Gurugram-based used car marketplace Cars24 has expanded into the new car segment by launching an aggregator platform for dealerships and original equipment manufacturers (OEMs). The company made the announcement on March 10, positioning the move as part of its broader strategy to consolidate the car-buying process within a single super app.
This expansion comes at a time when competitors such as Spinny, Droom, and CarDekho are facing slower growth and are rolling out new services to enhance their revenue streams.
Addressing a Core Problem in the Market
Explaining the rationale behind the move, Gajendra Jangid, co-founder of Cars24, said:
“We have been able to, with the help of technology, address a core problem of our customers – buying and selling used cars. We want to do the same in the new car category as well.”
Jangid further highlighted that many customers already exploring used cars on the platform are also considering new cars:
“In fact, 50 percent of buyers currently on the Cars24 platform are also evaluating new cars, and we want to ensure they find the car of their choice—whether it’s new or pre-owned.”
How ‘New Cars’ Will Work
The ‘New Cars’ segment has been introduced as an online-only offering on Cars24’s website. The platform will function as an aggregator, allowing various auto OEMs to list their car models. Customers can access features such as:
Detailed video walkthroughs of different car models
On-road pricing details
Test drive booking services
Financing options
Cars24 has been consistently expanding its offerings beyond used car sales. In August 2023, the company launched a super app, integrating services such as vehicle servicing, insurance payments, vehicle financing, chauffeur booking, and FASTag distribution. The sale of brand-new cars is the latest addition to its comprehensive ecosystem.
Industry Trends and Competitive Landscape
The used car industry has witnessed slower growth in recent times, prompting major players to diversify their offerings. While Cars24 is now entering the new car space, its rivals Spinny and CarDekho have also been exploring new verticals to stay competitive.
Notably, CarDekho shut down its used car retail business last year due to heavy losses and high cash burn.
Despite its diversification efforts, Cars24’s used car segment remains the primary revenue driver, contributing over 90 percent of the company’s total revenue.
Cars24’s Financial Performance
After facing growth challenges in FY23, Cars24 recorded a 25 percent increase in revenue for FY24, reaching ₹6,917 crore. However, the company also reported ₹498 crore in losses during the same period.
New Cars: Not a Major Revenue Driver (Yet)
While Cars24 has launched its new car marketplace, the company has stated that it does not expect it to be a significant revenue driver in the near term.
Jangid explained: “We buy and sell vehicles for our used cars business. That is not the case for New Cars. Used cars offer better gross margins, compared to new cars…For the next one year, we are not even looking into the revenues, that is not the objective. First, we want to make sure to increase traffic. We will figure out monetization after.”
Despite venturing into the new car segment, Cars24 remains bullish on the used car industry, citing its larger market size and higher growth potential.
The Future of India’s Used Car Market
The Indian used car industry has been experiencing significant growth. According to the latest Indian Blue Book (IBB) report by car&bike and Das WeltAuto by Volkswagen, in FY23, India saw the sale of 51 lakh used cars, with the industry valued at $34 billion. By FY28, the market is projected to double in size, reaching $73 billion with 1.09 crore used cars sold annually.
Jangid emphasized that the used car segment is growing at a faster rate than new cars, as increasing trust and transparency in the market encourage more customers to opt for pre-owned vehicles:
“The growth in the used car ecosystem is higher than new cars. The former is getting more and more organized. As trust and transparency in the category keeps building, aided by firms like us, more customers will be inclined to buy from this category.”
Currently, India’s used car market is largely unorganized, with 45-50 percent of sales occurring through unstructured channels. The organized segment accounts for only 20 percent of transactions, while C2C (customer-to-customer) transactions make up the remaining 30-35 percent, as per the IBB report.
Cars24’s entry into the new car market is a strategic move to expand its service offerings, attract more users, and enhance its super app ecosystem. However, for now, the company remains focused on traffic growth rather than immediate revenue generation from this segment.
With the used car market continuing to expand, Cars24 is betting on long-term growth in the pre-owned vehicle space, while simultaneously exploring new verticals to solidify its position as a comprehensive car-buying platform in India.