India is the 3rd largest automobile market in the world but buying and selling used automobile has been full of pain points, pitfalls and frustration. There are several reasons for this, such as : a) unlike USA, Western Europe and Japan, India is the low trust market and that cause very high degree of information asymmetry and moral hazard; b) India did not have the laws and ecosystem services that could enable a used vehicle transaction between two unknown people, and c) unlike USA, India does not have lemon law; d) finally, in India, there are many malpractices such as tempered odometer (85% of used cars have tempted odometer), fake RCs, misleading the buyers and not disclosing if there is bank hypothecation or not.
With this background, buying a used vehicle in India is called Buyer’s Beware. But it is not only buyer who suffers, good sellers also suffer while selling good used vehicle.
At Droom, we have built dozens of technologies tools and data science so that we can offset the serious deficit of trust, transparency and non- standardization of pricing and that results into a transaction for used vehicle taking place smoothly between two unknown people.
So, here are tips for buyers and sellers, when it comes to buying and selling used automobiles:
Buyer: In my view, there are four things buyer must develop comfort with – 1) who is the seller, can I trust him; 2) how do I know the exact condition of the vehicle; 3) am I paying the right price for the vehicle; and 4) are the documents genuine. These are the general tips and at Droom we have built many tools and services to address these concerns.
Sellers: Seller wants to sell his or her used vehicle for sure, at right price with least amount of efforts. So, the tips for seller are, price your item competitively, offer independent and unbiased inspection report, offer vehicle history and make sure you are open and transparent with the potential buyers.
Only 4% of Indian households have cars and 24% who two-wheelers, hence the used automobile market in India will continue to go through massive secular growth adoption for next 2-3 decades. Buying used vehicle makes more economic sense vs., buying a new vehicle. So long a buyer can develop comfort around a used vehicle, buying used vehicles makes more sense vs. buying a new one and suffering from very steep deprecation in first two years, high insurance cost and high financial opportunity cost or interest rates.
Sandeep Aggarwal is a serial entrepreneur, angle investor, Internet visionary and philanthropist. He is popularly known as the father of marketplaces in India. He has founded two marketplaces in India so far – ShopClues, India’s first managed marketplaces in 2011, which became 5th Unicorn in Consumer Internet in India and Droom, India’s first marketplace for automobiles in 2014. Sandeep likes to contribute his bit for digital India, startup, entrepreneurialism, and fund raising.
Twitter: sandeepagg
