Think of a scenario where you’re on the lookout for a suitable deal for trading off your old car, but resort to backing off from the deal before completing the transaction owing to lack of knowledge regarding the prices as well as the process to be followed. The fear of being stuck with a bad deal makes one hesitate even if the prices being negotiated are well known.
Owing to the COVID pandemic the transit systems of India have been shut off completely as the country resorted to a nationwide lockdown. The present times have observed an increasing number of people leaning towards buying used cars over purchasing new ones. Since the pandemic has had dire implications upon the economy, purchasing new cars has become an option which could be avoided, and used cars have slowly become more preferable.
One of the platforms that have highly benefited from this shift is Cars24 Services Pvt. Based in Gurgaon, India, this company is an online marketplace for used cars. With its recent funding, the platform has emerged as the first startup in the auto sector to reach the unicorn valuation.
“Traditionally, car selling or buying has been a tiresome process, however, over the last five years, we have strived to transform the customer's journey- 'the CARS24 way' that is hassle-free, safe and transparent,”
- Vikram Chopra, Co-founder and CEO, Cars24 to Business Insider
Through this blog, we will provide you a gist about the platform of Cars24, about its founders, its business model, it’s funding, its success story, its origin, as well as its growth.
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As confirmed by Business Standard in a July, 2020 report, CARS24 is a technology platform which facilitates the purchase and sale of used cars in the span of an hour following a single visit to one of the platform’s branches. Apart from payment, the platform also handles paperwork such as RC transfer and authorizes end-to-end transactions. The firm sells these cars online via its proprietary auction platform to businesses across India, which are dealing with pre-owned cars.
As of now, the platform has more than 10,000 channel partners from over 230 cities across India, having more than 210 branches across 70 cities.
Established in 2015 by Vikram Chopra, the platform presently operates in more than 130 cities across India. As per a December 2020, moneycontrol article, Cars24 presently claims to do around 15,000 transactions per month.. The platform has stated that it aims to target 1 million annual deals around the end of 2021.
The platform has also forayed in the loan-against-car arena in which the car owners can seek loan against their cars.
Cars24’s competitors include Carwale, CarTrade, Droom, CarDekho, Spinny, and more alongside horizontal players like Quikr and Olx India.
“Our motive is to expand across India and give our customers a hassle-free selling experience. Any car owner can sell their car at a great price in less than an hour by driving down to the nearest CARS24 branch. To make it a reality, we’ve been investing heavily in making our tech more robust, as well as, convenient and frictionless for all”
- Vikram Chopra to Your Story
Vikram Chopra is the CEO as well as co-founder of the platform. Graduating with a degree in both BTech and MTech in Engineering from Bombay’s Indian Institute of Technology, he also possesses an MBA in Finance from the University of Pennsylvania. Prior to establishing Cars24 he was also the co-founder of FabFurnish as well as an Investment Analyst at Sequoia Capital. He was also a Business Analyst at McKinsey & Company for a period of over 2 and half years.
Another co-founder of Cars24 is Mehul Agrawal, who is also the COO of the platform. He possesses an MBA from Calcutta’s Indian Institute of Management and has worked with the Boston Consulting Group in the past. Prior to this, he had been one of the founders as well as the Managing Director of the online furniture company FabFurnish.
Yet another cofounder of Cars24 is Gajendra Jangid. He is also the CMO of the platform. Similar to Vikram, he too has an engineering degree in BTech and MTech from Bombay’s Indian Institute of Technology. Prior to co-founding CARS24, Gajendra had been working at Schlumberger for about 9 years.
The Chief Financial Officer as well as co-founder of Cars24 is Ruchit Agarwal, A Cornell University graduate he had been the Vice President at Bank of America Merrill Lynch prior to co-founding CARS24.
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The Origin of Cars24
Prior to establishing the concept of CARS24, the founders noticed that the used cars industry has been chaotic since a long time. They noticed the huge degree of breach in the demand and supply of this industry. There was an absence of standard procedure for selling or purchasing a used car; and the industry also didn’t possess the technology to be able to determine a suitable price for the car.
Yet another barrier was the tedious procedure for accessing for potential users and the jumbled market players who don’t facilitate a detailed appraisal of the car. A great degree of time and efforts have to be contributed on the part of both the buyers and sellers to make a suitable
Upon observing these discrepancies the founders aimed to adopt technology in order to resolve these issues and simplify the whole procedure of purchasing and selling used cars for its users. The founders believed in the promise offered by the used car industry and had faith that their idea would spark a revolution.
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Cars24 Business Model
The Business Model of Cars24
1. Customer to Business (C2B) Model
The platform is focused on a customer-to-business (C2B) model. It purchases cars from users and in turn, sells them on to dealers. Contrary to a classified platform, Cars24 facilitates end-to-end transactions, charging a commission for every deal.
CARS24 is primarily a business for resale of used cars. The platform’s business model is based on the criterias of purchasing a car from their owner at the most suitable price and competent price in comparison with the other alternate services for car resale around the neighbourhood. The platform is basically focused on offering the Indian consumers a more suitable and easier alternative as opposed to various other banal approaches of selling used cars, in order to help make the whole procedure smoother and more straightforward.
The platform facilitates an assured price for every car, irrespective of its condition, age as well as model. This allows owners of used cars to be able to sell them in a single visit at any branch of the platform. Cars24 also allows the users to obtain a sketchy valuation, on the basis of the information provided of their car online on the platform. The users who sell their cars through the company’s platform obtain the payment instantly.
Alongside this, the platform also handles the transfer of legal documents pertaining to the registration of the vehicle, without the seller being required to pay any additional cost. The platform primarily operates in sections such as automotive, e-commerce, retail as well as trade of used cars, and has progressed at a rapid rate from the time of its establishment on the basis of this leading model.
2. Customer to Customer (C2C) Business Model
Recently the company has ventured to include the C2C business model as well. In this model, for purchasing a car, the user has to choose the car of their choice from the platform’s website or visit the nearest branch of the platform in order to assess the car and test it. The car is then delivered to the buyer following the payment in less than an hour.
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Cars24 Recent Growth
“People who did not have cars are looking to own a car due to safety issues while many others want to upgrade from two-wheelers. There is a surge in traffic on the website, and monthly transactions have surpassed pre-covid levels,"
- Vikram Chopra, co-founder, and chief executive of Cars24.
As stated by The Hindu in a recent article, the platform has recently ventured into the used two-wheelers section and in the span of less than six months of operations, the platform has already made over 3,000 deals. The platform received its NBFC license in 2019 via the Reserve Bank of India (RBI) for its new consumer lending business — CARS24 Financial Services.
With the slow evolving trend of people preferring to replace their old cars with pre-owned cars rather than purchasing new ones, the platform of Cars24 has highly benefited from the same, as their website’s annual transactions surpass 200,000 units, as reported by Firstpost, beating pre-covid levels. In order to keep pace with the demand the platform of Cars24 has scaled its presence from 155 outlets in 35 cities to 230 outlets until 2020’s month of September..
The platform aims to expand its presence in Tier-II, III, and IV markets in India by 2021.
“The business helps people solve real life problems, before CARS24 came into existence, selling a car in 1 visit and getting the best price for it was merely a dream. Starting off in stealth mode to transacting over 1.5 lakh cars annually in less than 5 years proves that CARS24 is the choice of people when it comes to pre-owned cars. Even as the COVID-19 restrictions ease, CARS24 is seeing that the more than 60% of their seller traffic and 80% of buyer traffic is back to the pre-COVID numbers hence there is a good turn around in the market.”
- Vikram Chopra to BW Disrupt
In its latest funding round, Cars24 has raised $200 million in a Series E round headed by DST Global, which also involved participation from its existing investors Exor Seeds, Moore Strategic Ventures, and Unbound. This funding has led to the platform emerging as one of the latest 2020 startup unicorns in the nation, with its valuation soaring past a billion dollars.
Prior to 2020, the startup had obtained investments from the Indian cricketer MS Dhoni, as reported by Business Insider.
The platform’s leading investors include Sequoia India, Exor Seeds, Apoletto (the investment vehicle of DST Global's billionaire founder Yuri Milner), London based multi-billion US$ fund Kingsway Capital, Silicon Valley and New York-based investment firm KCK, London-based investment firm Unbound and Moore Strategic Ventures, the privately held investment company for Louis M. Bacon, founder and CEO of Moore Capital Management.
“Cars24 has pioneered a significantly differentiated experience for the customer and dealer by deeply leveraging data and technology at each step, resulting in world-class operational efficiency and market leadership in the segment,"
- Rahul Mehta, managing partner at DST Global.
Establishing itself as a renowned name in the used car industry, CARS24 now has a sea of satisfied customers standing by the platform’s name. The platform is confidently set on its path of accomplishing its future goals, displaying a great degree of promise and scope for paving its way towards further growth and dominance in the future.