Digitization is Future of Auto Sector: CarDekho
How was the company’s performance before the onset of Covid and during the Covid times?
CarDekho was going through a purple patch prior to Covid with plans in place to drive exponential growth in FY21. Lockdown forced us to reevaluate our growth investment with zero auto sales happening for almost 2 months. During Covid, we have seen a marked consumer preference for personal mobility as social distancing has become the new normal. Automobile sales have shown a significant recovery post the lockdown. Since Dec’20, every subsequent month has been the best month for the Group in terms of revenue. Despite losing almost a quarter to Covid, we expect to surpass our FY20 numbers in FY21 by a small margin with strong momentum to demonstrate remarkable growth in FY21-22.
The automobile sector has been going through a difficult phase for over 2 years, 2020 further hit the sector. Your thoughts?
During last year’s lockdown, the Indian automotive industry suffered massive Rs 2,300 crore losses per day and an estimated 3.45 lakh jobs were lost, as reported by SIAM. The automotive industry contributes 7.5% to the overall Indian GDP and accounts for 49% of the manufacturing sector. With factories closed, dealerships shuttered and demand at an all-time low, it was an extremely difficult period for vehicle manufacturers as well as thousands of dealerships across the country. With the gradual lifting of the lockdown, the industry was staring at concerns about short-term liquidity as well as long-term growth in revenue and profitability.
The used car sector has witnessed the biggest chunk of pent-up demand due to Covid new normal. As an Industry player what are the major consequences faced by your industry and how has the pent-up demand added to your business?
While new cars continue to be out of the reach of a lot of buyers, 2-wheelers and used cars emerged as a value-for-money option. We saw demand for used cars go up significantly post lockdown. In FY20, there were 1.3 used car transactions for every new car sold and we see this number go well above 1.5 times in near future. We have seen demand go up significantly with our classified’s platform generating over 400k leads per month consistently over the past two quarters. Our most recent business line, Trustmark stores that sell used cars directly to end buyers, has seen over 60% growth in month-on-month sales.
Can you shed some light on your present India and overseas business structure & plan?
Our India and international business are two separate entities, part of the same CarDekho Group. Domestically, we operate several leading auto portals, besides CarDekho Gaadi stores and CarDekho Trustmark stores, which serve as the one-stop destination to sell and buy pre-owned cars. CarDekho financial services is amongst the largest used car loan originators in India. We also own InsuranceDekho which is one of the leading insurance brokers in the country. As a global brand, CarDekho has presence in Indonesia and the Philippines under the brand names OTO and CARMUDI respectively. Going forward, the company aims to strengthen its global presence with expansion in new regions in South East Asia and consolidating our base in the existing markets through newer touchpoints.
How is CarDekho different from the competition?
CarDekho Group was founded in Jaipur in 2008 and is today, the leading auto-tech company in India. CarDekho is working on disrupting the personal mobility ecosystem and has presence across the entire automotive value chain. CarDekho’s digital properties (CarDekho, Zigwheels, Powerdrift, Bikedekho, Gaadi, Trucksdekho, etc) are the most visited, most preferred automobile discovery and booking platforms in India. All our platforms combined get more than 55M unique visitors monthly. According to a BCG study done a few years back, more than 85% customers who intend to purchase a car in India, visit one of our platforms before making the decision. CarDekho is also the largest Indian automobile video platform with 4M+ hours of content watched in 2020. CarDekho Gaadi stores and CarDekho Trustmark stores are the leading destinations for customers to sell and buy used cars. CarDekho Gaadi stores are operational in more than 50cities across the country through a physical store or offering home inspection service. Trustmark stores are present in NCR and Jaipur with Mumbai and Bangalore opening shortly. CarDekho is amongst the largest used car loan originators in the country. Very few players can match our in-depth knowledge and expertise with regards to used car loan underwriting. InsuranceDekho is a leading insurance broker with a digital platform and a vast offline agent network.
Do you see the auto-tech sector to undergo consolidation?
Digitization is the future of the auto sector and is also at the core of CarDekho. We are seeing a tectonic shift towards environment-friendly cars and EVs will form a significant share of all new cars sold in not so distant future. We already have connected cars being offered by a few OEMs in India and many plan to launch soon. While these are amazing products, I believe we are just getting started when it comes to the connected car of the future. We have increasingly witnessed more vehicles being sold digitally, across all kinds of products and categories globally. With digitisation, the automobile business will be more profitable with significant value growth for all stakeholders.
Many unicorns are going for IPO now. What are your plans on the same, when do we see CarDekho going public?
Our businesses are rapidly growing and we’re in a very exciting phase right now. We would definitely go public in future. However that is not on the agenda in the near term.
What is your take on the scrappage policy? How much do you see it impacting your used car business?
The scrappage policy is good for the environment, good for the consumer, and good for the automobile ecosystem. The used car business has got a tremendous push as consumers who are unable to afford new cars will replace their very old cars with certified newer used cars. It will push the mindset of people to adapt to cleaner commute and open the market for brand new vehicle infusions, which will help the industry to grow.
What's your strategy for competing with OEM’s used car brands such as Mahindra First Choice, Maruti True Value, Honda Terrace, etc.
We do not see ourselves competing with any of these players. The Indian used car market is very big and highly fragmented. Currently, all the organized players together constitute less than 10 per cent of the used cars retail market share. There are enough opportunities for all of us to work together to transform the space.
