Cars24, the used car marketplace unicorn, has forayed into the new car market by launching an aggregator platform for dealerships and OEMs, as part of its ongoing strategy to consolidate the car buying process under a single super app, the company said on March 10.
This comes at a time when players in the space such as Spinny, Droom, and CarDekho have been reporting slower growth and are launching new services to boost revenue.
“We have been able to, with the help of technology, address a core problem of our customers – buying and selling used cars. We want to do the same in the new car category as well,” said Gajendra Jangid, co-founder, Cars24.
“In fact, 50 percent of buyers currently on the Cars24 platform are also evaluating new cars, and we want to ensure they find the car of their choice—whether it's new or pre-owned,” he added.
‘New Cars’ has been rolled out as an online-only offering on the company’s website, and the platform will act as an aggregator for various auto OEMs to list their car models. Features under the new offering include detailed video walkthroughs, on-road pricing details, test drive services, and financing options.
Building a Super App
Gurugram-based Cars24 had in August last year launched a super app to bring ancillary services including vehicle servicing, insurance payments, vehicle financing, chauffeur booking and FASTag distribution under one roof, to expand income streams. Selling brand-new cars is the latest addition to its roster of services.
Its rivals, Spinny and CarDekho, are adopting a similar strategy of venturing into newer verticals, as their used car business has reported slower growth. CarDekho had shut down its used car retail business last year after incurring heavy losses and high cash burn.
While Cars24’s non-core businesses have been growing fast, the used car business remains the largest growth driver – reportedly contributing over 90 percent to the revenue.
After facing growth pangs in FY23, Cars24 reported a 25 percent increase in FY24 revenue to Rs 6,917 crore and Rs 498 crore in losses.
New Cars Not a Big Growth Driver
New Cars will admittedly not be a big growth driver for the near term, said the company, partly due to lower margins in the business.
“We buy and sell vehicles for our used cars business. That is not the case for New Cars. Used cars offer better gross margins, compared to new cars…For the next one year, we are not even looking into the revenues, that is not the objective. First, we want to make sure to increase traffic. We will figure out monetization after,” Jangid said.
In terms of long-term growth, Cars24 is still betting big on the used car market due to its higher total addressable market and growth rate.
In FY23, a total of 51 lakh used cars were sold in India and the industry was worth $34 billion. From there, the sector is expected to grow to $73 billion and sell 1.09 crore used cars by FY28, according to the latest Indian Blue Book (IBB) report by 'car&bike' and 'Das WeltAuto by Volkswagen'.
“The growth in the used car ecosystem is higher than new cars. The former is getting more and more organized. As trust and transparency in the category keeps building, aided by firms like us, more customers will be inclined to buy from this category,” Jangid added.
The unorganised segment for second hand cars accounts for roughly 45-50 percent of the pre-owned market while the organised segment is responsible for only 20 percent of the transactions. C2C transactions make up the remaining 30-35 percent, as per the IBB report.
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