New Delhi: One of the latest unicorns, CARS24, is now thinking of entering the new car business. CARS24 entered the used car market nine years back with the aim of organising the largely unorganised used car market and since then, it has expanded to become a financier for used cars by acquiring an NBFC licence besides also expanding its overall bouquet of services to include many aspects of used car purchase. Now, it is eyeing a foray into brand new cars.
Gajendra Jangid, Co-Founder, told ETAuto that a lot of CARS24 customers want to buy new cars and the company has begun some pilot studies before venturing into the new cars business. “That is an interesting question. A lot of customers who are selling cars to us are in need of buying new cars. It is in our interest to get into that business. We are doing some pilots over there….as and when it is ready to be launched we will speak about it…in the new car journey, what is the first thing that you do? You want to know what cars are getting launched, what is the price of the car, what are the reviews about that car…we are providing all this information to customers to select a car of their choice. Idea is that once you come to the CARS24 app, anything to do with the car you will find here.”
We should enter the new car business in a few months, he said.
The foray into new cars will require tie ups with OEMs but CARS24 is still evaluating whether it will become a dealer in new cars or an intermediary in the sale process of new cars. “We have a customer base, we know the car they are looking for. OEMs already have dealerships for selling cars. We could become a bridge between OEMs and dealers. OEMs have a sales target. Dealers want footfalls. We can tie up with OEMs to promote the car they are looking to sell and give the information to customers for cars they are looking to buy. We will be able to give information and insights…we have large traffic coming to us, we have customer engagement…OEMs do not have all these insights,” Jangid said.
Organising the market:
The market for used cars is worth about USD 25 billion and has been growing at a cumulative annual growth rate of 15-20%. Jangid said in the next decade, the market will grow four times to reach the USD 100 billion mark. CARS24 has just about 6% share of the market and Maruti TrueValue may have another 10-12%, he said, leaving a large portion of the used car market in the unorganised sector.
Reducing burn:
Jangid says CARS24 should become profitable in the next 12-18 months and annual revenues are already topping a billion dollars. While the company did not share the financial details for 2023-24, revenue from operations grew by 8% year-on-year in FY23 at INR 5535 crore and EBIDTA margin improved to minus 6% from minus 19%. Profit Before Tax stood at minus INR 468 crore against minus 1093 crore in FY22. Gross margins were up by 11% last fiscal against a growth of 3% in FY22. Jangid said that the company has been “reducing cash burn year on year” and profitability was a milestone. He said that after the last round of funding, in 2022, the company was valued at USD 3.3 billion and no fresh funding was being sought. “We have enough money for the next five years”.
Superb app:
CARS24 has launched a new application, which it says is designed to meet every car-related need of customers as well as of those visitors who merely want to use various services without actually buying a used car on the platform. Orbit, a car management feature within this app, provides real time car valuation, helps with payment of e-challans, hire a driver, track PUC (pollution control) status, insurance and servicing history etc. Already, CARS24 has an NBFC license to finance the used car purchase on its platform and Jangid says 55-60% of the cars bought here are financed against just about 20% penetration of vehicle finance in the overall used car market.
