IBB Report 2023: Different Types Of Used Car Business Models In India

The sixth edition of the Indian Blue Book was recently launched by car&bike, which details the happenings, trends, and latest sales figures for the used car market in India, which is currently seeing a significant rise in terms of percentage increase. The used car market in India is a huge sector, with the current valuation being $31.33 billion, which is set to go over $70 billion by FY2028. India registered sales of over 5.1 million used cars in FY2023, which is more than the new cars sales of FY2024, at 4.22 million. To better understand the used car market in India, here’s a quick refresher on the types of used car business models in the country.

Also Read: IBB Report 2023: Factors Driving Growth Of Used Car Sales In India

Types of Used Car Business Models In India

Broadly, there are two used car business models in India – transactional and non-transactional. Let us look at the transactional business models in India, which can be divided into three categories.

1. Consumer to business (C2B)
2. Business to business (B2B)
3. Business to consumer (B2C)

Consumer to Business(C2B) - This model enables consumers to sell their car to a platform where they are in a position to inspect and further sell it to a used car dealer. It turns out to be an Asset Heavy model. The procured cars are auctioned on various digital platforms. Cars are thoroughly inspected and auctioned to a network of dealers, usually within 24 to 48 hours.

Also Read: India’s Pre-Owned Car Market Set To Touch 11 Million Units By FY2028

Business to Business(B2B) - This is partly an Asset Heavy model wherein the company supports dealers in obtaining procurement of vehicles. This strategy is beneficial if a dealer to-dealer transfer mechanism is in place to help the stock move around more quickly. Used car auctioning is facilitated by the company’s tech-led platform. There are a few assets that can be described as Asset Light models, such as hosting an auction digitally wherein the sellers can watch the live proceedings of the bidding process. For example, ‘Okashan’ enables auctions with access to real time bidding for sellers.

Business To Consumer(B2C) - This model enables selling used cars directly to the buyer. This, too, is an Asset Heavy model. In this case, the company refurbishes the procured car and sells it to a buyer via e-commerce platform or stores. COCO (Company Owner Company Operated or Franchise) requires higher investment, while the franchise model lightens the asset and e-commerce reduces store costs. Asset Light models help the company focus more on delivering assistance and support to dealers through lead management, financing, insurance warranty, post-sales support, etc.

Non-Transactional Models – First are classified ads, which work on the concept of advertising wherein buyers can see the cars that are advertised on a particular platform. Buyers can make informed decisions by researching, connecting with dealers, OEMs, etc. They partner with multiple third-party financers, automotive ancillary products, and services to offer a complete package to the next buyer.

The other non-transactional model is the automotive content based model, which are in the form of blogs, forums, online communities, and other sites where the primary offering to visitors is information which they would like to know before or after purchasing/selling used cars. This information is often provided for free, however the websites are monetised using advertisements or affiliate sales once there is influx of traffic.