Online auto sales yet to rev up in India

Online auto sales yet to rev up in India
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First Published: Wed, Oct 17 2007. 12 27 AM IST

Prospective buyers at the car showroom in New Delhi
Prospective buyers at the car showroom in New Delhi
Updated: Wed, Oct 17 2007. 12 27 AM IST
Mumbai: Ravneesh Garg, the director of Forsche Fleet Services Pvt. Ltd in New Delhi, wants to add Tata Indigos and Maruti WagonRs to his fleet of 10 cars. Garg, 31, ideally, would like to buy the vehicles online comparing different models if car makers offered such a facility in India.
Prospective buyers at the car showroom in New Delhi
Forsche, a Mumbai taxi service for women with only women drivers, plans to extend its model to Delhi in November. Eight months into operation, the Mumbai service has a fleet of 18 vehicles plying the port city. Time is essence for Garg and the old world, offline mode of buying cars is irksome for the tech-savvy Forsche director. Garg is one of growing tribe of Indians who use the Internet for purchases—some even big one—but finds it frustrating as the trend is yet to extend to auto buying, especially new ones.
According to a joint report of the Internet and Mobile Association of India (IAMAI), an industry body, and market research firm IMRB International, the size of the business-to-consumer (B2C) e-commerce industry is expected to grow by 30% to Rs9,210 crore by the end of fiscal 2008. Over three-fourths of such business will be in the online travel industry—air, rail and hotel reservations, car rentals and tour packages. No independent study is yet available on the size of the online B2B or B2C automotive market.
Two major firms operating in the B2B space are eBay Motors India and mjunction services Ltd, a 50:50 joint venture of Tata Steel and Steel Authority of India Ltd, which sells used or second-hand vehicles to dealers, workshops and garage owners. There are several other online portals that auction used vehicles.
Car manufacturers, too, have a number of online initiatives, which are largely devoted to helping consumers make the right choice, not direct sales. “Today, we see consumers using the Internet more and more to research their purchase before visiting a dealer. But very little in the way of transactions happen online,” says Scott McCormack, vice-president (marketing, sales and service), Ford India Pvt. Ltd.
EBay Motors India’s director Amit Bhartiya concurs: “Customers use online sites to gather information, make price comparisons and give feedback. But the complexities in the ultimate pricing of new cars do not lend to closure of deals online.”
Yet some changes are in the offing. eBay Motors India, which has 9,000 registered dealers from 250 cities, last week stepped into the B2C medium by creating a portal for online classified advertisements. While allowing customers to sell used cars and bikes, the new portal is also an extension of its B2B platform where dealers can now sell used vehicles to eBay’s two million registered users.
Car makers are too reaching out to the growing Internet population in India. Maruti Suzuki India Ltd, the country’s largest car maker, has just launched “online renewals” for Maruti Insurance customers, allowing them to renew the policies online with credit cards.
Its “Dil Se” programme too allows non-resident Indians to pay online for new Marutis to be gifted to their family or friends in India. Launched in July 2006, this portal today has 10,000 registered customers and sees 2,500 hits a day.
Rival Honda Siel Cars India Ltd’s Auto Terrace programme for trading in used vehicles of every model for a new Honda car is also becoming popular with online users. The programme is also available with all Honda dealers, wherein consumers can get the valuation of their used cars done ahead of trading it with a new Honda car. Honda also plans to open exclusive Auto Terrace facilities soon to boost its used car business.
Both the brick-and-mortar (direct sales) and online models will help Honda increase its sales volumes, which rose 13.1% to 47,312 units in the Jan-Sept 2007 period. “We have revitalized Auto Terrace from April 2007 and have received a very good response from customers,” says Jnaneswar Sen, senior general manager, marketing, Honda Siel Cars.
Autojunction, the auto division of mjunction, has started selling Reva electric cars in Kolkata. In the next stage, it will expand the facility to New Delhi and Mumbai over the next month and to Chennai in three months.
“We were in discussions with three companies and Reva was the first to agree to our model,” says Viresh Oberoi, managing director of mjunction. The company’s sales target for the first six months is 300-400 units in Kolkata.
For Bangalore-based Reva Electric Car Co. Pvt. Ltd, the presence on Autojunction will help. It has to date sold 200 units of the two-door electric car in Bangalore and another 1,100 in the UK, Autojunction allows the firm to expand to other cities through an online platform, where it will offer all three models of the Reva.
Autojunction estimates the cost of selling a car can be reduced by 40-45% through the auto online retailing service, leading to savings of Rs12,000-14,000 on the ex-showroom price for any compact hatchback model sold in India.
Once mjunction is able to make its mark in selling new passenger cars online, it will enter the two-wheeler space. There is, however, no plan to sell new commercial vehicles through the Internet yet. Meanwhile, Autojunction’s B2B business continues to grow, selling 14,000 used passenger cars, two-wheelers, buses and trucks last year.
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First Published: Wed, Oct 17 2007. 12 27 AM IST