CarTrade Tech Ltd. has announced that it will be shutting the auto sales division of its recently acquired unit, OLX India, owing to challenges faced with its unit economics.
CarTrade said its wholly owned subsidiary, Sobek Auto India Pvt., which houses OLX India's business, has made a "strategic decision to shut down C2B operations of the auto transaction business, reduce human resource and other administrative costs of the said business, and explore partnerships with other players for the same," according to an exchange filing on Wednesday.
Sobek will continue to grow its classifieds business, which is OLX India's major business, comprising both auto and non-auto verticals. "The classifieds business of Sobek demonstrates profitability and substantial potential for future growth. Sobek has thus made the strategic decision to concentrate its energies and resources on the classified business, recognising its immense potential for sustained growth and value creation," it said.
In July, CarTrade announced its acquisition of Sobek Auto India Pvt., the company that houses OLX India's business, in a deal worth Rs 537 crore.
CarTrade had said it was making the purchase "to provide synergistic benefits to the existing businesses of CarTrade Tech."
The company's latest move is in line with Prosus' move to exit the car sales business. In March, Prosus-owned OLX made the "strategic decision" to exit the OLX Autos business in several countries. It had also ceased operations in Argentina, Mexico, and Colombia, resulting in the global layoff of 800 employees.
Shares of CarTrade Tech were trading 3.07% higher at National Stock Exchange at 12:06 p.m., compared with 0.28% decline in the benchmark NSE Nifty 50.
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