MotorExchange : A unique Indian Car Auction Website (B2B & C2B only)

[GTO]

Very recently, I came across MotorExchange while casually surfing the web. The first thing that caught my eye is the vehicle auctions schedule on their home page. Unfortunately, I couldn't check out much more as their listings aren't open to guests. Registration is only open to dealers. There's a pretty detailed verification / documentation process in place too.

Upon further delving, I realised that they are HUGE in the online auction space. The modus operandi is thus : Cars are listed, primarily from finance company repos (about 12,000 finance repossessed cars exchange hands each month in India), used car dealer inventories, new car dealer inventories (presumably, their used car division) and individuals. Ebay also has a B2B auction website for cars, but again, it's open to dealers only.

Respect to the business model and unique positioning. I wish them the best.

Here are two screenshots (after login). Interface looks outdated and right out of the 90's though:




I had a meeting with Akshay Shankar (AVP, Product), high points of which are:

• Online schedule includes an up-to-date list of upcoming auctions / events, with complete details of inventory for that event.
• Auctions are regional (e.g. Mumbai auction, Chennai auction) as well as institutional (e.g. XYZ Bank Auction).
• Rs. 5000 one-time sign up fee for dealers.
• A minimum deposit amount of Rs. 20,000 required before a dealer can place bids.
• Success fee payable to Motor Exchange after each successful transaction.
• No test-drives; dealers place their auction bids depending on MotorExchange's car inspection report. The 3 page detailed car inspection includes checks on the body, engine, transmission, suspension, brakes, electricals, accessories etc. A MotorExchange engineer also test-drives the car as part of his evaluation. In the report, an approximate estimate ($$$) on things that need to be replaced / repaired is included.
• Inventory includes two wheelers, three wheelers, four wheelers, commercial vehicles (buses, taxis et al), construction vehicles and farm equipment.
• Seasonal offline auctions similar to the international format, where a car is driven in front of potential buyers, with live bidding to boot. Check the video out.

YouTube - MotorExchange Deals on Wheels

Thanks to Stratos for his help with this article.

[GTO]

Q & A Session with MotorExchange

1. How many deals are successfully closed in a month? Your target 2 / 3 / 5 years from now?

We have auctioned tens of thousands of vehicles across India in less than 12 months of operation. We recently raised our Series B round of financing and will be expanding the business in additional cities in the next 12 months.

2. How frequently are auctions held? Is there a fixed, recurring schedule?

Several auctions are held in parallel on a daily basis on MotorExchange, usually from 10 AM onwards.

3. If a dealer is from the same city as a listed car, can he check it out in person?

We don’t offer physical inspection as this would inconvenience our sellers.

4. Can dealers buy a single car, or do they have to purchase in bulk only?

Once dealers have registered, they can purchase vehicles as per their requirement. This can be from a single vehicle to a large number of vehicles. There is no minimum quantity.

5. What is your revenue model (membership fees etc.)?

Our main revenues derive from transaction success fees – only if a vehicle transaction is closed, do we get paid.

6. The sale of repossessed / fleet cars has traditionally been a largely unorganised, extremely fragmented segment. What are the top challenges faced by MotorExchange in this area?

A key challenge has been for us to get sellers and buyers to completely understand and appreciate the workings and merits of these online auctions. However, once this happens, sellers’ response has been very good and we have seen many sellers move totally to the MotorExchange solution from their old processes.

7. Are the informal dealer cartels supportive or wary of you? Any stiff resistance faced?

Dealers are in the business of buying and selling inventory and Motorexchange has become a key part of their business. Motorexchange provides the dealer with depth and breadth of inventory across India. Otherwise, the dealer would be limited to buying and selling inventory in his local geography. In addition, dealers get to bid on certified vehicles. They can access the certification report and images of the vehicle prior to the auction, so the true condition is known and they can bid with confidence. This saves the dealer a huge amount of time as he no longer has to physically inspect every vehicle.

8. Do you have a price guide that helps sellers in setting a price for their car? Can sellers set a reserve price?

We will be launching a pricing tool in the future. However, even today we always advice our sellers on prices which they can expect for their auctions, as we have detailed knowledge of pricing prevalent in the market. But it is important to note that it is the seller’s decision whether he is ok with a certain price before he sells his car.

9. Tell us about your certification process (accuracy, logistics etc.). Is there any additional charge for the certification?

We have a team of automotive engineers who inspect vehicles physically and prepare a Certification Report. The report covers 120+ certification points. Certification is a free service for our consumer sellers. Accuracy of certification is a key goal for us and the feedback from our buyers on our certifications has been excellent - buyers view the Certification Report as an accurate representation of the true vehicle condition.

10. What is the average inventory you expect to carry, at any given point in time, 2 / 3 / 5 years from now?

Our vision is to be India’s largest used vehicle platform and our goal is to auction over 8,00,000 vehicles annually in 5 years.

11. Why will you not allow individuals to bid? Even those that are willing to go through your qualification process? If anything, more bidders will result in better prices for sellers? Any plans to allow individual bidders in the future?

To become a buyer on MotorExchange, members need to pay a sign up fee and a deposit. We feel that this might make it hard to get individual buyers. In the future, we are considering making bidding accessible to individuals, either directly or through our member dealers.

12. How does the acquisition of CarTradeIndia fit into MotorExchange’s model?

On MotorExchange, professional automotive buyers bid on vehicles sold by consumers, banks, leasing companies, etc. At the same time, consumers visit CarTradeIndia to sell their vehicles. Thus, MotorExchange uses CarTradeIndia to reach individual sellers. These sellers can then use MotorExchange to sell their cars through auction.

[ACM]

Super Report GTO.

If they do allow individuals to get into this after bringing in place the required checks and charges, then this would result in cutting out dealers in a big way. This would increase exponentially as more and people get net savy.

One big reason why an individual buyer may not be comfortable with this arrangement though is that he / she can't check out the car in person. Yes there is the certification, yet for a user buyer owning a car is too emotive a process for an Individual to buy a car without checking it out in person, while for a dealer it is just a transaction so personal inspection is not really essential.

Rating this bit of educational info 5 Star.

[benzinblut]

Carwale had an online auction system similar to this. It was only in Mumbai. I think it is now discontinued. You could check their cars at their warehouse at Nerul and the auction is available for anyone after a returnable deposit amount of Rs. 5000Rs per car.

Must appreciate the busisness structure here but I think it would make more sense if they make it good for individuals to bid.

[moralfibre]

I never knew of the existence of MotorExchange. I had visited a yard in Pune which used to stock bank recovered vehicles including trucks, tractors, et al. The watchman wouldn't let us get in and told us all cars are sold on ebay regularly.

I wish motorexchange lets individuals bid on cars too but that would mean disappointing the dealer fraternity from where their primary revenue is generated.

[Stratos]

Excellent report GTO. What actually caught my eyes was the vast variety of vehicles they have. Everything from a Bajaj scooter to a Volvo B7R. The prices at which they are listed look very tempting but they tends to increase a lot (ofcourse on vehicles in demand) in the last few minutes of the auction. Great concept.

[GTO]

Thanks for the 5 star thread rating, guys.

Originally Posted by ACM

If they do allow individuals to get into this after bringing in place the required checks and charges, then this would result in cutting out dealers in a big way. This would increase exponentially as more and people get net savy.

Absolutely; nothing like consumer empowerment. I've already requested MotorExchange to open up their auctions to individual buyers like you & me. Hey, if I'm looking for a 8 lakh rupee car, I don't mind paying 5,000 bucks of a registration fee for a better deal. I would expect the MotorExchange cars to be cheaper than in the open market.

Having more bidders for the same car would only improve prices for the seller. And no, it won't lead to any rise in rates in the used market. The sole difference would be to the dealer margin.

One big reason why an individual buyer may not be comfortable with this arrangement though is that he / she can't check out the car in person.

Valid point, ACM. I wouldn't be comfortable buying a car without a thorough test-drive at all. I don't care who is certifying.

Originally Posted by benzinblut

Carwale had an online auction system similar to this. It was only in Mumbai. I think it is now discontinued.

Ah yes, I do remember now. Thanks for pointing it out.

Originally Posted by moralfibre

I never knew of the existence of MotorExchange.

Neither did I until Feb 2011 . That's exactly the purpose of this article....to share information on this unique concept with BHPians.

Originally Posted by Stratos

Excellent report GTO.

Thank you for your help with the article, Stratos.

[MileCruncher]

This is great news.

In the west you have similar ind of auctions both online and offline for seized as well as well Total Loss vehicles which can be repaired to be back on the road. I hope this gets opened up to the public as well.

Cheers

[vsk2009]

Thanks GTO for bringing an interesting thread.
I think in India online auction will not be practical. Our purchasing capacity is very less and it is difficult to rely on the auction agency and shell out the hard earned money. In US, for example, a graduate student can manage to buy a decent used car with few months fellowships. So such auctions make sense there.

[maddy42]

Best of luck to them as i loved the concept. Expect individuals to be let in soon too.

The preparation they have done is amazing and its nice to see their effort in the end result.

[moralfibre]

I guess their site is quite full of bugs as of now. I tried to register and it timed out. When I tried to re-register, it says email address and phone number already in use. When I try to reset my password, it says phone number does not exist. Quite weird.

[RS_DEL]

If the MEx chaps have got the dealers to use their system it is because dealers can pick up inventory at a price where they have a decent enough margin. I could be wrong but IMO since dealers are ONLY competing against each other they will more or less be having similar target price idea for each vehicle. Pit them against consumers their costing will inflate if a dealer is in a bid fight with a consumer. Why? Simply because the consumer has the peace of mind of a documentation verified vehicle with some level of dependability on the technical condition and would not mind bidding more than the dealer. In such a scenario MEx will lose it's USP to the dealer segment. So even if they do say they will invite consumer participation, I wonder if they will seriously do so.

[ghodlur]

Thanks GTO for bringing up this wonderful information. This gives more empowerment to the customers.

I wonder if this would by any chance have any impact on the T-BHP classifieds.

[mac187]

great concept. A good thing of not having individual buyers bogus bids, these would just raise the price of the vehicle without logic. Also individuals who are desperatly looking for a particular model end up bumping the price beyond resonable levels a la Bugs cost in Bangalore!

[Mr.Beat]

This looks like a win-all concept. They are doing some great business and if they open a integrated or a separate section for individual buyers that would be great. Is there any means of customer satisfaction guarantee now? Wherein they would guarantee that their report is 100% accurate and any other repairs will be covered by the company?