In India, the rise of internet-based businesses has had a concomitant effect on content consumption trends. The drastic shift from print to digital resulted in a consequent rise in the digital classifieds segment. This urged even the automobile industry to undergo a digital transformation in terms of sale and purchase of automobiles. Being the fourth largest market and the seventh largest producer of automobiles in the world, consumers are now increasingly tapping into technology and gaining access to real-time information available on the internet to research on and purchase new or used vehicles. Although the entry of ‘disruptive online used car classified portals’ is driving the culture of pre-owned cars in India in an enormous way, most of them remain unable to reach the stage of profitability and are forced to shut shop due to their inability to actively monetise their business.
In the last couple of months, many auto classified portals have been allocating their capital towards expansion or scaling their operations in terms of marketing and activation activities. But they had to give in to the high customer acquisition costs. Comparatively, there has been a lack of repeat business from the customers that eventually challenged the unit economics for these portals.
Going further, such portals that merely act as lead generators, have restricted control over the execution and closure of a purchasing transaction. As a result, a majority of customers end up being just one-time customers for the portals.
The ushering in of new technologies like Artificial Intelligence in the Indian automotive sector are ensuring smart solutions for businesses in changing their models. By analysing multiple data points about a single user in terms of location, demographics, device, interaction with the website and more, AI technology can help online used car platforms in displaying the best-fitting offers and content to the potential customers. By analysing the behavioural patterns of consumers, they can push notifications that are specific to individual users and deliver them the right message at the right time.
For online used car platforms opting for large-scale Pay Per Click (PPC) advertising, a majority of the campaigns are managed by human sources. Using AI, such platforms can test out more ad platforms and find the best-paid channels to deliver ads to their selected target buyers and sellers. AI-powered chatbots are yet another gain for online used car marketplaces that can provide detailed information about a car as well as the inventory straightway to the customer. Moreover, by conversing with them, the online platform can also gather information about the potential customers in a progressive way, which can result in a much higher conversion rate than traditional forms and also ensure improved customer service.
Car buyers in India are increasingly yearning for a seamless car-buying experience that can cover their decision from purchase, financing and the documentation procedure. Moreover, a customer is always apprehensive about his decision to buy a second-hand vehicle. There are customers who end up paying more money without identifying the shortcomings in a used car. This consumer attitude towards car buying requires the online used car platforms to follow an aggressive digital marketing strategy and invest in technology to create a seamless, cohesive experience that caters to all the customer needs.
For instance, a virtual marketplace for pre-owned cars like Truebil offers an efficient rating meter called Truescore that takes into account several factors, including the price and history of the car before it gets listed for sale on the platform. It uses Artificial Intelligence to even predict the price, by not just taking into account the condition of the car but also the geographic and season implications.
The Indian pre-owned car market is estimated to grow at 15 per cent CAGR and by 2020 it is expected to touch 7 million units or $40 billion. However, the future of digital auto classified portals lies in knowing the customer well and syncing this knowledge with smart technologies. While, the new passenger market is likely to touch 3.64 million units by 2019, demand for such portals will be further driven by the use of Artificial Intelligence, which is fundamentally changing three major blocks of the supply chain in this industry; the way people buy pre-owned cars, the way that dealerships sell and the way that lenders finance auto purchases. This clearly suggests that the future of the used car industry is now and while the forward-thinking dealers across the world are already using advanced algorithms to deliver better customer service and unravel new efficiencies across various aspects of their businesses, used car online marketplaces in our country are required to make this enormous technology shift to create a huge impact in the auto industry.