In an interview with Motown India’s Roy P Tharyan, the Co-founder & CTO, DriveX, Christopher Sargunam, talks about his company’s short journey since its initial investment from TVS. DriveX has also been co founded by India’s first Formula 1 driver Narain Karthikeyan.
Q1 The Indian two wheeler market is perhaps the largest two wheeler market in the world with around 16 million 2 wheelers being sold in the domestic market and another 3.6 odd million being exported. Thus, the pre owned two wheeler market would also be large. What are the numbers here?
As of March 31, 2021, the gross transaction value of the Indian used two-wheeler market is Rs 86,052 crore. The FY15–FY20 CAGR for India’s used two-wheeler market is 15.5%, while the FY21–FY26 CAGR is 11.6%.
However, beyond this, estimating the real value of the used vehicle market in India is difficult. This is because many people do not re-register their used vehicles. What can be said is that the market should be somewhere at least 4 times the new vehicle number. So, even at 2X, our business is a vast market, and as people buy and sell vehicles every year, 5X the new vehicles market would be a safe estimate which we are aiming for.
Q2: DriveX Mobility Ltd. (DriveX) got off to a great start in 2022 with a decent investment from TVS to the tune of Rs. 85.41 crore. How has the journey been since then?
The journey since August 2022, when DriveX raised funding of INR 85.41 Cr from TVS Motor Company in exchange for a 48.27% stake, has been one full of steady growth and sustainability. We are self-sufficient now and are focused on setting up our base to grow quickly. Our current goal is the vertical growth of the organisation, which basically means setting out to expand pan India, setting up essential infrastructure, hiring the right teams, building up the tech stack, and standardising processes. It’s been a busy few months, and we anticipate the next few to be even busier.
To illustrate, in February 2023, we launched our first state-of-the-art DriveX Technical Centre at Coimbatore. The Coimbatore Technical Centre will be able to refurbish 350–400 two-wheelers a month and will equip multi-brand two-wheelers with the latest ELGI machinery that has been made to DriveX’s standards and specifications.
Our goal is to log retail sales of over 6,000 vehicles a year and establish 50 outlets and five refurb centres across tier I and tier II cities.
Unlike other startups in the automotive field, we are glad to have the support of a few OEMs. For example, TVS Motor’s senior associates and staff have supported us with expertise in relevant areas and have helped us grow continuously in both a successful and sustainable manner.
Q3: This company was also founded by India’s first Formula 1 driver Narain Karthikeyan besides Christopher. Has Narain’s charm, fame and expertise rubbed off on the business in a positive manner?
Oh, definitely! We know it for a fact. His expertise in the automotive industry and his connect with the leading OEMs in India have helped a huge deal in charting our next steps forward. We have been able to benefit from multiple OEMs’ support, namely TVS Motor, Bajaj Auto, and Hero Electric, and expand our portfolio due to his experience in the industry. It also benefits us in the finer aspects, such as the relationship between DriveX and the spares and consumables manufacturers.
Q4: DriveX is Asia’s first multi-brand affordable mobility platform and India’s first and only digital-first auto-tech platform in the pre-owned two-wheeler category. In India, in this pre owned space, what percentage of business is done on the digital platform? Does it also mean that the unorganised way of doing business in the past is finally moving to a more organised way of doing business here?
With the rise of emerging technologies, the popularity of e-commerce platforms has increased, which has led to an increase in the market for pre-owned two-wheelers in the online space. This has been made possible because of increased convenience, easy financing, greater trust, and zero hassle among consumers.
The disorganisation in the pre-owned two-wheeler vehicle market is widespread, but it is going away gradually. We would like to be that disrupting factor in the market. DriveX aims to accelerate this process through its end-to-end, digitally native, affordable, and innovative solutions.
Q5: Your company recently established a technical centre in Coimbatore. It has a large working capacity with ATS ELGI machinery to meet big demands. Can you explain the importance of this machinery and the capabilities of your trained staff? Also, will you be establishing more such tech centres? Where?
At the moment, DriveX is a small but nimble startup. We have a variety of personnel working in various divisions – sales, marketing, tech, etc. We also have people such as technicians, tinkerers, and painters in our team, who have been extremely valuable in our work, and besides employment, we are supporting them by providing them with insurance policies and other assistance. We are also currently hiring a couple of hundred personnel, to form an entire ecosystem for scaling up 10X in the near future. We have also been collaborating with training colleges to provide jobs to ITI graduates.
Yes, we are planning to establish more such centres in Hosur and Chennai soon.
We intend to set up Technical Centres all over India eventually. We also aim to log retail sales of over 6,000 vehicles a year and establish 50 outlets and five refurb centres across tier I and tier II cities. We are also in the process of reaching out to all the potential franchisees all across the country for our FOFO model.
Q6: With electric two wheelers slowly but steadily gaining popularity, how do you foresee a preowned business in EVs, both in terms of refurbishment as well as servicing?
We have identified the rapid advancement of tech and consumers’ need for affordability as the most crucial factors in the EV space. Moreover, customers’ concerns regarding the residual value need to be addressed, given how rapidly the whole world is moving towards electrification. We are considering these factors in our planning for the EV business.
That said, DriveX is the first in the country to have repowering centres, wherein pre-owned electric two-wheelers coming into the market are taken in by DriveX, re-powered, and then put back on the platform. This lowers the price point for customers dramatically whilst giving them a similar experience.
Q7: Rs 85 crore is definitely a good initial funding amount. Will the company be looking at further investment to ramp up business and build credibility? Your revenues are still at a conservatively low level, do you see that increasing in the near future?
We are self-sufficient at this point in time. But, never say never. Right?! Later, on hitting certain milestones, we would definitely want to expand further even more rapidly, at which point funds could be required. However, as of yet, our focus is on achieving the targets that we have set before we start going and making any other.
We are scaling rather rapidly. Within 12 months of our launch, we were able to establish 2 refurb centres and 4 fulfilment centres, enabling 5000+ vehicle transactions and growing 40% M-o-M. The revenue of the company grew ~17x in FY 21–22 against the previous year.
In year 1, we were able to do Rs 45–50 lakhs, and in year 2, we did close to Rs 8 Cr. For FY23, our annual turnover is Rs 12–14 Cr. We are aiming to hit a year-on-year growth of 10X.
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