Used car marketplace Cars24’s sales inched closer to the $1 Bn mark during the financial year ended March 31, 2023. The Delhi NCR-based unicorn saw its consolidated operating revenue jump 16% to $930.3 Mn in the financial year 2022-23 (FY23) from $799 Mn in FY22.
Founded in 2015 by Vikram Chopra, Gajendra Jangid, Ruchit Agarwal, and Mehul Agrawal, Cars24 offers a platform for car owners to sell their used cars while also allowing users to purchase used cars from its site and its company’s branches.
The startup primarily earns revenue by selling cars. Besides this, it also earns from car delivery charges, parking fees, and other car-related services.
Including other income, Cars24’s total revenue rose 18% to $946.9 Mn during the year under review from $803.6 Mn in FY22.
The unicorn also managed to narrow its loss during the year. Its net loss declined 32% to $168.3 Mn in FY23 from $248 Mn in the previous fiscal year.
Where Did Cars24 Spend?
The startup, backed by MS Dhoni, managed to keep its total expenditure flat at around $1 Bn ($1.1 Bn) during the year under review.
Procurement Cost: Unlike Spinny and Droom, Cars24 purchases pre-owned cars in order to sell them to customers. At $806 Mn, this procurement cost accounted for 74% of its total expenditure. However, it was almost flat compared to $797.1 Mn in FY22. The drop in procurement cost could be attributed to the startup shutting its Saudi Arabia and Indonesia operations during the year under review.
Employee Benefit Expenditure: Employee costs rose a mere 2% to $93.6 Mn in FY23 from $92 Mn in the previous fiscal year. It must be noted that the startup laid off around 600 employees and saw several high-level exits in FY23.
Advertising Expenditure: Cars24’s advertising expenditure declined 20% to $43.7 Mn in FY23 from $54.3 Mn in the previous fiscal.
Interestingly, Cars24 is far ahead of its rivals in terms of total revenue. Amit Jain-led CarDekho group, which is in the second spot in terms of revenue generation among Indian used-car marketplaces, reported an operating revenue of INR 2,331 Cr ($284.2 Mn) in FY23. Its net loss remained flat at INR 562 Cr ($68.5 Mn) during the year.
Meanwhile, publicly listed CarTrade saw its operating revenue rise 16% to INR 363.74 Cr from INR 312.72 Cr in the previous year. However, the startup reported a profit of INR 40.3 Cr during the year as against a net loss of INR 121.3 Cr in FY22.
The used-car marketplace saw a sudden boom during the two years of Covid-19 pandemic. It was during this period that startups such as Cars24 and Droom, turned unicorn after raising massive funding rounds.
However, as the effect of the pandemic waned down, these startups saw a dip in their sales. Consequently, Cars24 forayed into the car financing space with Cars24 Financials Services. Car24’s financial services business generated a revenue of $3.1 Mn in FY23, 181% higher than $1.1 Mn in the previous fiscal.
It must also be noted that Cars24 converted into a public entity in 2021 in a bid to go public. However, it shelved its IPO plans due to economic slowdown and volatile market conditions.
Cars24 was last valued at $3.2 Bn and has raised over a billion dollars in funding till date. The startup counts the likes of SoftBank, DST Global, Alpha Wave Global, and Commercial Bank of Dubai among its investors.
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