Technological change taking place in second-hand car market.
LAHORE -- Pakistan's second-hand car market is passing through a transformational phase where technology is playing a crucial role in upgrading the norms for nearly all stakeholders.
Traditionally, the non-commercial, used vehicle market was driven by the end users, dealers or mechanics and the only way to buy or sell a vehicle was either through advertisements or visit to markets.
However, as the technology kicks in, people have found a new and almost free mode of advertisement in the shape of different websites, but such resources cannot guarantee a smooth, hassle-free and quick transaction.
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Last year, a Berlin-based start-up, Frontier Car Group (FCG), initiated its operations in emerging markets and Pakistan was one of its first choices.
FCG which is operating in Pakistan with the name of Carfirst develops, launches and operates used automobile marketplaces, by increasing the efficiency of selling and buying cars through technology, infrastructure and an innovative business model that allows all stakeholders to gain.
'Pakistan's second-hand vehicle market largely runs like a speculative industry, where buyers and sellers have to show patience throughout the transaction which many times concludes with no results or a loss for genuine consumers,' said Gouher Aftab, Head of Partnerships for Carfirst, while talking to The Express Tribune.
He said with nearly 2.9 million cars on roads in 2016, Pakistan represented a huge market operating in an unprofessional manner. 'We are trying to streamline this market by applying best global practices which saves time and energy not only for the end consumers, but also for the car dealers,' he said.
The start-up business runs like this. It purchases vehicle from a customer and sells that vehicle to the dealer via auction, hence, playing the role of a middleman. But Aftab said Carfirst immediately gives an offer to the client and 'if he agrees we make the payment within 48 hours and that too through legal banking channels.'
'In Pakistan, around 20% of second-hand car owners prefer selling their vehicle quickly to save time and energy,' Aftab said, adding that with the use of technology, 'we make it transparent which previously never happened in the auto industry. This initially faced resistance from market forces, but slowly things are becoming favourable for us.'
The company has established inspection centres in all major cities of Pakistan with a future plan of penetrating second-tier cities like Gujranwala and Multan.
Aftab said Carfirst gave better analysis of vehicle to the consumer than any market forces, 'however, we cannot give a better price than the consumer as the company has to retain its margins.'
'We might not give the best price to the consumer but we can guarantee a secure and speedy transaction,' he said, adding the consumer did not have to go through the tiresome process of verifying documents and other similar requirements.
The company then arranges an auction of purchased cars for its dealers six days a week through an app. 'We have to sell our stock to complete our business cycle. Within nearly one year of our entering the market, more and more customers and dealers are using our platform,' he said, adding that in future Carfirst would hold live auctions as practised in modern economies.
'We operate on the business-to-consumer model and will not change it in the future. We have no intention to open auction for the end consumers as our model does not allow us to do so.'
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He said in the local market, almost 30% of the people still preferred cash-based transactions. '[But] we did not allow this since one of our company's aims is to streamline the market through banking channels so that government departments are aware of the size of the second-hand car market,' Aftab said.
'Transactions through proper channels is the key. Once streamlined, this industry will attract insurance companies and banks to give car loans as such institutions are currently reluctant to pour money.'
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|Publication:||The Express Tribune (Karachi, Pakistan)|
|Date:||Dec 26, 2017|
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