BR Research recently caught up with Suneel Munj, Chairman PakWheels.com to discuss the new happenings at Pakistan’s largest community based automobile website. PakWheels.com gets over 25 million visitors annually who view more than 250 million pages on the website. In last year alone, close to 50 percent of Pakistan’s internet population visited PakWheels.com to buy and sell over 400,000 vehicles. This kind of success has made PakWheels.com a prominent name in the global e-commerce and classifieds sectors and helped raise USD 3.5 million in its first round of funding. A die-hard car enthusiast, Suneel did his MBA from the Lahore University of Management Sciences (LUMS) and joined PakWheels as a partner in 2008.

Below are edited excerpts of the interview.

BR Research: Please tell us about the CarSure inspection service and the idea behind it. Also, how has the response been so far?

Suneel Munj: People were facing a lot of issues when purchasing used cars. A lot of the times the car in reality turned to be very different from what was promised in the advertisement. At the same time, there was the need to have a reliable and independent car inspection service which was largely absent.

For example, if you purchase a car in the US, or Middle East you need to pass a MOT test for vehicle safety and road worthiness. In Pakistan, there is no such requirement or institution. When the role of a government regulator is not being fulfilled, there is always an opportunity for businesses to step in. Generally what people used to do is take mechanics with them to check the car condition, but there are many cases when the purchaser was duped.

So back in 2014 we launched Pakistan’s first third-party car inspection service by the name of CarSure. It is a comprehensive car inspection service where our team of experts inspects a car on a 200+ points checklist using modern tools and techniques to verify the car’s condition at your doorstep

We took out the human element so that the results cannot be compromised by manipulating the results. Our entire certification is dependent on gadgets whereby the reading is recorded and fed into the software system that issues a rating. Our aim for the future is to completely transform the experience of buying and selling cars in Pakistan.

Currently the pricing is very nominal where we charge only Rs2000 for the CarSure service. The response has been fantastic and we are continuously overbooked. In addition, we are also providing services to companies such as Careem, which gets a CarSure inspection first before inducting cars. We see the insurance and financing industries as big potential markets in the future.

BRR: How is your collaboration with Autogenie going?

SM: Autogenie is an independent company and we have invested with them. They have a very energetic team and a solid idea. Their model is also quite robust and has room for scalability.

At the moment, it is in its early stages but I believe they have a promising future and our collaboration with them has been quite productive. A new area where we have partnered up is accessory and parts installation where we will sell the product and they will ensure installation and fitting.

BRR: How has PakWheel’s revenue model evolved over time? When do you see the company turning profitable?

SM: There has been a transition from primarily advertisements to other areas, which we view as different pillars in our revenue model. These include feature advertisements, auto-parts e-store, CarSure inspection, bank financing lead, as well as digital media content.

By 2020, we hope to become a profitable company. We are in the process of minimising our expenditures and enhancing our revenue streams. Our new ventures such as CarSure and the auto-parts business hold great potential and have become great revenue streams. The growth in these areas has been much higher than what we expected initially. In addition, our aim is to make PakWheels.com a platform, which would make purchasing a car as easy as ordering a pizza by 2020.

BRR: There has been a visibly increasing penetration by imported cars in the recent past. How has the imported/local car dynamics changed in your opinion?

SM: Previously there were 90 percent local cars listed on PakWheels, whereas only 10 percent were imported. Gradually, the ratio has come down to 60 percent local cars versus 40 percent imported cars. A big reason behind this shift is the unavailability of new local cars in a reasonable time period. Branded car dealerships charge exorbitant amounts as “own rate” to expedite delivery while at the same time also mandating that insurance and extended warranty are also bought through them.

BRR: What are your thoughts on the new auto-policy?

SM: It is a great policy if it is actually implemented upon in letter and spirit. The end aim is to benefit the consumers. It is a welcome step to bring in new auto manufacturers and provide them incentives on greenfield investments. For the first time in the history of Pakistan, in the past six months, six new models have been launched. So competition has its benefits and it is high time that the country moves past the infant-industry argument employed by existing auto-sector players.

One thing I would point, it is the government that can only do so much more. The nation also has to collectively decide to stand up against hoarding and refuse to pay “own” charges. Also, once the market opens up to new players, consumer exploitation will be drastically reduced due to increased competition.

BRR: Do you feel that the regulatory environment for tech start-ups such as PakWheels is restrictive and should be framed to be more encouraging?

SM: Both the federal as well as provincial governments have to realise that tech start-ups are mostly operating in uncharted territory. As such the regulatory and taxation policies cannot be the same as applied to other more traditional business models.

For example, PakWheels is a loss making entity, but it is being subject to a 2 percent turnover tax which cannot be claimed back. Similarly, the Punjab Revenue Authority’s (PRA) provision of submitting GST in advance on advertising revenue should be looked at. Even though the contract has been signed, the actual payment might come after a long time, in some cases even after completion of the contract. So it is really difficult to submit 17 percent GST in advance especially for start-ups, which are generally cash-strapped.