Cars24 is one of the early entrants in the Indian auto tech space. Ever since its inception in 2015, Cars24 has seen a healthy sequential growth pattern until the COVID-19 crisis hit the globe. Before 2020, the tech startup grew strength to strength by adding over 1,000 employees in just three years and roping Mahendra Singh Dhoni as one of its key angel investors. It has achieved a market presence of 130+ cities and became one of the leaders in the pre-owned vehicles segment. It witnessed a 100 percent growth in 2019-20 but the pandemic halted all of its business operations and tanked their revenue to zero in April 2020. To avert the crisis, Cars24 introduced a new ‘Home Inspection' service to stay relevant in these unprecedented times. The company says that this effective solution has helped them gain back momentum, and claims that half of the traffic post lockdown has come from Home Inspection.
Disclaimer: The article was updated on December 25, because Cars 24 sent updated answers with more recent details.
Expert's opinion: TechArc analyst Faisal Kawoosa says, “First of all I think the company has nailed it. A car owner when decides to sell, is in haste for many reasons and anyone meeting the expectations to get a car sold as quickly as possible is adding a great value to the equation. Cars24 has done it right.”
He adds that due to the COVID-19 impact, many people may have gone light on assets due to financial stress. “Either sold their 2nd car or even the solo one, and many a times, brokers take an undue advantage of it. Now, if Cars24 has continued to remain transparent and kept the parameters of evaluating the potential value of a car same as before COVID-19, that is a good differentiator which even consumers would have appreciated. In the overall digital landscape, trust between the demand and supply is still shaky and getting that right is very important for the overall growth of digital services. I would expect Cars24 to work on a benchmark which brings in transparency, credibility and trust to the equation so that users can transact without any ambiguities. It should become the industry standard and that should be the aspiration,” Kawoosa asserts.
Gadgets 360 spoke to co-founder and CMO of Cars24, Gajendra Jangid to know a bit more about the company's success story in the auto tech sector.
1. How did you think of this business idea? When did you finally take the leap of faith and make it official?
In a country where around 0.35 million (3.5 lakhs) pre-owned cars are transacted per month, the biggest woe of customers always has been the aftermath of the said transaction. Five years back there were several challenges that existed for an average customer in the pre-owned car industry which we tried to address with Cars24. Our aim was to build a brand that could cater to the needs of the customer while buying/selling of pre-owned cars.
We as a brand wanted to shift focus to the supply side of the market, which was uncommon for the industry. Predominantly, the pre-owned car industry has been very fragmented with a majority of unorganized players. Most of these players have always focused on meeting demand expectations. Hence, challenging the pre-existing marketing, we wanted to build a ‘supply first approach and transaction led business' which focused on aggregating the supply side of the market. Thus, we ventured into the Industry with Cars24 in August 2015 with our first branch at Golf-Course Road, Gurugram. We haven't looked back since.
We have been expanding our presence in PAN India and have captured the market presence of 130+ cities catering to 15,000 cars per month. Our game changer- the seller side transaction led model which was derived customer backwards has helped us scale exponentially and become one of the most revered used car businesses in the industry. Our competitive edge lies in our core offerings, namely single visit, best price, free RC transfers and instant payment options.
We at Cars24 have witnessed more than 100 percent staggering growth year on year, more than that of any other company in the Indian used car ecosystem. After our highly successful supply business model, we've further expanded to the buying business model where we have introduced several industry-first services such as buyback guarantee, warranty, car condition verification, and accessible consumer financing.
In 2019, Cars24 was the first player in the pre-owned vehicle industry to procure a non-banking financial company (NBFC) license and launch consumer lending business with Cars24 Financial Services. Consecutively, the company ventured into the two-wheeler segment and car servicing business in Delhi-NCR.
Since its inception, Cars24 has built a strong technology backbone that features various first-of-its-kind offerings including an innovative auction format, a state-of-the-art proprietary inspection app, and a powerful algorithm that matches supply and demand across the country. In addition, Cars24 also features an innovative price discovery mechanism for used vehicles. In conclusion, today we proudly say that we pioneered a full-stack model and we own the entire value chain right from transaction to financing, to documentation etc.
2. Could you share some interesting stories about initial struggle days? How did you manage to overcome these struggles? What has it taught you?
In a start-up, there are many scaling challenges one faces, and our story is no different. We faced many operational struggles in the past few years, both big and small, be it dealer or customer oriented. However, we at Cars24 have always approached the problems with innovative solutions. Our technology and data science teams are heavily responsible in helping us combat these challenges.
When we started, the industry largely relied on inspections in-person/physically to verify and inspect thoroughly. Since it had been an industry-standard practice for the longest time, expecting our channel partners to switch to a digital format was something we knew we'd have issues with. Gaining their trust for this digital reliant idea was not easy. A majority of the dealers were hesitant to participate in online auctions due to the lack of physical inspections.
To combat this issue, our teams at the technology department worked diligently to build an entire environment/ecosystem that focused on transparency, security, and total accountability on our part in an effort to reassure the dealers of our #1 focus, i.e, accurate and efficient inspections on ~150+ parameters for the car. This not only helped them easily participate in auctions but also helped us tackle the resistance and emerge as one of the key players in the organised used car market.
Each pre-owned car is an asset and has its own journey and hence a unique pricing. To achieve this uniqueness of the vehicle we came up with a solution and developed an in-house price evaluation tool. With the help of machine learning, the tool accurately predicts the pricing of the car based on the certain parameters such as make, model, car condition and demand-supply conditions in the market.
We have learnt that trust is something which every external stakeholder looks forward to in a business and data-centric approach can help solve problems in a more practical and structured way.
3. Every successful startup has to deal with challenges that the outside world knows little about. Could you please elaborate on one such incident and how you dealt with that downturn?
One of the biggest challenges businesses across India have faced is the nationwide lockdown due to the Covid-19 outbreak. Almost all our business operations came to a halt and our revenue tanked to zero in April 2020. During the Unlock in May, we faced an immense decrease in footfall as compared to pre-corona levels as people were not ready to step out of their homes in such unprecedented times. Hence, as a business that abides by the rule of problem-solving, we made technological changes and offered “Home Inspection” throughout India. An effective solution in itself, post lockdown till date half of the traffic has come from Home Inspection.
4. What are the biggest milestones that Cars24 has crossed since inception? Please offer details on them.
For us, each milestone is as big an achievement as any. But three notable milestones are really close to our hearts. Being a start-up, there is always that question of ‘what if? Even the tiniest of reassurances matter the most in the early days. One of the most surreal moments for us as a young start-up was the moment when we launched our first TV campaign.
Another key moment in our journey was when we were awarded with NBFC license, we became the first start-up in this Category to be awarded with. We have always kept the customers at the forefront and relentlessly worked on how to make used cars more accessible for the country. And to be able to provide easy loans at a low interest for our customers and channel partners through this license truly falls in line with our customer-centric philosophy.
Also, an important achievement in this journey is becoming India's first Auto Tech Start-up to join the coveted Unicorn/Billion Dollar Club in November 2020 by raising $200 million in Series E funding.
These milestones are not only achievements to treasure but reminders that no dream is too small. And that the best is yet to come!
5. Could you please offer some details on the impact of COVID-19 on your business?
Our business came to a complete standstill when the government-mandated lockdown was announced. Our teams worked and developed new products and solutions that would be relevant in the new normal, including introducing Home inspections in all cities and product updates for the same, safety SOPs, Cars24 bike vertical Moto24 etc.
As a business that abides by the rule of problem-solving, we made technological changes and offered “Home Inspection” throughout India. An effective solution in itself, post lockdown till date half of the traffic has come from Home Inspection.
The rebound in the business came increasingly, the company stands at 130+ cities and 4x growth in website traffic in comparison to Pre-Covid level. Due to the immense amount of growth, we raised $200 million in a series E round of funding, which valued it at over $1 billion and made us the first unicorn in India's auto segment.
6. Any advice for young Indian entrepreneurs out there?
Entrepreneurship is more about the opportunity and how swiftly you capitalize on that particular opportunity. This quality defines the entrepreneurial spirit and sets him/her apart from the crowd. If we understood the market and wouldn't have acted upon it, we wouldn't have reached the milestone. I would just say that despite all the challenges, be a hustler! That is one of the key organisation traits of Cars24. Also, entrepreneurs should be empathetic, focus on the emotional quotient and adopt a customer-centric approach always!
7. Where does Cars24 see itself in the next five years?
We are currently at 4 percent market share and want to grow this market share to 20 percent of Indian used car ecosystem.
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