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Interview of Jatin Ahuja from Big Boy Toyz on Future of Luxury Used Car Market in India

Big Boy Toyz

Automotive | Jun, 2018

Jatin Ahuja, Founder & Managing Director- Big Boy Toyz Limited, tells TechSci Research that India used car market is expected to be 1.5 times the new car market over the next five years.

Question: When did BBT start?  What kind of growth have you witnessed over the years? What was your idea behind BBT?

Jatin Ahuja- BBT started in 2009, and from the very next year, we were witnessing a growth of 40-50 percent year on year. Starting BBT was never an idea, but whatever comes in your mind and if it hits the market, then it automatically becomes a great idea. So, for me, this was more of passion and then passion converted into profession.

Question:  According to you, what are the latest trends in the luxury pre-owned used car market?

Jatin Ahuja-  Well, half a decade back when I started the business, no one had the confidence to buy pre-owned cars from the market. So, a lot of people who would have slightly low budget, for instance, if I want to buy a brand-new S-Class which costs around 1-1.5 crore, but my budget is around 75 Lakhs, then I will probably end up buying an E-Class. But our presence in the market has created a trust among customers. So, an increasing number of customers are coming to us for fulfilling their requirements and passion for cars in their budget.

The latest trend I would say in our organization is that 40 percent of the people whose cars we sell come back to us to buy cars. They just see the pictures online and the car is delivered to them.

Question: What is the typical age group of your customers?

·         18-24

·         25-31

·         32-38

·         39 & Above

Jatin Ahuja- These are not young champs, so I would say most of them are self-made entrepreneurs, they contribute around 60-70 percent of the business. Also, business men who have worked hard for many years, so that is kind of the customers we have.

Question: What are the top attributes the buyer looks for at the time of purchase?

·         Brand Name

·         Matching Requirement

·         Product Quality

·         Product Price

·         Others, please specify

Jatin Ahuja- Firstly, when the customer comes to us, he has a fixed budget in his mind. Moreover, he has clarity whether he wants to buy a SUV, Sportscar or a Sedan. When the customer tells us about these two things, then we offer him various options. There are only 20 percent of the customers who came to us with a fixed mind set on a specific model that they want to purchase; rest 80 percent are the customers who are open to our suggestions based on their budget. In that sense, you can say that we work as advisors. We are not BMW, Mercedes or Audi dealers, but we work as great advisors. As soon as we understand our customer’s need, we deliver exactly what they want.

Question: What cars are hot-selling from BBT?

Jatin Ahuja- Starting from a Rolls Royce, Ferrari, Lamborghini to Aston Martin and Hummer, we have everything under the sun. However, we don’t sell 3-Series and 5-Series that is C-Class or E-Class bracket and we start from S-Class bracket onwards. So, typically the budget starts from 50 Lakhs and goes up to 4 Crores.

Question: What according to you is the market share of the Metro Vs. Non-Metro cities? Do you see any demand coming from Non-Metro cities?

Jatin Ahuja- NCR contributes the maximum to our business i.e. around 29 percent, and talking about the remaining, we are very strong in Hyderabad, Chennai and Bangalore, and now we are also entering the Mumbai market. I see tremendous growth in Maharashtra and we are expecting a decent revenue share from the Maharashtra market this year. I feel if NCR is at about 29 percent, we can touch around 20 percent from Mumbai since we have three more quarters to go.   

The demand from Tier 2 and Tier 3 cities is amazing. There are so many customers who reach to us to buy cars from cities like Haridwar, Rishikesh and Sirsa. We really want to reach these Tier 2 and 3 cities, since we have first time as well as regular customers from these cities. But these are very few. The major problem with the people that live far from Delhi is that they don’t want to do a hit and trial with any random person. They prefer going to the most reliable person since they don’t have any infrastructure and lack a service centre nearby for these cars. For instance, let’s suppose I stay in Kashmir and I want to buy a preowned luxury vehicle, but the nearest service centre is in Chandigarh. Now, I wouldn’t want to buy a car from a random person whose quality I am not sure of and for the car servicing I would have to drive 500 KM to Chandigarh. So, yes selling them is a challenge but the demand is good.

Question: How do you ensure quality of cars? What measures you take to ensure the quality of the cars?

Jatin Ahuja- BBT provides the highest-level quality of luxury used cars. Our rejection rate is 80 percent and we don’t buy cars beyond 20,000-25,000 Kilometres. We don’t buy any car that have undergone accidents, and we check the accident as well as insurance history. Every single car we purchase goes through 150 stringent checkpoints.

Question: Do you see the online channel medium is of use in the sale of the luxury used car?

Jatin Ahuja- Mostly what’s currently happening in BBT is that 40 percent of the customers see a car online, check the car, place their order and do an RTGS and we deliver the car at their doorsteps. That’s the kind of trust we have made in all these years.

Question: Big Boy Toyz is an organized player in the preowned car segment, but there are so many unorganized/small players in the market as well. Do you see them as a challenge or this doesn’t not affect BBT at all?

Jatin Ahuja- Competition is always welcome at any given point. When I entered the market, I was just 18 years old and there were like 20,000 used car dealers already in the country, while now there are more than 40,000 used car dealers. However, these are not our competition. Our main competition will be Audi India, BMW India and Mercedes India, as and when they start selling pre-owned luxury cars.

Question: Luxury Cars OEMs are coming up with their own premium used car programs/showrooms in the Indian market, which is going to boost the premium/luxury used car market in India but what BBT is going to face after their entry in the market?

Jatin Ahuja-  I am glad that these guys are coming up with the used car business. Because of the organized players entering the market, the size of the market will likely increase, and we would still have enough piece of cake. I would say the market is huge and if they enter the market, it will all depend on the capabilities that who will win the game.

Question: How does GST affect the sales of BBT?

Jatin Ahuja-  GST affected the business for the first 6 months because we came up to 48 percent GST straight. But I would say our government was ready to listen, and the Finance Minister listened to all the car manufacturers. Now, everything is cool, 2018 is going well and has been a rocking year. We recovered well.

Question: What is the average age of the vehicle at the time of sale? What is the average mileage size of the vehicle?

Jatin Ahuja-  For regular cars, we try not to take any car run beyond 14,000 or 15,000 kms, and for super cars it depends how exclusive the cars are. But, we try not to take any car beyond 2-3 years of age. At least 70-75 percent business is from 2-3-year-old cars.

Question: Do you think high amount of discounting in the new luxury car market because of the localization of the cars or their components is a challenge for luxury used car market?

Jatin Ahuja- It takes a little time but it’s a temporary phenomenon and everyone gets used to it gradually. The amount of price that they are going to reduce is any way going to generate the demand for luxury cars, which is a plus point. Any type of price reduction is most welcome and is broadly appreciated by the automotive sector. Make in India is something which we all are looking at. If prices can be reduced, the volume will increase.

Question: What according to you is the market share of the used cars in the overall passenger car market in India ?

Jatin Ahuja- See, what I feel is that we have reached to a 1:1 ratio today i.e. one used car sale to one new car sale every year. If not the case, but I can assure you that about 80-90 percent we are there. Over the coming years, the used car market is expected to be 1.5 times the new car market.

Based on the conversation with Mr. Jatin Ahuja and looking at latest trends in the used car market in India, TechSci Research estimates that India used car market is likely to reach over $ 66 billion by 2022, on the back of growing population and rising urbanization in the country. Furthermore, increasing focus of automakers towards setting up used car networks in different parts of the country and growing inclination of consumers towards used cars owing to their affordability and improved after sales services are some of the other major factors expected to boost demand for used cars in India in the coming years. 

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