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A lot more on the plate: Ola Cars looks beyond selling just used cars

Ola Car’s vision is to offer the full spectrum of vehicle commerce – from buying a vehicle to selling it and everything in between

October 12, 2021 / 10:43 AM IST

Bhavish Aggarwal-led Ola is looking to create a complete spectrum of personal mobility solutions that house business verticals including consumer engagement at every level.

While the company has started with used cars under this new umbrella called Ola Cars, it plans to diversify into segments such as used two-wheelers, new cars, vehicle servicing, finance and insurance.

The group is keen to become a one-stop-shop for all automobile-related needs. In addition, other group entities will simultaneously manufacture vehicles, but these will be powered by electric batteries and not internal combustion engines.

“The preowned car business is only one part of the business,” Arun Sirdeshmukh, chief executive officer of Ola Cars, told Moneycontrol. “The other area that we want to start quickly is the overall maintenance of the vehicle. If you transact with us on the preowned site, we become your natural partner for service needs. We want to also add different verticals like adding an insurance partner and financing options.”

Ola Cars started operations on a pilot basis in Bengaluru a few months ago. It is now live in 30 markets and operational in six major cities.

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“We have a fair share of the customer base already,” said Sirdeshmukh, who previously worked with e-tailing giant Amazon.

Droom, Cars24, CarDekho, Spinny, Carwale and CarTrade are among the well-established rivals that Ola Cars will be up against. With so many entities vying for inventory from the same pie, Ola’s entry in the used-car space is expected to create an impact on prices.

For now, Ola Cars is in no hurry to create a physical presence (showrooms) and it is focussed on improving consumer engagement digitally. This includes bringing vehicle servicing to the consumer rather than making the consumer travel to the service centre.

“We believe that a digital-first experience is far more convenient, more efficient and quicker. The second is about using technology – be it for evaluating your vehicle or maintenance alerts. The third is personalisation where we have to ensure that whatever we do, we do with utmost convenience, which means why not service where the customer is rather than make the customer travel to the workshop,” Sirdeshmukh added.

More profitable

India’s used-car market has been on a bull run, with sales estimated at 4 million units a year, which is 1.4 to 1.5 times the new-car market. With margins of 15-25 percent, the used-car business is significantly more profitable than selling new cars.

The onset of the Covid-19 pandemic spurred used-car sales as customers sought to avoid public and shared transport.

All car dealers operate a preowned business parallelly. Used cars that come as trade-ins are bought by companies like Ola Cars to be later sold to consumers at a premium.

“Our vision is to offer the full spectrum of vehicle commerce – from buying a vehicle to selling it and everything in between. We are starting with the preowned car business and we are not averse to getting into used two-wheelers. We want to do this in 100 cities before taking the business overseas. When we look at that full spectrum, there is a resource that is needed in the form of people, technology and infrastructure,” Sirdeshmukh said when asked for details about investments.

Ola Cars hopes to start with used two-wheelers within two years. The used-two-wheeler space is fragmented but has the same ratio as the used-car segment in terms of market size. In a Covid-hit year, the new two-wheeler market clocked sales of a little over 15 million units. The used two-wheeler market is 20-30 million units a year.

“The two-wheeler space is fragmented and does business the traditional way. Purchasing is largely a physical experience. There is a long way to go to provide efficiency and a richer and personalised experience,” Sirdeshmukh added.
Swaraj Baggonkar
first published: Oct 12, 2021 10:43 am

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