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[#DecaUp] CarDekho- sometimes seeing is not believing


Entrackr traces the decade-long journey of CarDekho- the modest start, the right turn, the top gear drive and also instances when it runs out of fuel. In this third article of Entrackr’s #DecaUp Series, we present to our readers a comprehensive picture of CarDekho.

All journeys are not similar. Sometimes we start a car and then let the journey decide the destination. The car may run out of fuel, we could take wrong turns and roadblocks can slow us down. But with the right attitude, you just chug along the road. Such journeys always have the potential to turn out into a story worth telling.

Similar is the journey of CarDekho that had a modest beginning. Started by sibling duo Amit Jain and Anurag Jain from the tier II city of Jaipur in 2008, it went on to become a leader in car classifieds.

In 2008, during the Delhi Auto Expo, the duo collected brochures of several car manufacturers, which they would soon use it in the upcoming venture. It was the beginning of the journey. Pretty much similar to Zomato’s one, where Deepinder Goyal collected menu of restaurants to make them available online.

Two months later, using those brochures they went live with CarDekho – an online platform to compare cars and read specifications. Since making money from a product business was tough at that time, Jain brothers kept funding CarDekho through Grinarsoft’s service revenue.

For uninitiated, Girnarsoft is the parent entity of CarDekho. It does software development for domestic as well as international clients in segments including e-commerce, edtech, automobile and real estate.

The Race begins

With the decent cash flow from Girnarsoft’s outsourcing business, the duo kept bootstrapping till 2012. By then, CarDekho grew significantly and had 7 million monthly visitors. However, the brothers realised that for scaling up CarDekho, they require venture capital money. A year later, CarDekho raised a $15 million Series A round from Sequoia Capital.

Flush with funding, CarDekho began competing hard with Tiger Global-backed rival CarTrade. Ramping up its play against competitors, CarDekho had acquired ibibo-owned Gaadi in 2014. The acquisition was largely driven by their intention to strengthen used car vertical.

During the 2014-15 period, investors were bullish on online car classifieds. Consequently, CarTrade, their main competitor managed to raise $30 million Series B from Warburg Pincus in October 2014. Not let down by this, in another two months, CarDekho scooped up $50 million Series B round led by Chinese investor Hillhouse Capital, giving a clear indication that they have matured enough for a game.


The massive fundraising by the two main players shook the online automobile classifieds segment, which led to further consolidation and a battle line was drawn. While Cardekho took over Times Internet-owned Zigwheels, CarTrade acquired Carwale. Continuing its acquisition spree, CarDekho later folded up six companies including Volob, SaaS startup Connecto and roadside assistance Help On Wheels.

These acquisitions were done to enhance the user interface of the website and apps by using big data and AR/VR technologies.

Venturing out into foreign roads

During the time the core domestic market was going through a paradigm shift as CarTrade, OLX, and Quikr were fighting for stable ground in car classifieds. The segment also heralded a new beginning of transactional format by the entry of  Droom and Cars24.

For those unfamiliar with the terminology, this is how a transactional platform works. A transactional platform allows buyers or sellers to connect with dealers. For instances, Cars24 performs transactions on behalf of dealers (C2B) and Droom enables transactions for buyers (B2C).

Unfazed by soaring competition on local grounds, CarDekho ventured into offshore markets. It went on launching several versions of CarDekho under the name CarBay in Vietnam, Philippines, Thailand, and Malaysia. In Indonesia, it opened up the website under the domain name Oto.com.

Also, during the period  CarDekho’s focused on Insurance and finance facilitation, which also proved to be a step in the right direction. It got funding from HDFC Bank in My 2015. By this arrangement, the prospectively used cars customers were provided hassle free finance. In a similar manner, it also tied up with Axis Bank, Tata Capital, and Mahindra Finance to create a digital finance platform for its used cars segment.

Apart from loans the company also tried to tap the auto insurance segment after obtaining a license from IRDA in April 2017. Later, it opened a separate vertical under the name ‘Girnar Insurance Brokers’.

Troubles in gear shift – Missing out in used car segment

As we compared the beginning of CarDekho was akin to Zomato, its mistakes were somewhat similar to the food tech company. The Alibaba’s Ant Financial-funded company ruled out entry into the transactional model for a long time. CarDekho did the same. Instead of playing a role in enabling the transaction, it relied on mere listings.

Ignoring operation-heavy aspects like hand holding dealers or customers through car buying/selling process, the company kept building traffic over enabling transaction in the used car segment.

As a result, its revenue horizon didn’t expand beyond advertising and lead generation.

While CarDekho was busy in maintaining a leadership position in car classifieds, a new breed of companies such as Cars24 and its long-term rival CarTrade set their focus on the transactional model in the used car segment.

By 2016, CarDekho realised that it is lagging behind in used car segment and began doubling down on it. It started offering certification to dealers and tried the transactional model. It was too late, the initiative did not work out well for the company.

Failing to find firm foot with the transactional model in the used car, CarDekho has been resorting to selling value added services such as financing and insurance. This also reflected in the company’s revenue of Rs 127.7 crore, a decent 32 per cent increase from Rs 96.4 crore in FY16.


Comparatively, losses for the company increased 300 per cent in FY16 from Rs 47.11 crore to Rs 143.77 crore and decreased only by 5 per cent in FY17 to Rs 135.6 crore.

However, CarDekho saw consolidated revenue of Rs 113 crore in FY17, up from Rs 82 crore the previous year. According to an ET report, a large part of the revenue was driven by the relatively new financing and insurance businesses.

Tweaking its model in new car segment, the company had moved from mere lead generation platform to a full-fledged booking platform for car buyers.

Drying up of fuel:  Funding crunch

Over the past 18-20 months, CarDekho has been in the market to raise capital. However, existing and new investors are not convinced by their proposals.  Amongst several investors, it approached, was Tencent in September 2017 for $30-40 million Series c round, but the deal didn’t work out.

Experts outline that reliance on CarDekho business on classifieds is the primary reason for investors apathy towards it. Meanwhile, rival CarTrade had raked in a $200 million ($145 million in 2016 and $55 million in 2017) from Temasek and late entrant Droom raised back to back rounds.

Unexpected roadblock: U-turn by Sequoia Capital

Sequoia has been an early and formidable backer of CarDekho. Besides becoming the first institutional investor in the company, the VC firm also participated in follow up financial rounds.

Since CarDekho was looking to raise fresh funding desperately, it anticipated that Sequoia may not shy away to cut a large cheque.

On contrary, Sequoia had hinted changing its side by participating in $50 million round in Cars24. The funding came as a jolt to CarDekho as well as analysts who track the segment. Highly placed sources told Entrackr that it was a clear sign from Sequoia – it’s not sure about the success of CarDekho. And, hence made an alternative bet in the segment as they continue to be bullish about the size of the opportunity.

It’s worth noting that currently, CarDekho doesn’t compete directly with Cars24. So far, the latter has been focusing on strengthening the dealer ecosystem. However, it eventually would also begin B2C listing platform to offer full stack solution to dealers.

Similarly, CarDekho would beef up an offering for dealers allowing a one-stop platform. So, be ready, a competition may be on the cards.

A destination beckons: IPO by 2021

In an interview with VCCircle, Amit Jain mentioned how CarDekho wants to go IPO with only one more fundraise by 2020-2021. But with the slow growth and fierce competition, IPO plan may not play out as easy as he projects.

The bootstrapped beginning and frugal attitude towards equity might have given a greater business value to the sibling duo and worked out wonders for the company in the initial years, but not right now.  

The company at present is unable to find more fuel, and the journey it has embarked on is too chaotic, it remains to be seen if CarDekho manages to hold to their steering tight and “chug along” in the sector.

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