Review Case Study TruCar.In: Finding A Position In An Emerging Online Market

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TRUCAR.IN: FINDING A POSITION IN AN EMERGING ONLINE MARKET

Utkarsh, Prashant Kumar, Anmol Lamba, Manadeep Ganguli, and Santosh Gupta wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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Copyright © 2018, Ivey Business School Foundation Version: 2018-07-13

In May 2017, Varun Kalra was pondering his aspiration of being an entrepreneur who made a difference in the automobile industry. A management graduate from a reputed business school in India, Kalra was immensely passionate about cars. After gaining five years of experience in the financial sector in 2014, Kalra launched his venture TruCar.in (TruCar), an online car portal he hoped would make a mark in the online car portal industry in India.

Unlike the existing online platforms that focused solely on selling used cars and providing necessary information to new car buyers, TruCar.in was a website built to help consumers (visitors to the website) select particular car models in accordance with their requirements and budget. The website provided information on the car availability at specific dealerships and the range of attractive discounts the dealerships offered. It listed and regularly updated the details of several car brands sold in India, and enabled consumers to contact TruCar’s online team for selecting a dealer of their choice.

To develop an effective marketing strategy to compete with both the established and the new online car portals in the Indian market, Kalra needed to identify key market segments among car consumers. In doing so, he faced some crucial questions. What was the way to determine the appropriate target segment? Which segment would offer a better business opportunity? How should the company position its offerings in the minds of the chosen target segment? As Kalra was thinking about these questions, he felt certain his company’s future depended upon how they were answered.

THE AUTOMOBILE INDUSTRY IN INDIA

By 2020, India was expected to be one of the key markets globally and a developing automobile exporter for the automobile industry,1 which in mid-2017 accounted for 7.1 per cent of India’s gross domestic product of US$2.26 trillion.2 Moreover, the Indian automobile industry produced a total of 25.3 million vehicles (passenger, commercial, and two- or three-wheelers) in April 2016–March 2017. The Society of

1 Booz & Company, Indian Automotive Market 2020, 2011, accessed September 26, 2017, www.strategyand.pwc.com/media/file/Strategyand-India-Automotive-Market-2020.pdf. 2 All currency amounts are in US$ unless otherwise specified. “Automobile Industry in India,” India Brand Equity Foundation, accessed September 29, 2017, www.ibef.org/industry/india-automobiles.aspx.

For the exclusive use of L. Hutchison, 2019.

This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Indian Automobile Manufacturers expected an annual growth of 10–15 per cent in the Indian automobile sector with a turnover of $300 billion by 2026.3

The Department of Industrial Policy & Promotion declared that foreign direct investment in the Indian automobile industry was $15.79 billion between April 2000 and September 2016.4 Since the liberation of the Indian economy in 1991, multinational firms had started setting up their export plants in the country, which were favoured by low operating costs.5 This trend continued until 2017. The electric car manufacturer Tesla Inc. was expected to enter the Indian market soon,6 and several other multinational companies were expected to launch innovative and technologically advanced vehicles in India in the near future.7 Moreover, the industry was expected to be one of the major drivers of the “Make in India” campaign, a government of India initiative to promote the manufacturing sector in India.8

The automobile industry in India was primarily classified into commercial vehicles, passenger vehicles, and three- and two-wheelers.9 The Indian passenger car market was expected to grow from 1.97 million units in 2014–15 to 4 million units by 2020.10 The two-wheeler segment in the Indian automobile industry, which catered to the growing middle class and young population in the country, had an 81-per-cent contribution toward the market share, as opposed to the 13-per-cent contribution of the passenger vehicle segment11 (see Exhibit 1).

EMERGING ONLINE CAR PORTALS IN THE AUTOMOBILE INDUSTRY

The automobile industry had witnessed tremendous changes over the years, which started with the philosophy of Henry Ford, who in 1908 said, “You can have any colour [car] as long as it’s black.” In 2016, the company Ford had founded, the Ford Motor Company, was offering mass customization for most of its car models, through online and offline channels.12 Over the years, the process of purchasing a vehicle, particularly cars, became increasingly complex. This complexity created opportunities for the emergence of web-based (online) car portals. Business experts considered the online car portal business as the next billion-dollar opportunity.13 The online platforms in this sector primarily catered to the following two segments: (1) the used-car marketplace, which focused on selling and buying used cars, and (2) online auto classifieds, which primarily provided information to potential buyers of new cars.

The online car portal business in India was about 10 years old, with a handful of companies in the industry such as CarWale India (CarWale), CarTrade.com (CarTrade), and CarDekho, which offered numerous services to consumers and dealers.

3 BMR Advisors, “Indian Automotive Industry: The Road Ahead,” Forbes India, October 20, 2015, accessed September 20, 2017, www.forbesindia.com/blog/business-strategy/indian-automotive-industry-the-road-ahead. 4 “Automobile Industry in India,” op. cit. 5 BMR Advisors, op. cit. 6 “Automobile Industry in India,” op. cit. 7 Tim Leverton, “Cars will Evolve as Essential Part of Digital Life,” Economic Times, June 14, 2017, accessed September 12, 2017, http://auto.economictimes.indiatimes.com/autologue/cars-will-evolve-as-essential-part-of-digital-life/2422. 8 “Automobile Industry in India,” op. cit.

“Overview,” Society of Indian Automobile Manufacturers, accessed September 15, 2017, www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=9. 10 “Automobile Industry in India,” op. cit. 11 Ibid. 12 Mohan Subramaniam, Bala Iyer, and Gerald C. Kane, “Mass Customization and the Do-It-Yourself Supply Chain,” MIT Sloan Management Review, April 5, 2016, accessed August 12, 2017, http://sloanreview.mit.edu/article/mass-customization- and-the-do-it-yourself-supply-chain/. 13 Deepti Chaudhary, Shravan Bhat, Debojyoti Ghosh, and Sohini Mitter, “10 Sharply Focused Ecommerce Players in India,” Forbes India, March 17, 2015, accessed September 26, 2017, www.forbesindia.com/article/ecommerce-in-india/10-sharply- focussed-ecommerce-players-in-india/39827/1.

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For the exclusive use of L. Hutchison, 2019.

This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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MAJOR COMPETITORS IN THE ONLINE AUTOMOBILE INDUSTRY14

CarWale: India’s oldest online car portal, CarWale,15 established in 2005, had initiated a unique model for offering free car consultations to car buyers across the country. CarWale was initially launched as a website offering consolidated information regarding the used-car inventory of Indian car dealerships.16 It gradually increased its functional portfolio by introducing features that helped the owners of old cars to estimate the cars’ value before actually selling them. CarWale eventually moved into the online auto classifieds business segment in 2007. This business segment focused on providing potential buyers with information regarding new cars. Catering to the needs of the new-car segment led to the introduction of numerous features on its website such as the latest costs and offers across dealerships, detailed specifications of cars, car comparisons, reviews by automobile industry experts, reviews by car owners, and blogs. These features on the website facilitated the car-buying decision with thorough information on cars and attracted numerous consumers; consequently, CarWale’s online traffic gradually increased.

The company had a presence in 200 Indian cities and towns with a network of more than 1,000 new-car dealer outlets. Moreover, it provided loan processing and insurance options. This served as an information source for buyers to access the best available car prices, the cheapest loans, and the lowest insurance quote. CarWale also rolled out dealership loyalty and rewards programs to promote its business in the country.

CarTrade: CarTrade, established in 2010, was a popular website that dealt in business-to-business and business-to-consumer operations for used cars. On its business-to-consumer platform, consumers could buy and sell used cars, whereas on cartradeexchange.com (CarTrade’s business-to-business platform), dealers could manage the online auction and sales. CarTrade, promoted by automobile industry veterans, offered car price information, certification, insurance, and used-car financing. Moreover, to facilitate the evaluation of cars, it offered features such as comparisons, on-road prices, and reviews for new-car buyers.17 Furthermore, CarTrade physically networked with more than 4,000 dealers across 80 cities in India.18 The website enlisted more than 180,000 certified used cars.19 The platform attracted 4.5 million–5 million unique visitors per month.20 In 2016, it acquired CarWale and emerged as a market leader in the used-car and auto classifieds market.21

CarDekho: CarDekho.com, established in 2008, was another leading online car portal, with 33 million visitors per month,22 providing users with expert reviews, detailed specifications, and cost comparisons for car brands and models available in India. The company collaborated with 1,900 new-car dealers and more than 4,000 used-car dealers across the country.23 It provided consumers an immersive experience of evaluating

14 No specific report or research identifies these specific four companies as major the competitors; we have chosen these companies based on their existence in the market and our discussion with Varun Kalra, who considers these companies to be his close competitors. 15 “Find the Right Car,” CarWale India, accessed September 10, 2017, www.carwale.com. 16 Ibid. 17 Disha Kathuria, “These 5 Startups Are Redefining the Experience of Buying a Car,” YourStory, February 11, 2017, accessed September 29, 2017, https://yourstory.com/2017/02/startups-redefining-car-shopping. 18 “About Us,” CarTrade, accessed August 16, 2017, www.cartrade.com/company/about-us. 19 Anita Babu, “E-commerce Platforms Selling Pre-owned Cars Likely to See Traffic, Growth Surge,” Business Standard, March 29, 2015, accessed September 26, 2017, www.business-standard.com/article/companies/online-platforms-selling-pre- owned-cars-see-increased-interest-115032500404_1.html. 20 Ibid. 21 “Find the Right Car,” op. cit. 22 Rahul Sachitanand, Malini Goyal, and Rajiv Singh, “15 Startups that Appear Best Placed to Enter the $1-Billion Valuation Club,” Economic Times, ET Tech, January 4, 2016, accessed September 29, 2017, http://tech.economictimes.indiatimes.com/news/startups/15-indian-startup-potential-unicorn-club/50433985; This included website traffic from Gaadi.com, because both firms were owned by GirnarSoft. CarDekho also acquired Zigwheels.com in 2015. 23 Ibid.

For the exclusive use of L. Hutchison, 2019.

This document is authorized for use only by Lauren Hutchison in Managerial Marketing – Spring 2019 taught by JOHN REED, University of New Mexico from Jan 2019 to Jul 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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cars before they visited the dealer showroom. CarDekho had launched innovative features such as 360-degree interior and exterior views of cars, search functions, and cost and feature comparisons.24 It facilitated the buying and selling of used cars. Furthermore, CarDekho provided several tools for car dealers to manage their day-to-day operations such as managing leads, tracking sales performance, and digital marketing support.

Autoportal: Autoportal, co-founded by Anton Rublevskyy, was a Ukraine-based start-up that entered the Indian market in late 2013. This web-based portal provided information on automobile products using thorough research tools, comprehensive video reviews, and comparative car analysis for different car models, which facilitated the consumer decision-making process for the purchasing and selling of cars. In a very short period, Autoportal had carved a niche space in the online car market.

Apart from these major competitors, Zigwheels.com and Gaadi.com were considered established companies in the market.25 Moreover, new Indian and multinational companies had entered the online car industry in India, leading to stiff competition. Popular classified advertising platforms such as Quikr and OLX, which had traditionally dealt in the selling and buying of household items, also entered the used-car market. These established companies, supported by global investors, had a healthy revenue stream from other businesses. The financials of the major competitors (see Exhibit 2) suggested that firms were incurring huge advertising expenditures to gain consumer attention.

Overall, the online automobile industry was an emerging industry, and over the last few years investors had keenly observed the emerging companies.26 Several mergers and acquisitions and private equity investments were initiated in this segment.27

In addition to the used-car market and online auto classifieds, online new-car sales emerged as a third segment. This business segment was anticipated to be the next growth phase of the online car platforms. The multinational players were already moving forward from being simply mirrors for car dealership inventory to becoming e-commerce websites where consumers could actually buy a car without visiting the physical car dealership.28 Global leaders, including Cars.com, Autobytel, and AutoTrader, were already moving toward becoming full-fledged car-buying websites.29 The next level of growth required attracting consumers and enhancing their online experience, which could only be done by understanding the car- buying process and the specific consumer requirements at each stage.