When Spinny raised $283 million earlier this month, it had more than doubled its valuation to $1.8 billion in just 6 months. Similarly, Cars24 saw its valuation jump 60% to $3.3 billion in just 3 months in December. CarDekho raised $250 million in October, including $200-million series-E equity and $50-million debt in its pre-IPO round, while Droom closed the first leg of its ongoing pre-IPO growth funding round of up to $200 million.
According to a recent OLX Auto-Crisil study, the country’s used car sales will nearly double its tally to 7 million units in 4 years from just under 4 million units in FY21. According to estimates, the segment should end FY22 at just under 4.4 million units. “The used car market will hit 10 million vehicles by FY30 at a 14% CAGR — how many segments can promise that kind of growth?” Given that only 6-8% of this is currently digital, “much of the funds will go into digitising a larger share of the ecosystem,” said OLX Autos CEO Amit Kumar.
Unicorn startups are already adding manpower and markets as they scale up tech infrastructure. Spinny founder & CEO Niraj Singh said, “We’re present in 13 cities and will expand to 25 cities in two quarters and we’ve gone from a 40-strong headcount in our tech and products team to 200. We’re investing in scale-up.” “We’re scaling up our presence in Australia, Thailand and Middle East and we will use these funds for further international expansion,” said Cars24 founder & CEO Vikram Chopra.
The funding floodgates and aggression of the unicorns means that market leaders are also stepping on the gas. Mahindra First Choice Wheels, which has 50% share in the organised used car market. Its CEO Ashutosh Pandey said, “We are planning a fund-raise to increase our lead in the retail side.” Auto experts say the investment optimism in used cars is more with an eye on the future. “Investments in used cars is like FOMO — people feel they will be left out of the next bull run,” said Pandey. “What happened with mobile phones in last 10 years will happen in pre-owned cars too.
The pandemic and chip shortage are tail winds for new cars but the long waitlist has prompted consumers to turn to used cars. This is a growing category globally, where the used to new ratio is 3:1 whereas in India it is 1.5:1 and growing fast,” added Vikram Chopra of Cars24.