 "Truebil: A new second-hand drive")
Suraj Kalwani, a former Housing.com employee, had a bitter experience while buying a second-hand car. Though spoilt for choice, it was the time taken to reach the deal that put him off.
"The amount of time a consumer has to spend on buying and selling used cars is extremely high," says Kalwani, who along with his colleagues set up Truebil, a virtual marketplace for pre-owned cars, inMarch 2015.
"The idea floated from our own personal experience of buying a second-hand car," he says. The pre-owned car market is outshining the growth of the new car market. It is estimated to be a $12-billion market, with 3.5 million cars being sold in a year. Search queries are nearly three times its market size, indicating huge demand for used cars in India.
Kalwani is joined in this enterprise by Ravi Chirania, Shubh Bansal, Rakesh Raman and Shanu Vivek, all former colleagues from Housing.com. Along with former Fab.com executive Ritesh Pandey and ex-Rio Tinto official Himanshu Singhal.
Several start-ups have dived into this business and Mumbai-based Truebil also hoped to make the most of the opportunity. It expects to be operationally profitable by the end of 2016 and achieve overall profitability by 2018.
The team wants to offer a solution that enables a prospective buyer and a seller to complete their transaction (from selection to inspection, insurance or loan) effortlessly. "We were earlier working with Housing.com across multiple domain-operations, product, marketing, growth and strategy. Coming from different backgrounds, we have been able to execute things in six months which typically take 18 months," claims Kalwani.
Target
The pre-owned car market has been growing 20 per cent year-on-year for three years. It is expected to grow at the same pace and by 2020, would see at least 10 million units sold every year, says the team. Truebil has listed over 10,000 cars till date and its current gross merchandise value (GMV) is about Rs 5 crore. The start-up is growing at 20 per cent month-on-month. "We aim to reach 1,500 transactions a month by the end of 2016 in four cities," Kalwani says. Its revenue model is based on commissions on transactions and services like loans and insurance.
Rutvik Doshi, director, Inventus Capital Partners, an investor in Truebil, sounds bullish on the potential. "For every new car sold in India, three used cars get sold. More than half of these used car buyers buy from dealers, not because they want to but because they do not have many options. It is something similar to the way the housing and rentals market operates in India," Doshi says. Truebil can offer hassle-free transactions for prospective buyers and sellers. "I feel the start-up could reach unit-level profitability in one or two years," he adds.
It recently raised $5.15 million in Series-A funding from Kalaari Capital, Inventus Capital and San Francisco-based Tekton Ventures. It will use the money to expand operations to Delhi, Bengaluru, Chennai and Hyderabad, beside strengthening its product and technology platforms. Last year, it raised $500,000 in a first round of funding from venture capital fund Kae Capital and angel investor Anupam Mittal.
The start-up is a customer-to-customer marketplace, rather than a classified service like cartrade.com. That is its unique selling proposition (USP), Doshi says.
"Our USP has always been our product and customer service. We have been a clear differentiator in our product and service strategy and that is why you see services like Quick Sell and Used Cars Comparison," Kalwani adds. Being lower in scale is currently an advantage and Kalwani says this results in at least 15 per cent of its queries getting converted into sales. More mature markets tend to have this number close to five per cent. "The number generally reduces once a business scales up," Kalwani says.
Nevertheless, the road ahead for Truebil lies in expanding to other major cities. At present, their operations are centred around Mumbai. Therein also lies a challenge. As Doshi analyses, "While acquiring customers would be key, the team would also have to figure a way in which it could facilitate transactions in the least cumbersome manner. Something that would not require a huge field force, so that they can expand into other cities rapidly."
So, does the start-up feel its model is scalable? "Absolutely. Our model is highly scalable. In fact, running this business since the past 11 months has given us immense confidence on scalability. We aim to support this scale with technology and products. Our learnings in Mumbai will be replicated across multiple cities the moment we start expansion," Kalwani says. In the coming months, the team's focus would be to build technology for its back-end systems and then scale across cities.
EXPERT TAKE: Abdul Majeed
"Car penetration in India is currently in the range of 20 people owning passenger vehicles (cars) for every 1000 person. This works to about two per cent. In the last 10 years, about 20 million passenger vehicles were sold. In the next five years, we expect passenger vehicle sales cumulatively will be in the range of 25-30 mn vehicles. Currently we have around 30 mn passenger vehicles on Indian roads.The pre-owned car market size is roughly $10-12 bn and approximately 3-3.5 mn used cars are sold every year. The market is growing 18-20 per cent a year and the organised segment is growing about 30-35 per cent annually over the past three years.
Looking at the opportunity, Original equipment manufacturers have entered the used car market.
The trade is still very unorganised and limited to a few big cities. For online used car companies, the challenge is to on how they make this trade profitable and sustainable, how they create trust with customers with onto quality of vehicles and how to build scale of the operations across the country.On the regulatory front, there is a probability of getting the used car vehicles under the goods and services tax regime. This will also help the trade more organised."
"The amount of time a consumer has to spend on buying and selling used cars is extremely high," says Kalwani, who along with his colleagues set up Truebil, a virtual marketplace for pre-owned cars, inMarch 2015.
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"The idea floated from our own personal experience of buying a second-hand car," he says. The pre-owned car market is outshining the growth of the new car market. It is estimated to be a $12-billion market, with 3.5 million cars being sold in a year. Search queries are nearly three times its market size, indicating huge demand for used cars in India.
Kalwani is joined in this enterprise by Ravi Chirania, Shubh Bansal, Rakesh Raman and Shanu Vivek, all former colleagues from Housing.com. Along with former Fab.com executive Ritesh Pandey and ex-Rio Tinto official Himanshu Singhal.
Several start-ups have dived into this business and Mumbai-based Truebil also hoped to make the most of the opportunity. It expects to be operationally profitable by the end of 2016 and achieve overall profitability by 2018.
The team wants to offer a solution that enables a prospective buyer and a seller to complete their transaction (from selection to inspection, insurance or loan) effortlessly. "We were earlier working with Housing.com across multiple domain-operations, product, marketing, growth and strategy. Coming from different backgrounds, we have been able to execute things in six months which typically take 18 months," claims Kalwani.
Target
The pre-owned car market has been growing 20 per cent year-on-year for three years. It is expected to grow at the same pace and by 2020, would see at least 10 million units sold every year, says the team. Truebil has listed over 10,000 cars till date and its current gross merchandise value (GMV) is about Rs 5 crore. The start-up is growing at 20 per cent month-on-month. "We aim to reach 1,500 transactions a month by the end of 2016 in four cities," Kalwani says. Its revenue model is based on commissions on transactions and services like loans and insurance.
Rutvik Doshi, director, Inventus Capital Partners, an investor in Truebil, sounds bullish on the potential. "For every new car sold in India, three used cars get sold. More than half of these used car buyers buy from dealers, not because they want to but because they do not have many options. It is something similar to the way the housing and rentals market operates in India," Doshi says. Truebil can offer hassle-free transactions for prospective buyers and sellers. "I feel the start-up could reach unit-level profitability in one or two years," he adds.
It recently raised $5.15 million in Series-A funding from Kalaari Capital, Inventus Capital and San Francisco-based Tekton Ventures. It will use the money to expand operations to Delhi, Bengaluru, Chennai and Hyderabad, beside strengthening its product and technology platforms. Last year, it raised $500,000 in a first round of funding from venture capital fund Kae Capital and angel investor Anupam Mittal.
The start-up is a customer-to-customer marketplace, rather than a classified service like cartrade.com. That is its unique selling proposition (USP), Doshi says.
"Our USP has always been our product and customer service. We have been a clear differentiator in our product and service strategy and that is why you see services like Quick Sell and Used Cars Comparison," Kalwani adds. Being lower in scale is currently an advantage and Kalwani says this results in at least 15 per cent of its queries getting converted into sales. More mature markets tend to have this number close to five per cent. "The number generally reduces once a business scales up," Kalwani says.
Nevertheless, the road ahead for Truebil lies in expanding to other major cities. At present, their operations are centred around Mumbai. Therein also lies a challenge. As Doshi analyses, "While acquiring customers would be key, the team would also have to figure a way in which it could facilitate transactions in the least cumbersome manner. Something that would not require a huge field force, so that they can expand into other cities rapidly."
So, does the start-up feel its model is scalable? "Absolutely. Our model is highly scalable. In fact, running this business since the past 11 months has given us immense confidence on scalability. We aim to support this scale with technology and products. Our learnings in Mumbai will be replicated across multiple cities the moment we start expansion," Kalwani says. In the coming months, the team's focus would be to build technology for its back-end systems and then scale across cities.
EXPERT TAKE: Abdul Majeed
"Car penetration in India is currently in the range of 20 people owning passenger vehicles (cars) for every 1000 person. This works to about two per cent. In the last 10 years, about 20 million passenger vehicles were sold. In the next five years, we expect passenger vehicle sales cumulatively will be in the range of 25-30 mn vehicles. Currently we have around 30 mn passenger vehicles on Indian roads.The pre-owned car market size is roughly $10-12 bn and approximately 3-3.5 mn used cars are sold every year. The market is growing 18-20 per cent a year and the organised segment is growing about 30-35 per cent annually over the past three years.
Looking at the opportunity, Original equipment manufacturers have entered the used car market.
The trade is still very unorganised and limited to a few big cities. For online used car companies, the challenge is to on how they make this trade profitable and sustainable, how they create trust with customers with onto quality of vehicles and how to build scale of the operations across the country.On the regulatory front, there is a probability of getting the used car vehicles under the goods and services tax regime. This will also help the trade more organised."
Abdul Majeed is partner at Price Waterhouse