Cars24 Sees Non-Core Business Growing Faster Than Used-Car Retail Business In FY24

Cars24, a unicorn startup selling used cars, has seen its value-added services such as financial services and insurance grow faster than its core business in the financial year ending March 2024.

The startup reported a 25% jump in its revenue from operations to Rs 6,917 crore from Rs 5,530 crore in the year before. "This was driven by an increase in unit sales and the average selling price per car. We sold more than 200,000 cars last year, the highest annual sales in our history," a company release said.

However, Ruchit Agarwal, Chief Financial Officer and Co-founder at the Gurugram-based firm, said that though the scale is lower, revenue growth was faster due to income from its financial services arm, service fees, parking charges and the sale of value-added services like insurance assistance and warranties.

"Value-added services like finance and insurance have added Rs 500 crore to topline. Income from financial services has nearly doubled to Rs 300 crore. Value-added services have grown faster than the core business for us," he said, adding that while the core business saw growth of 25%, financial services growth came in at 82%.

Agarwal also denied that there was a slowdown in the used-cars business, despite smaller competitors CarDekho and CarTrade's OLX signalling towards unviable unit economics.

"We don't see a slowdown in our numbers. The used car market continues to grow at 15% CAGR. Used cars have proven to be a viable, cost-effective alternate to new cars. We're seeing growth as Indians' purchasing power is growing, and organised players like us raising trust in ecosystem and providing easy financing options as well," he said.

Despite the large topline growth to nearly Rs 7,000 crore, Cars24 remained loss-making. It said better gross margins were offset by the investments in technology, data science, and customer experience enhancements for future growth.

Cars24 worked on its super-app, causing IT costs to grow by 18% and employee costs by 8%. "The company exercised stringent cost control across other areas, such as marketing expenses, which were reduced by 13%," a statement said.

Going ahead, Cars24 will be focusing on cost optimization to further reduce Ebitda losses in the ongoing financial year.