New Delhi: CarDekho, the online portal for new and used car sales, plans to raise funds to expand its used car retail business in certain metro and non-metro cities, said Amit Jain, co-founder and CEO of the startup.
However, CarDekho is yet to decide on an investment bank to conduct the fundraising round. According to Jain, the amount raised will be more than what CarDekho had managed in the previous rounds.
In January 2019, the Girnar Software Pvt. Ltd-owned venture had raised around $110 million from Hillhouse Capital, Sequoia Capital and Capital G of Alphabet, followed by a $70 million Series D funding round in December 2019 from Hong Kong’s Ping An Global Voyager Fund, Sequoia Capital and Hillhouse Capital.
The Indian used car market is around 1.5 times of new car sales and industry executives expect old car sales to increase in volume after the pandemic.
Automakers and startups are eyeing a share of this market, which is primarily dominated by unorganized players.
“Given that the business we are getting into is very asset heavy and that we would have to invest, we are preparing for a round of funding. I won’t be able to divulge the amount we are looking for at the moment and we have not yet decided on a banker for the fundraise. However, the amount we are looking at is only going to go north (compared to the last two rounds),” Jain said.
CarDekho will not appoint dealers like automakers and the showrooms will be operated by the company, Jain said.
The company has postponed its decision to open 250 stores, which was announced last year. It will, instead, go for larger format stores in select metro and non-metro cities.
“Bigger stores will give us economies of scale and more leverage on manpower efficiency. We will go with the top three-four cities and try different formats,” Jain said.
CarDekho is entering the organized used car business amid rising competition from other startups such as Cars 24, which has already made significant inroads in metro cities.
Automakers are also ramping up their infrastructure for used vehicle sales to improve revenues and generate new vehicle sales.
“We will be a tech-first auto firm; our way of doing business will be different from original equipment manufacturers. Capital requirements for us and OEMs are different. The cost of capital return will also be different. We are trying to keep it very lean, while OEMs try to maintain a covered showroom and other standards. It’s going to be a huge car park much like Carmax of the US,” Jain said.