'We're seeing down trading, price correction of luxury cars'

 

The pre-owned luxury car market is gradually getting back on track, but with a few interesting changes. The biggest, and most expected, is that consumers are down-trading. “Cars in the Rs 2 crore to Rs 4 crore segment, including the Lamborghinis and the Ferraris, took the biggest hit,” says Jatin Ahuja, founder of Big Boy Toyz (BBT), a Gurugram-based retailer of pre-owned luxury cars.

After three months of low sales, BBT, Ahuja claims, sold 48 cars in July and August. The second big change is the demand from Tier II and beyond. “About 35% of our enquiries are coming from the tier II, III and beyond,” he adds. “About 2-3% of our luxury cars underwent price correction,” he says.

Founded in 2009, BBT boasts of a wide range of luxury models from brands such as Bentley, Ferrari, Cadillac and Aston Martin, with price straddling from Rs 50 lakh to Rs 4 crore. To deal with the pandemic, Ahuja rolled out a new feature to sell a car within 29 minutes.

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 The feature is aimed at people and businesses with limited cash flow, he explains, and helps them in quick and easy liquidation of their assets. “We have gone the extra mile in making the transition from offline to online super easy and comfortable for our customers,” he says in an interview to Forbes India. Excerpts:

Q. How badly has the pre-owned luxury car market been hit by the pandemic?

The pandemic and subsequent lockdown put our business activities on hold for some time, but we are now back in the game. There’s been a significant shift in customer demand during this period, driven towards utility rather than luxury.

We have always had an online presence; 50% of our pre-Covid sales happened to be online. Customers would check website listings or look at the pictures and videos to make their decisions. However, in the past three months, this number has risen to 70% to 80%.

Q. Are people down trading in luxury cars?

Cars in the Rs 2 crore to Rs 4 crore segment, including the Lamborghinis and the Ferraris, took the biggest hit, which led to three months of low sales for us. But now, we can see that people are moving towards the pre-owned segment where they can still buy luxury cars but at a lower price. Also, about 2% to 3% of our luxury cars underwent a price correction, including the Rolls Royce Phantom, BMWi8, Lamborghini Huracan Spyder, Volvo XC 90 Lounge, and Indian bikes, out of 33% of our total stock. These discounts are attractive.

Apart from these, customers have also bought Mercedes S500 Maybach, GLS 350, Porsche 718 Boxster, BMW i8, Range Rover Sport, Lamborghini Huracan and Bentley Continental GT Coupe. Consumers from this segment are healthy, strong, confident buyers, which makes them unaffected by the pandemic.

Q. What tweaks have you made to your business model during this time?

We had to make strategic decisions in the past three months, a majority of which focused on restructuring our organisation and taking care of our unsold stock. Four-wheelers are depreciating vehicles and all that stock had to undergo maintenance and repairs.

The crisis may have impacted our industry, but it has also enabled innovation and fueled new initiatives to bring back lost business. We have been actively using our IT infrastructure and social media to engage with our customers, by more means than we were doing before Covid-19.

Customers are now transitioning towards the digital means as the fear of Covid is keeping them from going out to shop. About 35% of our enquiries are coming from Tier II, III cities, and beyond. So that’s a new edge for our business. We were already planning to expand in more markets and now that we have demand rising in other cities, we can successfully tap them.

Our website and soon-to-be released mobile application are loaded with features to help our customers make quick and effective decisions. Customers can get a 360° virtual experience, look at the interiors and the exteriors of the cars on their mobile screens. We also offer a ‘walk around view’ to take a tour of our showrooms, and our website has a ‘history’ section for fun facts. We have started doorstep deliveries too.

Q. Luxury has been one of the hardest hit sectors. How long will it take to rebound?

The automobile market has gone from flourishing to slow-paced to getting back on track in a span of four months. How and when things will get back to normal will depend on many things: To what degree the social distancing norms will impact consumer behaviour; how we can make the most of the internet to keep offering uninterrupted services; and what areas should we make our strategic investments in at this point.

The pandemic that limited consumer spending capacity has also increased demand for second-hand luxury cars. Today, the pre-owned market seems to make the best value proposition for those looking for brand new necessity cars before the pandemic. So, things will slowly yet significantly get better and we are preparing ourselves for the new normal.

Q. You are still bullish with your expansion plans…

Yes, we are now running the business in full throttle. Our plans for opening a new store in Gujarat and Kolkata remain unchanged and we have even begun hiring in these locations. The Covid-19 crisis caught us off guard, but now, we must learn to live with it. Planning for 2021 looks good in terms of logistics and finances, as we are ready to enter two new markets in the eastern and western regions. We are also eyeing similar profit achievements as those of last year.