Cars24 Nears $1 Billion in Sales for FY23
Founded in 2015 by Vikram Chopra, Gajendra Jangid, Ruchit Agarwal, and Mehul Agrawal, Cars24 offers a tech-enabled marketplace, streamlining the buying and selling of pre-owned cars in India, Australia, Thailand, and UAE. Revolutionizing the process by offering an efficient and reliable platform, it employs an AI pricing algorithm for accurate market and appraisal prices. Additionally, the platform facilitates appointments for vehicle inspections.
The Indian Used Car Market size is estimated at USD 31.62 billion in 2024, and is expected to reach USD 63.87 billion by 2029, growing at a CAGR of 15.10%, most likely due to increased demand for individual mobility and expansion of car financing options. Hindered new car sales and production during the pandemic have further fueled the rising prominence of the used car market.
In FY 2023, the company’s operating revenue increased 16% to reach $930.3 million compared to $799 million in FY22. Additionally, the company successfully reduced its net loss by 32% to $168.3 million in FY23 from $248 million in the previous fiscal year. As indicated here, the company is valued at $1.84 billion.
CARS24 operates on a customer-to-business (C2B) model in the used-car resale business. The company guarantees a competitive price for any car, regardless of its model, age, or condition. Sellers can obtain an online valuation and complete the sale in a single visit to any CARS24 branch, receiving instant payment. The platform handles legal documentation at no extra cost. Operating in the automotive, e-commerce, retail, and used car trade, CARS24 charges a 4-5% commission for end-to-end transactions. Pre-owned car sales form the primary revenue stream, followed by financing services and additional commissions. The company also earns non-operating revenues from financial assets.
Despite its success, CARS24 operates in a highly competitive market, facing competition from rivals such as CarDekho, Droom, Quikr Auto, Olx, CarTrade, and NDTV Auto, all targeting the same segment and audience.
Running a business in the used car market comes with its own set of risks and difficulties, especially when dealing with a large and slow-moving inventory. Selling used cars beyond a specified time frame from their acquisition poses a risk, potentially resulting in reduced profits if the inventory doesn’t find buyers within one to two months as the cost of keeping those cars in stock increases.
Moreover, the unicorn startup in the used-car industry is exploring diversification beyond its current focus on the ‘cars’ marketplace that it currently is, into bikes. Simultaneously, the company aims to expand its used car financing platform, utilizing the recently raised funds. It would be interesting to watch how they will counter the challenge in the two-wheeler segment when that sector is wholly run by unorganized players.
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