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Buying a new car has always been a traditional experience in India. You save money, visit the local showroom, come back home, visit the showroom again, vacillate a little, and visit more showrooms until you finally make a decision and select a spanking new car. In fact, to hasten the deal, dealers are more than happy to take you on test runs, provide dealership discounts, add freebies, provide affordable loans with “low, low” interest rates and insurance to lure you into making a deal. And of course, a good time is had by all. This drawn out process may seem silly to everyone else, but it’s quite normal in India when you consider that an average 4-seater petrol driven cars costs anywhere from Rs 4,00,000 to about Rs 10,00,000, depending on make and model. The price will increase substantially if you chose a fully-loaded car with AC, heating, GPS, etc. Prices will also depend on the distance between the showroom and the warehouse, state taxes like VAT, excise, sales tax, road tax, and insurance and so on. With such a high investment, it stands to reason that most buyers do take their time while making a purchase.
Star CJ Promises to Change All That
India has a population of about 1.24 billion, and more than a quarter of that population is centered on major urban locations. Cities like Mumbai, Bangalore and Delhi have great roadways, but land tracts inside the cities have already been completely exploited for urban accommodation. As a result, the incoming population has no other option but to stay in suburban locations and commute to offices through public transportation or private cars. Considering the rapidly improving Indian economy and a flourishing double income middle class, it stands to reason that almost every suburban nuclear family in India can afford to buy a car. However, they prefer to buy a car from their local dealers. Star CJ is now planning to change that perception by selling cars online at a much more affordable rate.
- According to Media Mughals, used cars sales in India increased by 15 percent, and young, educated customers were buying used cars as their first vehicles. As a result, there is already a sub-group of the population who is educated about online shopping. This age groups is well versed with online shopping, is familiar with Star CJ and could prove to be a very valuable initial customer base.
- India also has the youngest and fastest developing market for luxury brand new cars. For example, Audi, Mercedes-Benz and BMW are in high demand with the younger age group. However, passenger vehicles like hatchbacks are in high demand as well. Honda posted an amazing 82 percent sale improvement, with sales of 1,334,339 units. However, it was followed closely by Fiat India, with an 86 percent sale increase. Ford’s sales improved due to the Figo and EcoSport models released in 2013, and Renault also managed to make a dent because of the popularity of the duster. Companies like Maruti, Hyundai, Skoda and Nissan also managed to turn notable profits. These statistics show that the demand already exists for almost every type of luxury and mid-budget car. If Star CJ can offer competitive pricing, it can break into this customer base almost instantly.
The demand for cars is there along with a ready customer demographic who will trust Star CJ and its products. However, it is still necessary to adapt logistics, prices and delivery to the Indian market.
Adapting Online Car Sales to India
Star CJ is a very well-known online shopping website. The retailer is also popular for its StarCJ Coupons, often offered through websites like mydala for a plethora of its existing catalogue of products, ranging from home furnishings to electronics, kitchenware and clothing etc. Kenny Shin, chief executive officer of STAR CJ Alive, stated that Star CJ may be the first home shopping network offering cars for sale, but it already has the logistical support and technical know-how of its international partner CJ O Shopping. Star CJ also posted a turnover of more than Rs 5,000 crore in the first five years of inception and this number is expected to increase. The company already has a very strong 35 percent piece of the online shopping market pie. This is particularly good as CJ O Shopping made an annual profit of Rs 1,000 crore or $161 billion from its online car sale division in China and Korea, and it plans to parlay this expertise into the Indian market through Star CJ. The company has already tied up with two major car manufacturers but the current fluid electoral climate has delayed business deals and the car-sale launch by a few months.
Online car sales are not new. The TOI and Indian Televisions website point out that GM, Mercedes and Tesla have already started offering online sales of their cars, though only in niche geographical regions. This sales model can be adapted to the Indian market as well. Passenger cars and commercial vehicles saw the highest gains in India, and India is expected to be one of the largest markets for automobiles, with a demand for more than 7 million passenger and commercial units by 2020. Time magazine also states that India is also expected to be the third-largest automotive market behind the U.S. and China, and demand for passenger vehicles is expected to power the surge in sales.
So if you have been holding back on getting you dream car; Star CJ could provide you with the opportunity you have been looking for. The network which was already famous for selling an exhaustive list of products is finally taking a plunge in selling cars and it would be great to watch this amazing idea unfold and come to life. After all, what more could we have asked for!