Nippon Paint India is keen to tap India’s vehicle refurbishment market and recently partnered with Spinny and Ola Cars, two new used car start-ups. The company is betting on the increased trend of buying pre-owned cars.
A study by OLX Autos-Crisil suggests used cars sales may register a 15 percent YoY growth in FY2022. The market size is expected to double from 3.8 million units in FY2021 to around 7 million units by FY2026. “We are working with start-ups like Spinny, which is one of the leading used car brands in India,” says Sharad Malhotra, president, Automotive Refinishes and Wood Coatings, Nippon Paint India. The company’s leadership says working with start-ups is part of its growth strategy.
Nippon Paint India’s other key customer in the organised used car space includes Ola Cars, which entered the segment in October 2021 with retail operations in Delhi, Mumbai, Pune, Bengaluru, Chennai, Hyderabad and Ahmedabad. It plans to expand to over 100 cities including Tier 2 towns in CY2022.
The company sells its products directly to major OEMs as well as gets them into the aftermarket through its 2,800 plus retail partners in 1,400 cities. Its refurbishment business contributes around “5 percent to our topline, and is relatively small compared to the main business of aftermarket retail, ” Malhotra says.
Nippon which manufacturers automotive paints at its plant in Bawal, Haryana, says it offers end-to-end refurbishment service, “something no paint company is equipped to provide,” adds Malhotra.
For example, Spinny buys these cars, conducts mechanical repairs and hands them over to the Nippon Paint India personnel stationed at Spinny’s body shops located in all the major cities where it operates,” Malhotra explains. Only after a stringent final quality inspection conducted by Spinny, are these cars listed for sale.
India’s car market is facing supply chain constraints causing long waiting periods on new cars. So many potential car buyers are opting for the used car route and that has brought several start-ups into a largely unorganised market. However, the scenario is set for change with the share of organised players in the pre-owned car market expected to increase from 20 percent currently to 30 percent in the next five years, going by recent study. These new players, mostly start-ups, woo customers on the promise of a well-maintained, non-accident and less-driven used car, often delivered in a ship-shape condition with a one-year warranty tag.