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“There are 140 million two-wheelers in India, and every year, another 20 million two-wheelers are sold. Over USD 10 billion in two-wheeler financing supports this industry yet the experience for customers is still stuck in the 1980s. It is extremely broken – from finding options to test driving to financing paperwork and more. Every step is disconnected from the next step and there are unnecessary delays all over,” shared Sumit Chhazed, Co-founder and CEO, OTO Capital when quizzed on what led him to launch his automotive fintech platform that doles out inventive finance options for the new generation of customers.

IIT Bombay alumni Sumit Chhazed and Harsh Saruparia envisioned OTO Capital to provide a 10X simpler buying experience for financing and owning a two-wheeler. Reimagining the digital experience for two-wheeler buyers, OTO presents auto buyers with an opportunity to compare brands online, book free unlimited test rides, and make an informed decision. The startup has been able to build a healthy customer relationship by curating user and expert reviews for a diversified class of two-wheelers. The company claims to provide one of the lowest prices and fastest availability of all major models within the city for the buyer. Their financing option offers a simpler leasing-like model for two-wheeler purchases where buyers pay an upfront payment like any other loan, pay up to 30 percent lower EMIs, and have an option to own the two-wheeler at the end of the tenure or return it back to OTO.

This Bengaluru-headquartered startup with services across 10 cities including Hyderabad, Chennai, Pune, Delhi, Ahmedabad, Indore, among others, has grown 8X over the last 12 months. It intends to sell 70,000+ two-wheelers and achieve Rs 600 crore of annual disbursement by March ’23.

Understanding OTO’s business model

The startup has built strategic partnerships with major brands like Hero, Honda, Suzuki, Bounce, and many more to seize new opportunities, and acquire a new set of customers via the digitisation process. The company has partnered with varied banks and non-banking financial companies (NBFC) to offer differentiated products to customers and create a diversified portfolio to a new secured asset class with zero marketing and operational costs for them. Banks and NBFCs have committed Rs 350 crore under this partnership for the next 12 months. The startup also provides full auto lifecycle management, from credit underwriting to insurance, maintenance, and eventual resale of the vehicle to its partners.

The business model has been devised ensuring absolutely no loss post initial down payment and three EMIs. This asset-backed secured lending has NPAs at 0.5 percent as compared to peers. There is a 90 percent NACH activation rate followed by multiple sources of revenue at the time of sale and across the product life cycle.

OTO has been able to obtain bookings for more than 30,000 bikes so far. This one-stop platform has been able to generate tie-ups with more than 500+ dealers and aims to increase it to around 2700+ across 50 cities by 2025. The startup has been emerging as the EV flag bearer in the Indian automobile market and has witnessed a 19X growth in EV sales in the last financial year itself by offering innovative financing schemes such as flexibility to customers to opt out of EVs within 12-24 months of purchase and lower EMIs due to attractive interest rates.

OTO has tied up with leading EV players in the market including Hero Electric, Okinawa, Ampere, and Bounce among others. Through their programs like the OTO Rider Empowerment Program, it aims to benefit the last-mile logistics market with the delivery fleet. It envisages setting a higher benchmark next year by clocking EV sales of Rs 250 crore thus disrupting the electric mobility market.

Meet the founders

Sumit, the co-founder and CEO of the company, has been christened under Forbes Asia 30 under 30. His earlier founding stint with CredR gave him an opportunity to serve over 100,000 customers in the used vehicle segment, which triggered him to initiate his new venture OTO. One of his earlier enterprises, Coursewave was aimed at a disruptive engagement model of online learning which he co-founded during his IIT days, which was acquired in 2013.

“My stint at CredR gave me the insight that new-age customers love to upgrade faster and want to have minimum commitment towards ownership, which is not possible with existing options. With OTO’s financing and digital commerce platform, we envision to re-imagine two-wheeler ownership for millions of Indians. OTO aims to present a 10-fold simpler, faster, and more convenient way for Indians to buy, finance, and own their two-wheelers,” he says.

Harsh, the co-founder and CTO, is a strategic leader and is one of the driving forces behind the success of OTO in creating and conceptualising products and developing cutting-edge technologies to streamline processes resulting in increased productivity, customer engagement, customer loyalty, and revenue streams.

“OTO’s innovative platform has redefined two-wheeler ownership with more personalised, digital and on-demand services. Technological innovations such as those provided by OTO are fuelled by changing customer behaviour. With electric two-wheelers added to the mix, OTO aims to become the default app for Indian buyers to cut through the noise and get a two-wheeler buying experience that has never existed before,” says Harsh.

The impact

The team is India’s first startup that is engaged in facilitating two-wheeler financing/leasing through an e-commerce platform. The ownership and buying patterns are changing, specifically in the new generation i.e., among the millennials and Gen Zs. The incumbent Indian customer is seeking a digitised platform for two-wheeler purchase and affordable finance options. The moment the customer walks in for auto financing, KYC is followed on the OTO app, with every step being digitised. With their strategic partnerships with dealers and automakers, they can serve customers sitting in the comfort of their homes from discovery to delivery.

The startup has been successful in raising funds from Matrix Partners, Prime Venture Partners, and Venture Catalysts with serial entrepreneurs K Ganesh and Sameer Sawhney. They have raised three rounds generating USD 10 million.

With effective economics, the startup is pacing fast in its growth trajectory. The timing is perfect for OTO Capital – digitisation, EVs, and the gig economy are the new order.