In November 2020, Cars24 pulled off something most startups can only dream of. Within just five years of its inception, the used cars startup achieved unicorn status, buttressed by a $200 million funding round in a pandemic year. Perhaps more impressively, it was an inbound investment. Hong Kong-based DST Global, the investor that led the round, approached Cars24.
It’s certainly cause for celebration, but Cars24’s co-founder and chief financial officer Ruchit Agarwal only sounds tired.
“If someone had told us in 2015 that we’d go through all these crises, we wouldn’t have entered the market in the first place,” he tells The Ken. Agarwal is hardly exaggerating. In the last four years, the used cars space has been put through one trial after another. Demonetisation Demonetisation Demonetisation In November 2016, the Indian government banned 86% of the country’s currency. It withdrew all the Rs 500 and Rs 1,000 banknotes and issued new Rs 500 and Rs 2,000 notes in 2016 hit what was traditionally a cash-heavy business; 2017’s Goods and Services Taxes Act raised taxes on used cars.
Despite the chaos, the used car market performed better than the new car market, especially after the latter slumped in 2019. Automobile sales hit a 20-year low 20-year low Times Now ndian Automobiles sales in 2019 lowest in last 20 years Read more , but sales in the used car segment actually grew from 4 million units 4 million units IndianBlueBook India Pre Owned Car Market Report 3rd Edition 2019 Read more for the year ended March 2019 to 4.2 million 4.2 million ET Auto Pre-owned car companies look at upstaging new car sales in FY21 Read more for the year ended March 2020.
In the months that followed, the pandemic was the straw that broke the automobile sector’s back. But for the used cars market—valued at $2 billion in 2019, with a projected CAGR CAGR CAGR Compound annual growth rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year. of over 15% in the next five years—it turned out to be the icing on the cake.