Droom, an online marketplace for automobiles, has recently announced the launch of Orange Book Value (OBV), which is India’s first algorithmic pricing engine to measure the fair price range for any used automobile. The used automobile market in India is full of uncertainties and pricing mechanism is often ambiguous, subjective and dependent on the seller’s discretion. Unlike a new vehicle that comes with a standard price, the pricing of a pre-owned vehicle always varies depending on parameters like condition, kilometres driven, etc. OBV is aimed at providing fair valuation of any vehicle. Speaking with HUNED CONTRACTOR, Droom’s Founder and CEO, Sandeep Aggarwal, elaborates on the initiative. Excerpts from the interview...
What is Orange Book Value?
The right valuation of a pre-owned vehicle has always been a difficult task for both buyers and sellers and with Orange Book Value, we have tried to address and solve this problem. We have developed OBV with a long-term vision of making it the most trusted valuation guide for automobiles, be it cycle, bike, car or even plane. Droom is a technology and data science-driven company and with our innovative and disruptive marketplace approach, we build trust, pricing, transparency and convenience advantages in a unique way for buyers and sellers for used automobiles. The launch of this feature is a step towards this commitment to our users.
How does OBV work?
Any automobile buyer, seller or a curious mind can come to www.droom.in/obv and check the price for any used automobile. A seller can consider OBV pricing while creating a listing on the Droom platform and for that matter while selling an automobile on any platform or channel. Similarly, a buyer can refer to OBV pricing to have another reference point about the fair market value of an automobile, be it at Droom or any other platform or channel. Like Droom, the marketplace, OBV is also category agnostic and one can find the fair valuation of
What has been the progress of Droom so far?
Droom has witnessed rapid expansion since its public launch in January 2015 and has grown over 500 times during this period. The company also raised
Rs 100 crore in July this year on a Series A funding round raised by Lightbox. The current experience of buying and selling an automobile is completely broken, antiquated and full of pitfalls. Droom offers a truly 21st Century experience in buying and selling automobiles. It is a mobile-first marketplace with a presence on three platforms i.e. Android, iOS and Desktop. It is amongst the fastest growing consumer internet companies in India with 19,000+ B2C sellers, 25,000+ products, 18,000+ listings, Rs 675 crore+ in listed GMV, 1.23 million+ FB community members (highest for any automobile community in India) and over 1.2 million downloads for mobile apps. We have a team of more than 100 professionals in our offices at Gurgaon in India and Silicon Valley in the US.
What is the size of the used car market in India?
India’s automobile industry is one of the fastest growing in the world and is already the sixth-largest globally. In India, automobile is a $125 billion annual industry, including $100 billion in automobile transactions and $25 billion in automobile services (e.g. insurance, auto inspection). As per Droom’s estimates, nearly 50 million vehicles are sold in India per year, including 30 million used vehicles, making India the third-largest automobile industry in the world. According to a SIAM report, annual car sales could reach 5 million vehicles by 2015 and more than 9 million vehicles by 2020.
The current buying traditions in automobile largely suffer from unsatisfactory and dubious experience devoid of regulation or a scientific approach especially when it comes to buying online. Droom offers an unparalleled advantage for buyers on trust, pricing and selection. For our sellers, we provide low transaction cost, advanced online seller tools and scalable platforms. As far as the online industry goes, we believe less than 0.5 per cent of the total automobile industry is online and the experience provided by online classifieds and content rich discovery platforms is sub-standard and now antiquated.
What are the kind of vehicles mostly preferred by Indian buyers?
India is a country of diversity. There exists a perfect fusion of modern and archaic tastes in the people here. As the global car makers are concentrating more on India, they design cars keeping in mind the requirements of the Indian customers. Indians prefer to own cars that are compact and cheaper than the price of SUVs and sedans. For instance, Maruti Suzuki India, which is majority-owned by Suzuki, has eight models in the A and B vehicle sizes rolled in the market, which covers sub-compacts and micro cars, while its other competitors such as Toyota and Honda just have two such variants. Maruti holds a 48 per cent market share of compact cars in the country unlike other international players like Renault-Nissan, Volkswagen, Toyota, Ford and Honda that have no shares in the compact hatchback market at all.
Is the used car segment restricted only to the middle-class buyers?
Although a huge part of the used-car consumer base consists of the middle-class buyers, due to the emerging demand for luxury cars, consumers from the upper middle-class and high-class brackets are also going for used cars. Witnessing the trends, it is only going to increase with the passage of time.
How do you see this trend shaping up in the near future?
The used car market has penetrated largely in the Tier-1 and Tier-2 cities. The domestic used car market has been constantly evolving and even though most of the major players have made their entry in the used car segment of the industry, many car makers are still to realise the potential of this market. The Indian used car market is expected to show a tremendous growth through a CAGR of 20 per cent towards the end of this decade with the organised sector playing a huge role in the growth. In terms of revenue generated, the market size for used cars in 2020 is estimated to reach Rs 1.5 billion. Among the different types of cars in the market, cars with a price range of Rs 10 lakh are going to be a hot proposition due to the growth of the higher middle-class.
What are your growth plans for 2016?
The company will further expand to more cities and add more dealers. Apart from this, the company is soon planning to launch a new category section on