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 twice that price to buy the luxury sedan back in 2011.
The massive depreciation hit was not the only one of the depressing factors for Gupta. An independent valuation done by him later with the Indian Blue Book revealed that 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 list also includes banks, financial institutions new and used car dealers and vehicle manufacturers.
Being part of Mahindra’s used car outfit First Choice Wheels, Autoinspekt employs a battery of around 100 mechanical engineers who run a 150-point check on target vehicles before feeding the collated data into an algorithm-based matrix.
The matrix known as the Indian Blue Book then returns with a valuation for the vehicle based on the data fed into it. The valuation may starkly differ than individual or market-driven valuations.
“There may be some hidden problems with the vehicle such as a damaged frame, leaky engine oil etc which 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 carried out on vehicle body, electrical systems, airconditioning, braking, steering, suspension, transmission, engine, fuel system and ignition and accessories. Inspection is also done on status of documents such as RC book, Insurance validity and hypothecation.
“Valuation is entirely done through a computer process without any manual intervention. Last year we did 40,000 inspections and this year we will do 100,000 inspections”.
Every year 2.8-3 million second-hand cars are sold in India, with more than 80 per cent volumes coming from the unorganized 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 of prices can be attributed to increase in consumer discounts on new cars at the retail level by manufacturers.
According to Palle banks and financial institutions are not only using Mahindra First Choice’s eco-system 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 data base to get vehicle records before providing loans for used cars.
Overall conversion rate (enquiry to sale), Palle claims, has increased to 70 per cent from 57 per cent while bids per car has gone up to 23 from 13 with the use of this system.
Later in the year the company will expand to commercial vehicles also. Palle said that the company is also exploring ways to enter the tractor segment, an area where M&M is the market leader.