The Covid-19 led FY2021 recently ended on a negative note for most OEMs, and the overall Indian automotive industry. The current situation offers little respite and has begun with huge challenges for many. But there are some companies which have managed to grow despite the downturn. The Gurgaon-headquartered Boys and Machines, a pre-owned premium luxury automobile company, is one of them.
Founded by auto enthusiast Siddharth Chaturvedi in 2020, it aims to provide customers with the best-priced luxury cars. “As a supercar user, you understand that there is massive depreciation when you purchase and sell these vehicles. This motivated me to come on the other side and get into the business of buying and selling luxury cars. We searched the market for people who are in this industry, met some national players who are into this segment and built a team,” recalls Chaturvedi.
Making the most of growing demand
New car sales in the luxury segment in India are a small fraction of overall passenger vehicle sales, which roughly translates to few thousand units in the segment dominated by the three German carmakers.
According to Chaturvedi, the competition is so significant that many dealers are “providing hefty discounts and working on thin margins, and as a result many of the dealerships are shutting down.” Another challenge is the high overhead costs — “My payout for all our dealerships will be very small compared to another dealerships in India. We did not want to glamorise selling luxury cars, but wanted to provide same quality at a reasonable price. The pandemic also brought forth the topic of people looking to have their own vehicles as they did not want to use shared transport/taxis. Another interesting aspect that we noticed was that people, who were once saving for the future, looking at the uncertainties, started splurging on themselves.”
He cites the example of China, where post-lockdown there has been a significant jump in luxury vehicle sales; a similar trend was being seen in India. In fact, the company claims that it has clocked Rs 25 crore worth of sales since its launch (October 2020 to March 2021). “We opened our Mumbai showroom in January, Kolkata in February, and now are clocking sales of around Rs 7-8 crore per month across the showrooms,” says Chaturvedi.
The company claims that despite being a very young entrant, the company has not incurred any losses and has been in the positive delta from day one.
Selling across India
Unlike mass-market products, the luxury segment has customers fragmented across the country, and it is important to be able to deliver and provide products wherever the customer is. As part of a centralised inventory model, Boys and Machines says it has a “very strong procurement model and having a transparent digital presence which allows us to sell vehicles across India.”
“While our new showroom is coming up in Hyderabad, we have already sold three vehicles without having a physical store there. That is simply because of the price-point that the customers chose us over other competitors and bought their cars from Boys and Machines in Gurgaon. We have a stock of Rs 22-24 crore worth of inventory listed on our website for sale across India. Our cars have never faced any rejection on the basis of quality or pricing,” says Chaturvedi.
To build its inventory, the company has onboarded industry veterans and hundreds of dealer partners to procure these vehicles. The Boys and Machines team conducts physical inspection as well goes through the complete documentation and service history. After a vehicle meets all requirements, it is procured and serviced to make it as good as new vehicle, then it gets listed on the company website.
Explaining the company’s positioning, Chaturvedi says, “There is a wide gap between a BMW 3-Series and 5-Series seller and one for a 7-series, Maybach or a sports car. That is what we are trying to bridge. If a client, with a Rs 20 lakh budget, walks into my showroom, we would not be able to cater to him/her. That’s what we decided against. We would want to service those clients as well. Our ticket size starts at Rs 20 lakh and goes up to Rs 3-4 crore. The average sale price is around Rs 60-70 lakh.”
In terms of customer trends, Chaturvedi reveals that he views Mumbai as an SUV market, Delhi customers prefer sedans, Hyderabad sees high demand for sports cars, while Kolkata has a mixed demand. Delhi sees 80 percent of vehicle sales on loan, while in Mumbai and Hyderabad around 90 percent of purchases are through single payment. In Kolkata there is no case of financing yet.
Attracting customers and maintaining quality
The crucial aspect for any business is to have sustainable sales and clients. Boys and Machines is betting on its strong workforce and satisfied clients to spread word of mouth. “For any existing dealer, the relationship between him and the customers has built up over the years, but there would always be the first time. It is about what is available and what price. If we are able to offer good quality, the brand that the customer wants all at a very good price, he/she will end up saving lakhs of rupees on a car. They will not then buy from someone who is selling them at a higher price. The cars are not being manufactured by us but by reputed global companies. If our quality is right, we will be able to sell it to the customer. Strategically, what we have done is open our showrooms in the prime cities,” explains Chaturvedi.
When asked why they aren't exploring a franchise model, he says that while expansion might be faster that way, it is difficult to ensure quality in every showroom. Since the fleet is owned by the company, it also helps to maintain an online inventory. In addition to the OEM warranty, the company offers a standard six-month warranty on engine and transmission, and assured buyback at 25 percent depreciation for each year.
With a strong momentum and growth, Boys and Machines now plans to target Tier 2 cities — Indore, Ahmedabad, Chandigarh — in the next 60 days.
This feature was first published in Autocar Professional's May 1, 2021 issue.