With the cost of BS VI models expected to go up anywhere between 5% and 10%, we strongly believe that customers prefer to get better deal in used cars.
Cars24 Services, which has grown from a small player to become one of the largest used car company last year, is bullish on its growth prospects. The company expects the market to remain vibrant despite short-term headwinds. It hopes to achieve 100% growth in 2020 with expansion of both branches and its entry into new cities. In an interview, Gajendra Jangid, co-founder and CMO, Cars24 Services, told FE’s R Ravichandran that the company will finalise plans for its NBFC to get aggressive in the used car business. Edited excerpts:
Can you throw light on the used car business in India and its growth?
The used car business is 4.5-million-units-a-year strong sector in India and it is growing at 15-20% annually. It has potential to grow manifold given the own advantage like cost, brands, services and other packages. With the sector getting more and more oganised through players like Cars24 Services, the demand for used cars is expected to keep growing over the years.
Can you elaborate on the company’s performance and plans?
We have become the second largest player in the used car industry in India. We have been selling 15,000 cars a month on an average and we have achieved 110% growth in 2019. We have presence in 70 cities with 210 branches in 2019 and we plan to add 50 more cities (mostly tier III and IV cities) and 150 branches in 2020 to maintain our last year’s growth momentum. It is important for us to keep expanding our presence to grow further.
The growth for us could be possible as the sector is getting organised fast than five years ago. Moreover, now customers get first hand information about cars, prices, features, cost advantage and transparency in dealing with companies like us. We have been using the data-driven pricing mechanism usng algorithm. There are 60,000 auctions every month through our channel partners. Every auction is being recorded to get real time data on information about the model, specs, prices and checks. With the power of data, real-time demand and market-driven mechanism, we are able to fix real-time pricing of a model to enable customers benefit immensely. The decision-making is more accurate and no customer gets cheated.
What are the challenges due to the BS VI emission norms?
With the cost of BS VI models expected to go up anywhere between 5% and 10%, we strongly believe that customers prefer to get better deal in used cars. Moreover, it is extremely good news for us as and when people buy BS VI models, we get more and more BS IV cars/brands/models to offer customers affordable prices. Since there is no restriction on registering BS IV used cars beyond April 2020, we see the business will be as usual and may be even better given the price difference between BS IV and BS VI models.
What is your take on banks/NBFCs cautious approach towards lending due to volatile market conditions?
It is true. Traditional banks are always sceptical in financing used cars. While the new cars get financed anywhere between 70% and 75%, used cars get financed up to only 15%. This needs to change as the sector is getting organised in a big way.
You launched an NBFC last year. How has it been so far?
Cars24 Financial Services was launched with an aim to help customers gets financed more. We have done some pilot lendings but not scaled up yet. We will soon finalise plans for our NBFC. The company has, in October 2019, raised $100 million in Series D funding. Along with its existing investors — KCK, Agnelli (Fiat) Family and Sequoia India —, the company also raised a part of the latest round from Unbound, a global investment firm headquartered in London, and Moore Strategic Ventures, LLC (MSV), a New York-based investment firm. The company is also backed by marquee investors like Sequoia India, Exor Seeds (a venture fund affiliated with one of the world’s leading holding companies controlled by the Agnelli Family), Apoletto (the investment vehicle of DST Global’s billionaire founder Yuri Milner), Kingsway Capital (London-based multi-billion-dollar fund) and KCK (Silicon Valley & New York-based investment firm).