Investors who bet on allied business verticals growing including companies into financing or insurance for used vehicles to create growth in India, which has typically seen a slow down, have seen a positive return especially on the car classifieds platform CarDekho which is owned by Girnar Software.
The Gurgaon-based firm has seen the segment add significant heft to its balance sheet with FY18 revenues growing about 40% to come in at $2.16 from $1.54 last year. This comes even as losses almost halved to $0.94 crore from the $1.82 that the firm clocked in FY17.
The growth has been driven by the used car business where an end-to-end transaction model specifically for the financing and insurance businesses has seen the firm scale significantly.
CarDekho has steadily been building its insurance and finance growth engines over the past year to enable a more entrenched dealer network for the two verticals. CarDekho’s used car business alone has 3,000 dealers out of a 5,000-strong dealer network. While the insurance business covers over 800 dealers, over 450 dealers offer financing services for used cars.
“The new car business is growing at an annual growth riate of 40% while the used car business is growing aggressively at almost 150%. At this rate, we will eventually see the used car business overtake the new car business to form over 50% of the revenues in the next 4-5 years. This is also because there is a far more predictable pattern for used car buying,” CarDekho co-founder and CEO Amit Jain told ET.
For CarDekho which is backed CapitalG (Google Capital), Hillhouse Capital, Tybourne and Sequoia India, its used car business currently forms about 20% of the overall revenues.
The firm also claims to have reached breakeven at an EBITDA level as of September this year, as it has been strengthening its transaction-based model across verticals. The firm clocked a monthly EBITDA burn of about Rs 3.5 crore as of FY18.
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