Last November, CARS24 raised $200 million in a series E funding round, which valued it at over $1 billion and made it the first unicorn in India’s auto space. India’s largest online marketplace for used cars, CARS24
Services, has closed a $450 million funding round that has almost doubled its valuation
to $1.84 billion.
The funding includes a $340 million Series F equity round, coupled with $110 million debt from multiple financial institutions.
This is the biggest round for the six-year-old start-up, which also saw participation from Tencent and existing investors such as Moore Strategic Ventures and Exor Seeds. Existing investors like Yuri Milner’s DST Global and the US’s Falcon Edge also invested.
Last November, CARS24
raised $200 million in a series E funding round, which valued it at over $1 billion and made it the first unicorn in India’s auto space. The capital from the latest fundraise is likely to be used to build warehouses to recondition old cars.
The company buys cars from individual sellers, reconditions them — which includes quality checks, minor or major fixes — and then makes the car available for sale.
The pre-owned cars market is expected to more than double to 8.2 million units or $47 billion by financial year 2025-26 (FY26) from 4 million units in FY21 or $17 billion, which means that two used-cars are expected to be sold for every new one, according to a report by JM Financial.
“The biggest problem that customers face while buying a pre-owned car is where does he find the desired model. When a consumer comes to CARS24
, he finds 10,000 cars to choose from, whereas he will find a maximum of 50 models in a dealership. This is an incredibly hard business to make, you have to solve difficult problems in logistics, but despite that we have had high satisfaction scores from customers,” said Vikram Chopra, co-founder and CEO of CARS24.
In FY20, the firm recorded consolidated revenue of Rs 3,056 crore, compared to Rs 1,687 crore recorded the previous year. Chopra said as more organised players emerge in the used cars
business, trust will increase among customers.
“Out of 100 people in India, two own a car. Most people don’t have a car because they can’t afford it, which makes pre-owned cars a very viable business model, because it’s more affordable,” Chopra said.
With supply-side disruptions like the shortage of semiconductors preventing auto companies
from rolling out new models and meeting the increased demand, the demand for used-cars surged over the past year. Besides, the amid the uncertainty sparked by the pandemic there is an increased preference for affordable used cars, according to the JM Financial report.
India’s largest carmaker, Maruti Suzuki, said production in September may drop by as much as 60 per cent due to shortage of semiconductors.
In fact, SoftBank has invested in a number of online used-car vendors around the world, including China’s Chehaoduo, Mexico’s Kavak, and Carro in southeast Asia.
“Investors say they find value in the business model as the company is trying to organise the fragmented used-cars market using technology. We have studied such platforms globally and are struck by the similarities we see between CARS24 and analogous businesses that have scaled successfully,” said Navroz D Udwadia, co-founder of Falcon Edge Capital
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