Automotive aftermarket
auto parts
embedded credit
captive finance
multi-lender stack
waterfall financing
cascade financing

Here's how automotive e-commerce can boost growth with in-context BNPL

Anna Catherine   /    Content Specialist    /    2022-12-29


Skoda owners in India, despite utmost devotion to their car, would have loathed it, when it comes to repairs. Spares are costly and take a long time to source. Moreover, you have to pay through the nose to maintain it, especially when you service it in showrooms post warranty period. This is not the case of just Skoda owners, but all car owners in general. However, interestingly, that’s changing. Indians are no longer shying away from buying brands they love simply because the after-sales service isn’t the best. In fact, India bought more Skoda cars than any other country, save Germany, earlier this year. What explains this shift in consumer preferences? 

One major factor influencing this shift is the advent of e-commerce and its  progressive takeover of the aftermarket industry. Car owners no longer have to rely on service centres to source spare parts such as brake pads, starters, alternators, etc, or even fast-moving consumables such as filters, wipers and others. A whole assortment of well-defined aftermarket products are now available on e-commerce websites such as Boodmo and Parts Big Boss.

The independent aftermarket dominated by few brands has been disrupted. E-commerce sites have made space for low-cost suppliers who have been serving the aftermarket for a long time, but didn’t have the branding or distribution capabilities to reach the customer directly. 

Variety, price transparency, quick delivery, and cheaper alternatives are the new attributes of the aftermarket industry, thanks to tech-enabled digital distribution of aftermarket parts. But affordability is where the shoe pinches

From making ‘cars’ affordable to making ‘owning a car’ affordable

Expenses don’t end with the purchase of a car. Recently, a Bengaluru man made headlines when he got a ₹22 lakh repair estimate for a car worth ₹11 lakhs. The need for affordable credit in the after-sales service segment is dire. 

Amitabh Kant pointed out in 2018 that India has only 22 cars per 1,000 individuals as compared to over 500 in Japan, Canada and the UK. Among them are cab drivers for whom it is a question of bread and butter. A trip in the rain is enough to bring their lives to a grinding halt. Many cab drivers say they would rather miss a few hours’ pay during heavy rain than spend a month’s earnings to repair cars in case of breakdown. 

It’s increasingly becoming apparent that solving the problem of affordability will unveil a whole new value proposition for aftermarket e-commerce. In fact, it will prove to be the final lap of the race to market consolidation. 

Having said that, it is unlikely that Original Equipment Manufacturers (OEMs) will back down without a fight. They are all competing for a share of the B2B, B2C aftermarket. Toyota, for instance, is revamping its aftermarket supply chain and Toyota Material Handling, India is a classic example of OEM attempts at tapping the aftersales market. Additionally, OEMs have captive financing arms (for eg: Toyota Financial Services, India) that would make the race to consolidation tougher. It’s clear as day that e-commerce players need access to a diverse lender network to stand a chance against OEMs' financial subsidiaries, should the latter seriously enter the aftermarket segment. 

Building a tech-enabled aftermarket credit engine, with FinBox

Embedded credit tech stack is the central lever for accelerating revenue and growth in the aftermarket segment. But there are layers to what a fintech stack should comprise when it comes to e-commerce success.

  • For one, e-commerce players must win on both sides of the aftermarket economy — supply and demand. Hence, a fintech stack that can cater to both consumer financing as well as retailer & distributor financing is crucial. 

  • Two, access to a lender network with diverse lending policies is key to ensure a level-playing field with competing OEMs who have their own financial subsidiaries. At FinBox, we enable e-commerce platforms deeper access to an ever-growing lender network, with a simple one-time integration. Our decisioning engine delivers personalised point-of-sale financing offers to end consumers ensuring the highest approval and acceptance rates from our network of lenders. Our multi-lender network helps connect consumers of every risk category with a lender (see figure below).

  • Three, it is imperative for e-commerce platforms to have straight-through processing capability complete with loan lifecycle management dashboards. FinBox builds end-to-end tech stacks for platforms, automating the entire lending process from loan application to disbursement. In addition, our risk intelligence engine curates adaptive journeys for users based on risk — so much that we enable two-click credit for premium users. This halves the drop-off rates, significantly reduces customer acquisition costs, and leads to higher customer lifetime value. We also offer automated, intuitive nudges to help customers complete a transaction, delivering a 50% improvement in conversion rates. In addition, we also provide a hyper-personalised analytics dashboard designed to give platforms complete control and visibility of credit line management for higher engagement.

Bottom line

E-commerce has the potential to give the automotive aftermarket a new lease of life. The future of automotive aftermarket e-commerce is very promising and all the channel partners, be it parts manufacturers, distributors, or end customers (vehicle owners, garages), have all started making the shift to digital. However, ‘affordability’ remains the centrepiece of the puzzle — and enabling credit in the aftermarket segment is the first step to reshaping consumer perceptions about vehicle ownership. To know more about how FinBox can help you launch and scale in-situ credit products, get in touch with us