Exclusive: Cars24 shuts down supply focused vertical in over 80 cities

Even as used car e-commerce firms in India had a banner year in terms of funding announcements and more, some of the firms have also used the pandemic to make course corrections. CarTrade went public in August while three companies Spinny, CarDekho and Droom had checked into the coveted club of unicorns in 2021.

While the funding boom in the sector brought in heavyweights like Tiger Global and SoftBank, major changes followed too. Thus, CarDekho shut down over 20 ‘Gaadi by CarDekho’ stores in Delhi (NCR), Mumbai, Pune and Bengaluru in September. Now, Cars24 has decided to pull the plug on its supply-side business from 82 smaller cities.

According to an internal note sent by Cars24’s co-founders to its employees, the company has decided to focus on the top 100 cities countrywide. “As a part of our strategic review, we have decided to discontinue our 'supply side' business activities outside of the top 100 cities in India,” said the note.

Through its supply-side business Cars24 primarily buys used cars from consumers on behalf of dealers and builds inventory for its retail business. 

Entrackr has reviewed a copy of the communication note.

Importantly, the company emphasised that this is not a cost-cutting exercise and demand-focused or sell-side business will continue to operate in these cities. Impacted employees will be offered an opportunity to switch to other cities while those who chose to move will get three months salary and six months of medical insurance coverage.

“We have waived the vesting cliff for employees who have equity. They [employees] will get equity for their duration at Cars24,” the note mentioned.

Queries sent to Cars24 didn’t elicit any immediate response. We will update the story as and when the company responds.

Cars24 was the first unicorn from the used-car space and recently raised $450 million in an equity and debt round from Falcon Edge’s Alpha Wave Incubation, DST Global, SoftBank, Tencent and others at a valuation of $2 billion. 

Apart from cars, it also deals in used bikes and has a significant overseas presence. Cars24’s Singapore based holding entity controls six subsidiaries of the company across India, Australia, UAE and Thailand.

The operating revenue of Cars24 had declined by 12.6% to $371.3 million [Rs 2,720 crore] during FY21 from $424.7 million [Rs 3110 crore] in FY20. According to Fintrackr, the company managed to reduce its losses by 29% to $28.87 million [Rs 211 crore] during FY21.