<article>MXC Solutions India Pvt. Ltd, which operates CarTrade.com, plans to become an aggregator for car servicing and finance businesses as it seeks to become a one-stop shop for car buyers in India.</article>

MXC Solutions India Pvt. Ltd, which operates CarTrade.com, plans to become an aggregator for car servicing and finance businesses as it seeks to become a one-stop shop for car buyers in India.
CarTrade claims it has 80% market share for new car customers and around 74% for used cars on the Internet in India. It sells around 25,000 new cars and as many as 40,000 used cars per month.
“Going to 90% from 80% is meaningless; how we can add value is the question we are asking,” Vinay Sanghi, founder and chief executive of CarTrade, said in an interview last week.
His firm acquired Carwale.com from German media conglomerate Axel Springer seven months ago, catapulting it to India’s largest online marketplace for used and new cars.
Based on the marketplace model, CarTrade will allow someone looking to get a car serviced choose the nearest service station through a mobile app. The app will show the car owner all kinds of options from company authorized and branded service centres such as Mahindra First Choice Services Ltd and Carnation Auto Pvt. Ltd, to small road side ones.
There are close to 60,000 garages in the country and the number is only growing, he pointed out adding that the idea is to bring them on the CarTrade platform, he said, adding his firm will bunch a host of technologies together to offer value-added services.
“There’s a clear advantage of getting into adjacencies like finance,” said Harish H.V., partner at Grant Thornton India LLP pointing out that financing of used cars is more profitable than new ones owing to the high interest rates it attracts.
He, however, cautioned that a service aggregator business needs to be a lot more than just being a directory for the nearest service station as there are competitors such as the Bengaluru-based pitstop.com—an online car care servicing platform that enables customers to get their car serviced through a mobile and web-based application.
Besides offering a directory, it also gets the car picked up and delivered back at the customer’s door step. “India is a price and value conscious market. One has to see enough value for such services,” he aid.
In January, CarTrade raised Rs.950 crore in a funding round led by Singapore-based investment firm Temasek and March Capital, with participation from existing investor Warburg Pincus.
The company competes with other private equity and venture capital-backed firms like Jaipur-based Cardekho.com (Girnar Software Solutions Pvt. Ltd), Droom Technology Pvt. Ltd and Truebil (Paix Technology Pvt. Ltd).
The revenue model for CarTrade’s servicing and finance businesses, will either be subscription or transaction fee-based.
Of the 15,000 dealers for new cars, close to 9,000 are registered with CarTrade. Sanghi is eyeing a similar scale for the upcoming services business.
Meanwhile, the Tiger Global-backed firm is also looking to be an aggregator of financial services for buyers of used cars who often struggle to get credit. The buyer of a used car will be linked to a bank via an application. The entire transaction—from applying for loan, evaluation of the used car, assessment of loan applicant’s credit rating score to getting the credit sanctioned, can be done online without the buyer or the seller having to visit the bank’s branch or dealership.
Only 10% of the used cars are financed by organised financiers. It’s significantly higher— close to 50% to 60%—outside India, said Sanghi. This is in sharp contrast to the finance for new cars, where eight out of 10 cars sold are bought on credit. He attributes the low finance penetration in the used car space to the high risks involved. Bankers are wary of lending for used cars owing to concerns over their value.
“We are trying to go there and make the banks believe in our certification and valuation process,” said Sanghi, adding the undertaking will take care of the buyer asymmetry—one of the major reasons for banks staying away from extending credit for second-hand cars. A better finance availability will further fuel growth of such cars which have been growing faster than new cars.
India sold close to 2.7 million new and 4 million used cars in the year ended 31 March.
In a bid to scale the finance business faster, MXC is looking to make a string of acquisitions in the coming months. This could be the acquisition of some direct selling associate or non-banking financial companies (NBFCs). MXC, which has 2,000 people on its rolls, is looking to add another 1,000 this year.
Sanghi is hoping to scale up the business by three to four times over the next three to four years. Car sales have been growing at a healthy clip, he said. “There’s a clear overlap and the potential to grow in the used and new cars and tap the adjacent services like finance, services, warranty, insurance, is huge,” said Sanghi.

India: CarTrade aims to add servicing, finance businesses to its platform

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