Cars24, which offers a tech-enabled platform to customers to buy and sell pre-owned vehicles, has raised $200 million in its Series E round, taking the company’s valuation to over $1 billion. With this fund-raise, the startup joined the unicorn club, and claimed it is the only startup in the mobility sector to achieve a unicorn valuation.
The funding round has been led by billionaire Yuri Milner’s fund DST Global that also pumped in $122 million into edtech startup Byju’s earlier this year. Existing investors including Exor Seeds, Unbound and Moore Strategic Ventures also participated in the round.
The capital will be used to bolster Cars24’s new lines of business such as pre-owned two-wheelers, customer financing and servicing.
“With this investment, we will continue to innovate our product and strengthen our capabilities to provide the best experience for all parties – with sellers getting the best value for their car, and buyers getting to choose from a wide assortment of automobiles,” said Vikram Chopra, co-founder and CEO, Cars 24, adding that the capital will also be used towards hiring, brand building and increasing market share from 4% currently to double digits.
After witnessing a sharp decline in business during the lockdown, the company said it has witnessed a robust recovery.
The pandemic augmented the appetite of the industry with increase in inquiries for pre-owned vehicles.
“People who did not have cars were looking to own a car due to safety issues while many others wanted to upgrade from two-wheelers. There was a surge in traffic on the website and monthly transactions surpassed pre-covid levels,” said Chopra.
The lockdown altered several habits of people across countries including the way they used to travel before covid.
According to reports, a considerable share of the commuters will now look forward to using private cars in the post-covid world to essentially maintain social distancing.
While car manufacturing slowed down during the lockdowns, the pre-owned car market has continued to grow over the past year and is larger than the new car market now. In 2018-19, while new car sales were recorded at 3.6 million units, 4 million second-hand cars were bought and sold, according to a report on India’s pre-owned car market by IndianBlueBook, a used car pricing guide by Mahindra First Choice Wheels. Experts say a slowdown in new car sales could mean the demand is shifting towards the pre-owned market. In fact, some car sellers replace their old cars with pre-owned cars instead of buying new ones.
Cars24 has benefitted from this trend. Currently, the company claims to be operating above pre-covid transactions with annual transactions exceeding 200,000 units and a 4X increase in website engagement.
Founded five years ago with an aim to streamline the buying and selling process of pre-owned cars by leveraging cutting edge technology, Cars24 has 230 branches across 100 cities. Despite the ongoing pandemic, it has been able to expand its presence from 155 outlets in 35 cities to 230 outlets till September.
“We have built a one stop shop solution for customers where the magic happens at the backend, thanks to the data science and AI engine that we have built that helps in assessing cars, discovering the best price and making sure that the whole process is fast and hassle-free,” said Chopra.
Chopra said now the focus would be on the used two-wheelers category that was launched during the unlock phase with Cars24 Moto, as well as the financing business. The company had acquired a non-banking financial company (NBFC) license last year for its consumer lending business, Cars24 Financial Services, with an aim to provide seamless and instant access to credit. “The market for used cars and bikes in India is a huge $50 billion opportunity and we are the best set up to ride on these tailwinds.”
This article was first published on livemint.com