By D. Murali and C. Ramesh

The booming economy is fuelling strong growth in the passenger car segment, which is seeing the emergence of new channels of transaction such as auto Web sites that hope to ride on growing Internet penetration.

The total annual transaction value of all car trading is pegged at Rs 85,000 crore and online auto portal CarWale (www.carwale.com) is aiming to garner a chunk of this volume, according to Mr Mohit Dubey, CEO and founder.

Speaking to Business Line on the potential of online car sales and the company’s plans, he said: “Around 13 lakh new cars were sold in 2006-07 and the projected growth is at least 15 per cent this year. The used cars market is growing even faster at 25 per cent annually.”

But CarWale operates in a space that is becoming increasingly crowded. On how the company seeks to differentiate itself and stand out in the crowd, he said: “We have differentiated ourselves initially by offering India’s first used car price guide and tools like car recommendation and instant online price quotes.”

According to him, CarWale provides “very exhaustive content” for researching new cars and goes beyond to connect consumers with car OEMs and dealers.

“So far, we have helped more than 10,000 new car buyers to enter into a transaction. The idea is not to sell cars online, but to empower consumers to make more informed buying decisions.”

Claiming that the site has notched up a strike rate of around 40 per cent – “which means that a consumer has bought the car within 60 days of submitting a purchase inquiry at CarWale” – he said that the company calls up more than half of all consumers who make an inquiry to track their transactions and know their overall experience.

“It’s increasingly difficult to make the best buying decision and not get carried away by fancy ads and offers, now that a consumer has never-before choices among various car makes and models,” he pointed out.

“Researching cars is very crucial to save time, money and hassles. Hopping from one dealership to another and choosing from more than 300 car versions is very inconvenient. And a dealership tries to sell you their car and not the one that meets your preferences best.”

Mr Dubey informed that CarWale has a car recommendation engine that is “impartial and unbiased. So far, more than 50,000 recommendations have been made by this system. And the instant price quote feature gives consumer a real idea of money they must invest.”

He added that with a few clicks, customers can access information about loans, sale of existing cars and getting in touch with dealer of choice.

So, how does CarWale make money, especially now that it has also received venture capital funding (from Seedfund)? “CarWale has a strong revenue model. We provide prospective car buyers leads and branding opportunities to car, finance and insurance companies. We have served clients like Trilogy, Tata Motors, Tata Motors Finance, ICICI Bank, ICICI Lombard, Mahindra and Mahindra, Ford, and various dealers across the country.”

Sensing that online car sales could be the future, at least two auto majors are seriously toying with the setting up online car portals.

Mr Dubey is of the view that the future will only see more cars being sold online, given that there is an increasing presence of more mature and consumer-oriented Internet business models.

“CarWale has been working with both Trilogy and Tata Motors for the past few months and we have seen very encouraging results.”

According to him, 5-10 per cent of total car sales will be generated through the Internet this year, and at significantly low cost.

“The numbers will see a strong growth as online portals reach an increasing base of consumers on Web and mobile.”

On servicing the used car market, he said that around 4,000 used cars are listed at CarWale at any point of time. And each car gets 4-6 interested buyers within a month, on an average.

“We put a fee of Rs 500 for listing used cars and therefore attract genuine buyers and sellers of used cars. Additionally, each listed car expires in 30 days, which means that buyers get to see only most likely available cars. Of course, the sellers can always renew their listing. So far, we have listed more than 20,000 cars.”

According to him, there is an opportunity to empower buyers and sellers and serve existing car owners to make better decisions.

“Today, customers enter into car trading with little information on pricing, etc., and go through haggle and hassle. On the other hand, a great many dealers and service providers operate in local markets but have no pricing standards to refer to. Our used car price guide is referred to even by car finance companies, and dealers across country are using it as a reference point for buying and selling cars.”

He also said that the Internet has enabled access of data with just a click, making it easier for both customers and dealers to seek information before actually taking a decision or making a deal.

Going beyond the online presence, CarWale has launched a classified magazine for used cars in Mumbai in February. “We have plans to launch the magazine in Bangalore and Delhi.”

Seedfund, floated by Mr Mahesh Murthy, who has an impressive track record as investor, has provided the company with funding.

On Mr Murthy’s role in taking CarWale to the next level, Mr Dubey said: “Mahesh brings a very strong understanding of consumer Internet business. The Seedfund team has helped us in refining the business model. They have helped us strategically and with their insights on grooming startups.”