CarDekho betting on insurance and finance products to drive the company to unicorn status

CarDekho, India’s most popular Auto portal laid off employees and slashed salaries as the company sees the rising disruption across the industry caused by the novel coronavirus. (Source: startupsinindia.com)

Automobile search-and-compare portal CarDekho is counting on its financing and insurance products for used cars to fuel its next level of growth. The company, which launched its financing and insurance products in May, has already seen significant traction from the vertical.

In FY17, CarDekho clocked a 37% jump in revenue at over Rs 110 crore, majority of which was on the back of its financing and insurance business. The used car segment alone, which majorly accounts for the financial products, saw a 72% growth.

“The work we started a year ago, we are reaping its benefit now. We have largely seen our used-car segment generating revenues from service offerings that includes financing, insurance, warranty, and so on,” Umang Kumar, President of CarDekho, told Moneycontrol.

The company expects to break-even in a whole-year basis in FY19 and is targeting to acquire unicorn status in the next three years.

CarDekho has been steadily building its insurance and finance vertical in the last one year, after its parent company GirnarSoft procured Insurance Regulatory and Development Authority (IRDA) license in April.

“Insurance and financing will be our focus area this year. The percentage share of this vertical will definitely grow for us in this year. We are looking at a 200% y-o-y growth in finance and about 100% in insurance,” Kumar said. CarDekho processes close to 4,000 insurance policies every month.

Currently, new cars segment accounts for majority of revenue share at about 80%, while used cars or the finance products segment accounts for the rest 20%.

“Loans and financing in used cars is difficult to come by since calculation of value of an asset is complicated. Only about 10-12% get financing for used cars. While financing for new cars is well taken care of by traditional banks,” Kumar said. CarDekho has a 5,000-strong dealer network with over 3,000 dealers in the used-car space.

As the role of online has increased over the years, CarDekho is keen to improve consumer engagement tools on its portal. To start, the company has leveraged virtual reality and 3D technology to create virtual showrooms. One can show an entire showroom of cars right in the potential buyer’s home with a VR headset.

“OEMs don’t have the space to station all models of the car at the showroom. We have built 3D models of the models, which can be rotated and can be checked from all angles possible. We have also recorded actual engine sounds of the cars for more depth,” Kumar said.

According to Kumar, nearly 96% of buyer research for cars online before visiting a dealership, while 45% of them decide which car to buy online. “Almost 80% of all that research by potential buyers is on CarDekho portal. We have over 50 million user researching on our site every month. But only about 40% of them become actual lead for our OEM partners,” he added. CarDekho contributes about 15-30%, on an average, to actual sales.

“In this scenario, it becomes important to personalise and customise the experience for users. We have deployed several tools to track users’ browsing behaviour, such that, what you see on the portal will be different from what I see,” Kumar said.