SoftBank-backed Cars24 lays off 600 employees

Joining the likes of several growth and late stage startups, used car platform Cars24 has laid off 600 employees. A little under a fifteenth of its staff has been let go of in these layoffs. A Cars24 spokesperson confirmed the exits in a brief statement: “This is business as usual — performance linked exits that happen every year.”

The layoff appears to be a move to conserve cash and extend runway as raising new money is getting difficult and investors have been asking portfolio companies to cut cost. Cars24 hasn’t revealed about departments impacted in the layoff but Entrackr sources outline that a major chunk of these staff belong from operation and marketing verticals.

Back in December 2021, the Gurugram-based company had raked in $400 million in its Series G round led by Alpha Wave Global at $3.3 billion valuation. In the last eight months, the company has picked up $850 million from investors including SoftBank, Tencent and DST Global. In February, it bought back ESOPs from employees worth Rs 75 crore or $10 million.

While the used car market in India is growing — due largely to consumers hesitating to buy new vehicles in the face of economic conditions, and production issues at carmakers amid the global chip shortage — Cars24 has not yet attained profitability, and neither have competitors like Spinny and CarDekho. A Fintrackr examination of the 100-odd unicorns that currently exist in India shows that Cars24 and its competitors have losses ranging from Rs 110–340 crore.

The company laid off 300 employees in 2019 as it looked to downscale its consumer financing efforts. In 2019 too the company said that these were performance-linked exits and not layoffs.

On Wednesday, edtech company Vedantu sacked 424 employees. It was the second round of layoffs for the Tiger Global-backed company this month.

With the funding environment turning tepid, layoffs are bound to pick across growth, late and even early stage startups. Last month, two edtech companies – Unacademy and Lido Learning – had fired hundreds of their employees. Byju’s-owned WhiteHat Jr also saw around 800 voluntary resignations in the past few weeks. Adding to the list, social commerce companies Meesho and Trell, furniture rental startup Furlenco, and bookkeeping startup OkCredit also fired a significant chunk of their workforce.

Correction (3:07pm): A previous version of this article mistakenly stated that Cars24 had layoffs in 2019.