Cars24 is a Gurgaon based start-up which recently joined the unicorn league. Cars24 is the biggest online marketplace in India for used vehicles.
Spike in Website Traffic with the onset of the pandemic
Cars24 reported a four-fold increase in their website traffic. It is astonishing that this increase began precisely with the start of the pandemic which clearly shows the increased demand for used vehicles during the pandemic.
Upcoming funding deal valued at $250 M
The company is working out a funding deal valued at $250 M backed by investors including DST Global. If successful, this deal could double Cars24’s site value between $1.6 M to $2B.
Renewed interest towards pre-owned cars during the pandemic
The demand for used vehicles has spiked in India since people are afraid to take public transport. The second-hand vehicle market exploded during the pandemic. Since the spending thresholds have reduced for people from all walks of life, investing in a brand-new car has taken a backseat. There is also no concern regarding the status symbol which a pre-owned car might bring to the table.
Business model of Cars24
Cars24 is aimed at easing the process of the used car, pre-owned motorcycles and scooters’ trade in India. Cars24’s business model is to price vehicles based on AI algorithms. The insights from the data will match the least troublesome car with its soon to be owner.
Cars24 have their own reconditioning facilities where vehicles to be listed for sale will be refurbished. The refurbished vehicles can be returned within 7 days without the need to furnish a reason for the same. Each vehicle sold through Cars24 will enjoy a six-month long warranty period. The business model of Cars24 also includes customised financial services and vehicle lending products.
Global expansion to new markets
The start-up is actively exploring new markets and has already set up base in Australia and the United Arab Emirates. They also have plans to stretch their presence in more middle eastern and southeast Asian markets.
For 2021, the company has already set aside funds worth INR 738 Cr ($98 M) for expansion of its international operations. Through their global expansion, they want to cater to new and unique consumers across the world.
Cars24 was particularly interested in the Australian market since the consumer base here loves cars and had never experienced a business model quite like Cars24 which made it simple to trade in pre-owned refurbished vehicles.
Future and Forecasting
Currently, Cars24 is operating 20 car studios in more than 10 locations. About 400 cars are being catalogued by the company each day. They have an assortment of more than 10,000 cars.
For the year 2021, they have planned to establish 7 refurbishment workshops spanning an area of 50 acres in total. They also want to hit targets of 20,000 refurbished cars monthly.
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What’s in it for me?
Since its inception, Cars24 has been a seller focused platform for used cars. But since then, they tactfully changed their stance from being a seller-focused to being a buyer-focused firm. They offered a fair incentive for customers who wanted to buy used automobiles from them based on a purely online experience. The incentive of a 7 day no-questions-asked return policy and the 6-month warranty sealed the deal for Cars24.
While making the transition to a buyer-focused used car dealership, Cars24 had to shoulder the responsibility of logistics, in-house refurbishing via their own workshops.
Their focus on doing quality checks of the vehicle through a 140-point inspection before sales has helped them find favour with customers. Cars24’s venture into the financing business in 2019 proved to be profitable to them since they reported earnings of INR 10 Cr ($1.3 M) purely from finance products and loan interest.
