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Car manufacturers are mastering online sales of used cars in the conditions of a shortage of new cars

Photo: Maksim Platonov

Transformation of the automotive secondary market has been provoked by the lockdown. The shortage of new cars and the decline in the purchasing power of the population forced manufacturers to make a bet on the secondary market. Volkswagen has already successfully mastered this service, and this spring the Hyundai brand also launched a mobile platform for online sales of used cars. About the prospects of manufacturers in the market, which has so far been divided by private dealers and car dealerships, the first results of digitalisation in this field, as well as the pros and cons of online trading in used cars — read in the material of Realnoe Vremya.

Plus to minus

In April of this year, Hyundai Motor CIS company launched the UKA mobile application for the sale of used cars. Moreover, the South Korean automobile company was not the first manufacturer to decide to sell used cars. In particular, Volkswagen also uses this scheme.

Hyundai positions its platform in Russia as a convenient and secure service that gives the opportunity to make registration and payment for the purchase of a used car without intermediaries and completely online — not only without looking at the sales office, but also without examining the object of purchase in reality. Although one can see the car live, of course, if one wants.

By the end of May, as the company told Realnoe Vremya, the application was installed by users about 17,000 times, about 6,000 active users were registered in the system and almost 70 requests for booking and further purchase of cars were received.

By the end of May, as the company told Realnoe Vremya, the application was installed by users about 17,000 times. Photo: hyundai.ru

It is assumed that the geography of the service will expand, but so far it is small: cars with mileage of different models from ten cities of Russia, including Kazan, are presented in the online store. However, according to the official Hyundai dealer in Tatarstan — Transtekhservice company, not a single used car has been sold completely online in the republic yet, although the service itself works in favour of “mixed” sales, when the buyer makes a choice online and finishes the transaction (sometimes changing its object to another) in the salon.

“The history and information about the current condition of cars is provided to users for free, all the cars presented in the catalogue have passed pre-sale service and diagnostics at official Hyundai dealerships,” the company argues in favour of buying a used car from the manufacturer. “Users can choose any car with mileage from the open catalogue and before buying, not only find out its history, but also get acquainted with the details of diagnosing the current condition.”

In addition to ordinary used cars, this way one can buy cars that were part of corporate fleets, were used by Hyundai dealers for test drives or participated in the Hyundai Mobility online subscription programme.

According to the company’s representatives, the fact that the amount paid by the buyer for the car is frozen only on his bank card and is debited only at the time of the transfer of the car at the dealership — after the buyer checks its condition — acts as transaction security guarantee If the car does not meet the stated criteria, the customer have the opportunity to refuse the purchase and the funds will be returned, the manufacturer assures.

According to the company’s representatives, the security of the transaction is guaranteed by the fact that the amount paid by the buyer for the car is frozen only on his bank card. Photo: uka. online

“It is profitable for us”

“Many, and almost all distributors are already engaged in online sales of used cars on their own websites,” says the head of the TTS division for sales of used cars, Marsel Khasanov. “They have implemented all the stages, up to the delivery of the car to the client. The Hyundai project is different in that they have made their platform with a separate mobile application. For us, this is a new page in cooperation with Hyundai, the platform has been in operation since recently so far, and it is too early to draw any conclusions. We are currently implementing the pilot project in two cities — Kazan and Ufa. We are interested in this because we have already launched our own mobile application long time ago and have gained some experience, and because now there is a global digitalisation in all areas, and those who start using its achievements faster will learn how to work better in new conditions.”

According to Khasanov, the new programme of the South Korean automaker provides new opportunities to the official dealer, who has been selling used cars independently for a long time:

“It is profitable for us, because we are also placed as partners on this site. This is a mutually beneficial collaboration and recognition of the dealer.

Khasanov explained that the dealer earns a commission of 5% of the cost of the car if he sells a car placed by Hyundai Motor CIS in the UKA application. And if the dealer places his car in the application and they buy it online without coming to the salon, it is the dealer who pays — 1% of the cost.

“We have accumulated a huge practice of selling used cars, and the experience suggests that a client can come for one car and leave in another,” he said. “On a photo, the car is beautiful, but the heart isn’t in it, as they say. Sometimes it’s not even about the condition of the car — the manager can offer something else that one would like more. We prepare for the arrival of the client and prepare four or five more alternative offers of cars of different brands and different configurations.”

Having come to the car dealership, the customer can bargain for an additional discount, take advantage of some sales promotion, finally hand over a used car and buy another one with mileage, getting a discount. Photo: Maksim Platonov

“The main thing is to occupy a niche”

“It is unrealistic to completely go into online car sales,” says Marsel Khasanov. “The application is a sales channel, a channel for obtaining information, a convenient way to book a car that saves time. And as for buying, a car is still such a thing that a person needs to touch. When buying a used car, there is usually no linkage to any particular brand. Especially if it is, for example, the first car.”

He pointed out another important point — the “one-brand” nature of the application. In general, there can be a wide variety of cars in it, however, as soon as the linkage to the place of purchase is activated, the choice is sharply narrowed. The client, of course, can deliver a car from another region, but at their own expense.

Besides, having come to the car dealership, the client can bargain for an additional discount, take advantage of some sales promotion, finally hand over a used car and buy another one with mileage, getting a discount, but online, they make a purchase without options and pay exactly as much as indicated:

“It is more profitable for a client to visit a car dealership than not to visit it.”

In general, Marsel Khasanov concluded, online sales today account for no more than 10% of all sales of all cars — both new and used ones:

“This suggests that in Russia people prefer to look and touch the car before buying. Therefore, I doubt that someday the market will completely switch to online — rather, it will not be instead, but together with regular sales. This is the first step towards transparency and civility of the used car market.”

Ilya Savinov, the development director at KAN AUTO Group, approached the issue of the development of the new area of the car market by automakers — used car market, as well as online car trading, with caution:

“According to our estimates, the prospect of selling cars online in the short term is vague, since buying a car is still a serious life event for the citizens of our country, which requires studying, a test drive and directly discussing the characteristics of the car with the manager. This direction is rather designed for the medium or long term. Hyundai Motor CIS is actively developing the direction of online sales, and at the moment, the company has clearly made progress in this, we are monitoring the prospects for this type of communication with customers so far. As for the representative offices of other brands, we are also seeing a movement in this direction. Regarding cars with mileage, then, of course, a large role in the implementation of such cars is played by large classifieds, such as Cars.ru or Avito. It is often at these sites that customers determine for themselves the pool of cars from which they will choose, and the final decision is made already at the car dealership.”

To use the service, it is necessary to download the application and register in it. This, according to Andrey Kalinin from Kazan, who wanted to try out the UKA platform but changed his mind, will be a serious disadvantage for many:

“I would like to change my Hyundai Creta for a newer car. The idea of buying a car from the manufacturer seemed tempting to me: they, unlike resellers, provide a guarantee, and this is reliable. And the car was repaired, I believe, more responsibly, using orginal parts. But when I started loading the application, it turned out that I had to register. But I was not ready to provide my data to the company before I bought a car from them. It is yet questionable whether I will buy something from them or not, but spam will be for sure in such cases. It would be more convenient for me to first look at their offers, for example, on the official website without registration.”

“It’s logical”

The reason that automakers are entering the used car market is simple — it is the economic situation in the country, says Sergey Znaemsky, the deputy editor-in-chief of Autorevue publication:

“The market of new cars has declined due to their unavailability, these are the consequences of covid restrictions and a decline in production in 2020. On the one hand, there are not enough new cars, on the other — people have less money, so many people postponed the purchase of a new car and paid attention to the used car market. This market in our country is several times larger than the market for new cars in terms of the volume of transactions. In this situation, the logical solution for any seller is to trade what is in demand. The one who is limited to selling new cars is losing. Meanwhile, there have been trade-in programmes for a long time, and used cars are sold and in demand in car dealerships. But dealers cultivate this market and earn money on it. Why not manufacturers? If a manufacturer is engaged in direct sales, for example, online, then why not selling not only new, but also used cars?”

According to the expert, the success of manufacturers in the used car market can also be facilitated by that, unlike private owners and dealers, they have not compromised themselves on it — the degree of trust of customers in them will be higher than in competitors.

“The trend is very right,” says Znaemsky. “And Hyundai is the leader in the introduction of mobile technologies in our market, starting with online sales and ending with a car subscription programme. And the second wave of the coronavirus, the looming closure of public places on the horizon, and the reluctance of people to leave their homes once again will contribute to interest in the new platform. And we will see what the demand for this service will be.”

A number of auto experts believe that one shouldn’t expect a significant increase in the sales of used cars from automakers.

“This tool is still new so far, and I think it will not gain wide popularity right away,” Azat Timerkhanov, the head of the press service of Autostat analytical agency, assessed the prospects for online sales by manufacturers of used cars. “Private transactions — from hand to hand — still have a significant share in the secondary market. Personally I, in any case, would go and look at a car with mileage from all sides for something hidden. Our market is still not as civilised as in Europe and the United States.” “Cars are becoming more affordable every year, especially with mileage, so people’s attitude to them is changing — not as luxury items, but as an integral attribute of life,” says the head of the Car Dealers of Tatarstan Association, Ruslan Abdulnasyrov. “It’s not the cheapest thing, but it’s not the biggest rosy dream anymore. The consumption model will continue to change, people will want to make purchases faster and faster. Finally, buying online is just convenient. So the brand’s strategy aimed at taking a new niche in the market in advance is absolutely correct. Of course, not everyone will buy this way, but some of the customers will definitely use this application.”

By Inna Serova


Tatarstan