Droom is expanding its fintech business under its Droom Credit Business Unit to drive auto loan disbursals and insurance for purchase of preowned vehicles and facilitate dealer financing options.
In contrast to declining sales in the new vehicle market, the pre-owned car market has been steadily growing over the past couple of years. This has prompted companies like Maruti Suzuki and Mahindra & Mahindra to set up divisions to sell preowned vehicles, which are posting robust growth.
According to Shashank Srivastava, Executive Director, Marketing and Sales, for Maruti Suzuki India, while the used car market registered a 16 percent overall growth last year, the company’s True Value division registered around 19 percent growth. According to sources, close to 4 million used cars were sold last year. However, while customers can avail of vehicle loans from banks, they have to pay higher interest rates as compared to a new car – often in the range of 20 percent as compared to 9.40 percent for the latter.
Offering viable financing and credit facilities can, therefore, promote this segment further. Additionally, extending inventory financing to dealers can help them invest in more stock. Hence, companies like Droom are investing in fintech organizations to build a robust ecosystem for its customers and dealers.
“The traditional banking system is quite conservative and is usually amongst the last to turn to technology. Xeraphin’s acquisition gives us a great advantage in used vehicle financing."
— Founder and CEO of Droom, Sandeep Aggarwal
He added that the preowned car financing business is currently registering 100 percent monthly growth. To keep pace with this progress, it recently set up an AI lab to leverage AI, machine learning and Big Data to improve the solutions on its marketplace.
Read more here