India’s leading ecommerce platform for used vehicles, Cars24, has raised $450 million in new funding round, nearly doubling its valuation to $1.84 billion. This includes a $340 million Series F equity funding round and a $110 million one from multiple financial institutions.
The funding rounds were led by SoftBank Vision Fund 2, Falcon Edge, and DST Global, along with Tencent and existing investors Exor Seeds and Moore Strategic Ventures. With this investment, Cars24 plans to widen its presence in United Arab Emirates (UAE) and Australian markets. The company will also advance its car and bike business in India and continue to enhance its technology for a better customer experience.
Let us dive into the details of this company and how it made profits despite the pandemic.
Cars24 is an online marketplace that facilitates both the purchase and sale of used cars and bikes. Apart from managing the payment, it also handles RC transfer and end-to-end transactions. In addition, the company sells cars online to various businesses across India via its proprietary auction platform.
Cars24 is present in over 200 cities in India and has a total sales volume of more than 4,00,000 vehicles to date. With upwards of 13 million website visits every month, the platform is the largest of its kind in India. It now enjoys more than 90% market share among other similar online transaction platforms.
The Cars24 platform is built with a ‘buy, fix and resell’ model, which gives them an edge over both online and offline competition. It appraises vehicles from individuals, buys them up, reconditions them and resells them to new owners, and makes the delivery. With its centralised platform, the company has gained dominance in the fragmented used car market.
The Covid-19 pandemic had brought the business to a complete standstill with the government-mandated lockdowns. As a result, Cars24 introduced the ‘Home Inspection’ service in all cities to stay relevant in the new period. Moreover, the company’s staff opted for voluntary pay cuts to keep the business going.
From June 2020, demand bounced back, and website traffic quadrupled from pre-coronavirus levels as people were not using public transports. The estimated gross annual revenue went up by 20% to $600 million in FY21, with the growth continuing through September and October 2020.
As the need for personal mobility has remained uniform through the pandemic period, people are continuing to buy from Cars24. Moreover, with job and business losses, more and more people are turning away from buying new cars, resulting in more revenue for the company.
Many people have also sold their second vehicles due to financial stress in this period. With Cars24 offering fair pricing at a time and other brokers taking unfair advantage, most sellers chose this company.
In November 2020, Cars24 became India’s first auto tech startup to obtain Unicorn status by raising $200 million. In the Series, E funding, DST Global, which had backed major Indian startups like Swiggy, Byju’s, Ola, etc., provided capital infusion for Cars24.
Previously in October 2019, Cars24 raised $100 million via a Series D funding round involving various investors.
Following this, Cars24 focused on developing a full-stack approach to their business, providing everything from documentation to servicing. It also obtained an NBFC (non-banking financial company) license to provide vehicle loans. In addition, the company expanded its operations into the Australian and UAE markets.
The current series of funding will let Cars24 expand its presence into the new overseas territory. Cars24 has sold over 1000 cars in UAE from April 2021 and launched a new campaign in Australia in September 2021. It will use the funds to also continue penetrating their existing cars, bikes and financial business in India.
With demand for used vehicles rising in India since the Covid-19 outbreak, Cars24 is all set to penetrate the Indian market. So far, only two out of 100 people in India own cars, a number which the company feels will rise considerably in a few years. By providing a unique and hassle-free shopping experience for customers, Cars24 will likely continue transforming the sector.
As per the latest data available, Cars24 has made Rs. 2,998.14 crores in net sales in FY20 compared to Rs. 1654.61 crores in the previous year.
People have been trying to avoid public transport while needing personal mobility. With new cars being costlier, most people are turning to used cars.
After the $450 million funding round, Cars24 had nearly doubled in value to $1.84 billion from $1 billion last year.
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