Amit Jain, co-founder, and CEO of the startup said that CarDekho, the online portal for the sale of new and used cars, plans to raise funds to expand its used car retail business in some metropolitan cities and non-metropolitan cities.
However, CarDekho has yet to make a decision on an investment bank to hold the fundraising round. According to Jain, the amount raised will be more than CarDekho managed in previous rounds.
Also Read: Things to check before buying a used car!
In January 2019, Girnar Software Pvt was launched. The Ltd-owned company raised approximately $ 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 Ping An Global Voyager Fund, Sequoia Capital, and Hillhouse Capital.
India’s used car market is about 1.5 times larger than that of new cars, and industry executives expect sales of old cars to increase in volume after the pandemic.
Automakers and startups seek to capture a portion of this market, which is dominated primarily by informal players.
Also Read: Checklist before buying a used car
“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 had postponed its decision to open 250 stores, announced last year. Instead, it will go to more select stores on the Metro or other 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 regulated used car business amid increasing competition from other startups like Cars 24, which are already having great successes in metropolitan cities. Automakers are also increasing their used car sales infrastructure to improve revenue and generate new car 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.