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Businessman Ramesh Gupta sold his petrol-powered three-year old Mercedes-Benz E Class last November for Rs 26 lakh. Gupta, who owns a few warehouses in Mumbai, had paid more than double the price to buy the luxury sedan in 2011.
The massive depreciation was not the only depressing factor for Gupta. An independent valuation done by him later with the Indian Blue Book revealed the Mercedes could have fetched a minimum of Rs 31 lakh had he chosen to 'Autoinspekt' his car.
Promoted by conglomerate Mahindra & Mahindra, Autoinspekt, a cloud-based vehicle inspection platform, is fast emerging as a critical tool for used car buyers and sellers. Besides individuals its customers include banks, financial institutions, new and used car dealers, and vehicle manufacturers.
Being part of Mahindra's used car outfit First Choice Wheels, Autoinspekt employs around 100 mechanical engineers who run a 150-point check on vehicles before feeding the collated data into an algorithm-based matrix.
The matrix, known as the Indian Blue Book, then returns a valuation for the vehicle, which may differ starkly from individual or market-driven valuations.
"There may be some hidden problems with the vehicle such as a damaged frame or leaking engine oil that an unsuspecting buyer may not be able to discover. But an engineer will certainly discover them", said Nagendra Palle, chief executive, Mahindra First Choice Wheels.
Inspection is done on the vehicle’s body, electrical systems, air-conditioning, brakes, steering, suspension, transmission, engine, fuel system, ignition and accessories. Inspection is also done on documents such as the RC book, insurance validity and hypothecation.
“Valuation is done through a computerised process without any manual intervention. Last year, we did 40,000 inspections and this year we will do 100,000,” said Palle.
Every year, 2.8-3 million second-hand cars are sold in India, with more than 80 per cent volumes coming from the unorganised sector. Used cars clock higher volumes in India as compared to the new car market. For every new car sold 1.6 used cars are sold every year.
Used car prices registered a decline of two per cent over the last two months. The weakening can be attributed to increase in consumer discounts on new cars.
According to Palle, banks and financial institutions are not only using Mahindra First Choice’s ecosystem to dispose their repossessed vehicles they are able to get 10-15 per cent better valuation. Besides, banks are also able to tap into the same database to get vehicle records before providing loans for used cars.
The overall conversion rate (enquiry to sale), Palle claims, has increased to 70 per cent from 57 per cent, while bids per car have gone up to 23 from 13 with the use of this system.
Later in the year the company will expand to commercial vehicles. Palle said the company was also exploring the tractor market, where M&M was the leader.
A SECOND-HAND OFFER
What is Autoinspekt?
- A cloud-based vehicle inspection platform promoted by Mahindra & Mahindra, which is fast emerging as a critical tool for used car buyers and seller
- Individuals, financial institutions, new and used car dealers, and vehicle manufacturers
- Autoinspekt employs around 100 mechanical engineers who run a 150-point check on vehicles before feeding the collated data into an algorithm-based matrix. The matrix, known as the Indian Blue Book, then returns a valuation for the vehicle, which may differ starkly from individual or market-driven valuations.
- It is carried on the vehicle’s body, electrical systems, air-conditioning, brakes, steering, suspension, transmission, engine, fuel system, ignition and accessories
- Every year, 2.8-3 mn second-hand cars are sold in India. For every new car sold 1.6 used cars are sold every year in the country
