IBEF: March 17, 2020
With an intent to grow its brand name and expand the customer reach, Maruti Suzuki India Ltd the country’s top car maker has taken a leap for the growth in sales of pre-owned cars along with the possibility of creating a good number of jobs.
The company has a strong pre-owned car network. Every year around 4.5 lakh pre-owned cars are sold through the True Value business. If these numbers are considered as car sales, then True Value will be the third-largest independent car seller after Maruti Suzuki and Hyundai Motor India.
The company has now decided to transform the business from a largely car exchange-based model to a full-fledged used-car marketplace.
Henceforth, the True Value network, which has 570 outlets across 280 cities, will recognise cars from any brands helping owners of any car brand to sell their vehicles at True Value outlets regardless of whether the customers buy Maruti cars or not. Previously, customers were only able to sell their old Maruti or other brand cars to buy a Maruti vehicle.
“There is a good chunk of car owners who want to sell their old cars, but not necessarily buy new cars. So, with this move, we want to broad-base it and make it more convenient to a large number of customers and it will also help us build customer relationship in the long run. The overall objective is to make True Value a one-stop destination for buying and selling quality pre-owned cars,” Mr Shashank Srivastava, Executive Director (Marketing & Sales), Maruti Suzuki India.
Since, a greater number of car owners are looking for a transparent and hassle-free transaction space for their old cars leading to increase in market share of organised players in this space.
In India, the used car market is about 1.5 times the new car market. Last year, 35 lakh was the new car market, while the used car market was estimated at 40 lakh units.
Though, most of the transactions in this space take place in customer-to-customer (C2C) mode, organised players like True Value and others have been witnessing an increase in their transactions. Mr Srivastava added that the market share of organised players has grown to 18 per cent now from 10 per cent a couple of years ago and this trend is expected to continue.
Company expects to achieve benefits as its True Value business. First, the volume is expected to grow significantly, and with that the profitability will also increase. The increase in volume will also offer opportunities for launching future models, hire more people for sales and evaluation and related requirements, along with the ramp-up of True Value outlets.
“As of today, we have 5,400 evaluators in True Value outlets and the number of sales executives is close to 4,000. It is a pretty large workforce and it will grow even more once the volumes see a surge,” he said.
Mr Srivastava also believes that with the latest move the company would be able to expand and strengthen the relationship with customers even from the enquiry levels. The Maruti brand will grow bigger. Estimates put pre-owned-car-related searches and queries at about 17 crore in 2019, and growing at 30 per cent every year.
The True Value was re-launched by Maruti with a new brand identity about three years ago to boost the pre-owned car buying experience.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.