Automobile E-commerce – Changing face of Indian automobile industry

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With Rs 100 crore, Droom wants to tank up on ads

Droom, an online marketplace for used automobiles and auto services, plans to spend 100 crore on marketing, advertising and promotions this year, according to a top executive of the company.

“We want to increase the sense of pride and lower the anxiety in the mind of a customer when they plan on buying a used vehicle,” said Sandeep Aggarwal, CEO of Droom, which is present in 160 towns and cities.

eTailing India Thought Corner

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Automobile E-commerce – Changing face of Indian automobile industry

The Government of India has allowed 100% FDI in the automobile sector under the automatic route. The industry has attracted FDI $14.32 billion during the period April 2000 to December 2015 and has potential to generate upto $300 billion in annual revenue by 2026. Presently, Indian auto component industry revenue alone stands at $40 billion.

Blooming automobile e-commerce portal:

  • Over the years, buying and selling of automobiles has been a concern due to low trust segment along with other obstacles such as vehicle loans, insurance etc.
  • Again the market for used cars in India is very fragmented and unstructured, with almost 70% of sales being done by local dealers.
  • These dealerships are also not regulated which acts as a hindrance later in the process of used car purchase.

The new online e-commerce portals have come up in order to deal with such specific issues. In particular, the online auto classifieds and used car marketplaces have attracted VC investments of more than $250 million in the last couple of years.

India is the fourth largest market for automobiles in the world and the online marketplace for automobile sales is still a nascent concept in India. Sandeep Aggarwal, CEO of Droom, an online marketplace for used cars tells, “There are 1.3 used vehicles sold for every new one in India and it will increase to 2:1 by next year.” This shows a big opportunity lies in the sales of used cars.

The total annual online ad spends by automakers is around $30-50 million, of which 10$ is spend on online classified sites. This is expected to grow to around %100 million in the next four to five years and the leading auto classified sites will vie to capture large share of this.

Since classified businesses have opened gates for transactional model in automobile industry, car buyers in India are increasingly looking for a seamless car-buying experience that includes the luxury of decision power, financing, insurance and official paperwork.

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