Auto classifieds site CarTrade wants to make it easier for buyers of used cars to get loans. It’s currently piloting a project to promote institutional financing of such vehicles.

“There are 3.5 million used cars sold every year in India, out of which not more than 10% are financed by organized financiers or banks,” said CarTrade CEO Vinay Sanghi.

“In contrast, the used car finance market in most other developing countries is around 50-60%. That is going to be the biggest business focus for us for the next 12 months.”

CarTrade recently raised Rs 950 crore from Singapore-based investment firm Temasek and global venture capital firm March Capital. Banks have focused on new car loans as the used vehicle finance ecosystem hasn’t evolved in India.

CarTrade, which says it has one of the largest used car price indexes in the country, plans to provide this information to banks to make loan processing easier. The big stumbling block for banks currently is getting an accurate estimate of value.

The company, which counts people and marketing as its only major costs and works on an operating margin of around 60%, hopes to break even in the next four to six months, Sanghi said.

This will be thanks to increasing revenue from new business strategies and a greater share of internet traffic following the acquisition of with Car-Wale in November last year.

Business models are evolving in the online auto classifieds space.

On the used cars front, dealers pay a monthly subscription to CarWale or CarTrade or both.

Revenue from this has doubled in the last four to five months and so has the average revenue per user as dealers migrate to online channels.

“Most dealers who used to get 10-15% of their sales from the internet have seen it go up by 30-40% just in the last one year,” said Sanghi.

With regard to new cars, the model for the last three-four years has been to generate income from advertising by manufacturers or original equipment makers (OEMs).

But dealers are also advertising new cars on such sites. “Revenues from dealer advertising have jumped five times since March last year,” said Sanghi.

CarTrade said it owns 75% of used car internet traffic and 80% of that pertaining to new cars. The CarTrade-CarWale combine has about 9,000 of India’s 15,000 car dealers. CarTrade competes with sites such as Ratan Tata-backed Car-Dekho, which in the last two years has bought Times Internet-backed Zigwheels and Ibibo group-owned Gaadi.com.

Source: The Economic Times