Venture capital is flooding the used car market with another significant infusion. One of the fastest growing startups from India has received $450 million. This includes a Series F financing of $340 million and $110,000,000 in debt. Cars24 is valued at $1.84B post-money. This makes it one of the most valuable privately-held used-car startups in the world.
DST Global, Falcon Edge, SoftBank Vision Fund 2 and SoftBank Vision Fund 2 led the Series F. Tencent, existing investors Moore Strategic Ventures, and Exor Seeds also participated. A mix of financial institutions contributed to the debt round. Although the official fundraise is now confirmed, it was rumored to have been smaller than expected. It didn't include the debt portion and some reports were based upon regulatory filings for less money.
Vikram Chopra is the CEO of Gurugram, where he co-founded the company with Mehul, Ruchit, Jangid and Gajendra Jangid. He stated that the plan is to spread the funds over a variety of areas.
These include international and national expansion (it is already in India, Australia, and UAE and plans to expand); technology (specifically, expanding its virtual appraisal process and more data science around pricing and after-sales; and financing to both buy in vehicles and to assist consumers in making vehicle ownership a feasible economic option.
Cars24 has been active in more than 200 Indian cities and has sold over 400,000 vehicles (both motorbikes and cars) to date. It also attracts upwards of 13,000,000 monthly visitors. It is the largest Indian platform for this type of selling. Its goal is to make it easier to sell a car or buy a used car in other parts of the world, and not just in India.
Chopra stated in an interview that selling or buying a car can be difficult anywhere in the world. We are working to fix this.
Technology and financing are also important here. Chopra stated that Cars24 was founded in India in 2015. The country has a difficult economic environment with a low level of car ownership, at 2% (or 2 cars per 100) compared to Europe, which is typically between 50-80 cars per 100.
Chopra stated that buying a used car is an option for anyone to own any car. We want to increase penetration in a country such as India to 10 or 15, Chopra said. He also stated that India's current car resale market is valued at around $25 billion but could soon reach $100 billion.
Cars24 is a model that combines buying-in, fixing-up, and then selling. It works in a similar way to Opendoor, which appraises vehicles and buys them up at a price agreed upon. Then it reconditions them and resells them to new owners. Chopra stated that this model gives Cars24 an advantage over traditional players (both online and offline).
It provides a central platform, cars24.com, and the corresponding app. This allows users to browse an inventory that extends beyond their local area (and local dealers). Cars24's technology also determines the pricing and curates that inventory.
Cars24 is creating a data-enabled platform to organize the fragmented Indian used car market, stated Munish Varma (Managing Partner, SoftBank Investment Advisers), in a statement. We have closely followed its efforts to disrupt the Indian used car retailing industry.
Sumer Juneja (partner, SoftBank Investment Advisers), stated that Cars24 has the potential to improve the customer experience in the used vehicle industry through its focus on technology. This growth will be supported by SoftBank Investment Advisers, who have extensive knowledge in all aspects of e-commerce.
A second option is that consumers can return a vehicle if they are not satisfied with it after they have made a purchase.
Chopra explained that this is different from other used-car sites as well as physical sellers: they don't offer trial runs or, in the case of individual offline sellers, they may give a driver 10 to 15 minutes to drive the vehicle around. This is not a great way for you to find out what you like and dislike about the vehicle.
Investors believe it will give Cars24 an advantage over its competitors.
In a statement, Navroz D. Udwadia (co-founder of Falcon Edge Capital) said that they have looked at used car platforms around the world and were struck by the similarities between Cars24, and similar businesses that have scaled well. Cars24 has consolidated its first-mover advantage through the creation of wide-ranging supply side moats that in turn drives demand liquidity on the platform. Cars24's positioning as a consumer-friendly buying and selling platform drives a lot of top-of-mind recognition. Rarely is a business so focused on the customer experience and driven to make it exceptional through the use of technology and data science. We are also impressed with the leadership of the founders and we are delighted to support them as they transform India's used car industry and expand internationally in MENA and SE Asia.
It is ironic that a platform for selling used vehicles raises a lot of money, given the larger trends in transportation.
One theory is that the surge in popularity of e-hailing apps such as Uber, on-demand car-sharing service like Getaround and Zipcar, as well as a push to urban centers encouraging people use more transportation options to offset traffic, and larger environmental trends that encourage some to abandon gas-guzzling cars would lead to the end of car ownership. Cars24 and others like it are prolonging the lives of many older models to keep them in private hands.
Uber can be expensive and not as convenient as owning your own car. Chopra stated that the desire to own a vehicle is at its highest point right now due to Covid-19 and those concerned about the spread of the virus.
He said that it is not true in India that fewer people want cars. We have seen lots of demand in India during the pandemic. This will allow Cars24 to present a new class of cars as electric vehicle adoption increases. It's not yet all there.
We are seeing a lot of startups and scale-ups trying to create the next generation of used car-sale platforms because of the strength of the current opportunity.
Other companies in the same sector that raised money recently include Spinny (also from India); Cazoo (UK), which has now gone public. InstaCarro, Kavak, and Carsome (Malaysia) are all close competitors. Carvana is a major used-car platform and is publicly listed. It is currently valued at almost $28 billion.
It has been fascinating to see that these large players have carved strong markets in their own countries and are now looking to expand internationally. Cars24 has raised hundreds of millions of dollars (it raised $200 million less last year) partly because its investors believe it can export and scale its model beyond India's huge market.
Cars24 is changing the way people buy and sell cars. They offer a unique digital shopping experience and transaction experience that allows them to do so in an entirely new way, according Rahul Mehta (managing partner at DST Global). Their undisputed leadership in India's used car market has been achieved and their early success in international markets has exceeded all expectations. We are proud to support founders who are ambitious and bold thinkers. This is why we are thrilled to continue our long-term partnership with Cars24.
Updated at Cars24's request. Its description as a marketplace and the number active cities have been increased to 200, from 130.
