation services which offers antimicrobial surface protection service.

“This festive season, we have witnessed over 60 per cent peak in sales. In new vehicles, sales of cars have witnessed 60 per cent surge and premium cars accounted for 100 per cent growth. Two-wheelers also witnessed growth over 240 per cent and 25 per cent jump in GMV,” added Singh.

While the used car market, valued at $24.24 billion in 2019, is on an upward trajectory, it’s not without its own share of problems and shortcomings. Unorganised and semi-organised players take up most of the market share, leading to a highly supply-constrained market. Consumer-to-consumer deals still make up 32 per cent of the segment – not a good sign in terms of regulation and accountability. Financing and other value-added services aren't readily available in the used car business, which acts as a roadblock in customer engagement. However, recent growth through organised modes has been somewhat driven by cannibalisation of the consumer-to-consumer and unorganised channels – a trend that should bode well for companies like Droom.

“The biggest challenge is to maintain the organic traffic and eventually make growth sustainable. Going forward we will keep practicing our customer-centric approach and build the latest technological solutions to make the buying and selling experience of automobiles better and better,” he concluded.

Latest Reads

https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/wing.jpg?itok=Wh-vG4hW
Wing Communications to handle Advait Infratech’s PR mandate

Wing Communications has won the communications mandate for Advait Infratech—a Gujrat-based Infratech on Wednesday.

MAM PR & Communication
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/contract_logo.jpg?itok=IJMJHbXJ
Yardley London launches new campaign #Naturalfloralspa

On Wednesday, Yardley announced the launch of a new commercial for its all-new range of floral essence shower gels.

MAM Media and Advertising Ad Campaigns
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/myleeta-agawilliams.jpg?itok=dLvnsaLF
upGrad onboards Myleeta AgaWilliams as CEO – International

EdTech company, upGrad has announced the appointment of Myleeta AgaWilliams as CEO-International to spearhead growth across the APAC, EMEA and US regions. She assumed office in August this year.

MAM Marketing Brands
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/15.jpg?itok=6VXUoIYK
Dentsu Creative India names Sumeer Mathur as chief strategy officer

Dentsu Creative India has bolstered the strength of its strategy team with the appointment of Sumeer Mathur as chief strategy officer. Mathur will report to Dentsu Creative India chief executive officer Amit Wadhwa.

MAM Media and Advertising People
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/arshan_saha.jpg?itok=VYZPx5Am
GroupM APAC senior leadership rejig: Arshan Saha named Nexus APAC CEO

Mumbai: GroupM, WPP’s media investment group, has unveiled a roster of C-suite appointments in Asia Pacific who will lead the regional transformation of GroupM Nexus – the global performance organisation that unites the network’s performance talent and technologies into one single outfit. Arshan...

MAM Marketing MAM
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/endorphins_entertainment_0.jpg?itok=b133xRAV
Endorphins Entertainment bags PR Mandate for ZStack International in India

Mumbai: Endorphins Entertainment, an integrated communications agency headquartered in New Delhi, on Wednesday announced that it has won the PR mandate for ZStack International. It is a cloud computing technology vendor specialising in the research and development of cloud computing software and...

MAM PR & Communication
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/ds_group.jpg?itok=qlK2XPjG
DS Group launches first NFT on 93rd Founders’ Day with Grapes

Mumbai: On its 93rd Founders' Day, Dharampal Satyapal Group (DS Group) launched its first NFT in collaboration with the marketing firm Grapes. The group, which was founded in 1929, is celebrating its 93rd Founders' Day to commemorate an era of setting new standards and conquering new territories....

MAM Marketing MAM
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/17/yamaha.jpg?itok=0ePAsysS
Yamaha rolls out 'The Call of the Blue' version 3.0 campaign

Mumbai: Yamaha India has launched the 3rd version of its ‘The Call of the Blue’ campaign to elevate its image by intensifying its aspirational value through engaging customer-centric activities and launches.

MAM Media and Advertising Ad Campaigns
https://www.indiantelevision.com/sites/default/files/styles/340x340/public/images/tv-images/2022/08/16/promax.jpg?itok=4OhzL1V_
Promax India Conference and Awards 2022: Zee, Disney+Hotstar, Sony Liv bag awards

Promax India recently celebrated the 20th anniversary of its "Promax India Conference & Awards 2022," which recognized excellence in entertainment marketing and design.

MAM Marketing MAM