The SoftBank and Alpha Wave Global-backed company is looking to reduce its burn rate by about 50% to extend its runway and accommodate a relatively slow rate of growth, which has begun to stymie its aggressive expansion plans overseas. happened together. United Arab Emirates, Middle East, Thailandand Australia.
burning of a Gurgaon-based company, or cash rateWas about $20 million a month and now it’s trying to bring it down to about $10 million, said one of the people aware of the matter.
It has closed most of its offline centers across the country except in the National Capital Region (NCR). While the decision to close the offline centers was taken last year, it has been implemented throughout the year.
Cars24’s recent layoff exercise is said to have cut at least 700 jobs, the people cited above said. This is higher than the previously mentioned number of 600. He said that even changing the existing vacancies in the company has come to a halt.
A Cars24 spokesperson declined to comment.
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The firm’s tight spending across various operations is a sign of widespread tension in the used-car business in India as well as globally, where US-based Carvana’s stock was down nearly 90% recently.
“Yes, they (Cars24) are cutting costs to keep pace with the new reality and last longer,” said a person familiar with the company’s vision. “It still has more than $500 million in the bank, but these measures are being taken into account if the ‘financing winter’ lasts longer than expected.”
Another person aware of recent developments said the company is not planning to exit any of its overseas markets, but will put an end to aggressive marketing and expansion plans. “Cars24 was looking at the overseas market in a big way, but that approach has changed,” the person said. “Even in India, the company has significantly cut marketing spend and changes to its strategy have been communicated to teams internally.”
Among other changes, the company is offering payment gateway charges to consumers for major car purchases.
These measures on Cars24, which has gained prominence as one of the leading startups over the past two years, underscore the current sentiment among startup founders and investors that the funding slowdown may worsen in the second half of the year before the recovery begins can.
In May, ET had reported about
Meesho is one of the top-funded startups looking to cut costs amid the ‘funding winter’.
ET reported on May 30 that the top
Venture capital (VC) funds are expected to be slow on large deals and issued memos to portfolio firms on saving cash as a priority. VC funding to Indian startups fell 37 per cent year-on-year to $6.9 billion in the second quarter of this year, according to data from Venture Intelligence.
Cars24 was shut down in December last year
$400 million in funding, including loans, After which its value came to $ 3.3 billion.
“One has to keep pace with the reality of the market. As compared to the earlier aspirations of doubling the growth, now as they (Cars 24) are looking to reduce the burn, the growth expectation is moderate,” said one of the people above.
Several industry sources said the growth in the used car business across various platforms is slowing down, but sources aware of Cars24’s thinking said it is still growing on a monthly basis. At the time of the funding announcement last year, Cars24 was selling around 20,000 cars per month, ET reported.
Tiger Global-backed Spinny and CarDekho are other major players in the space.
“As is clear, things will get tough in the second half of the year before any chance of recovery. While consumption is muted across all sectors, sales of used cars are definitely slowing down,” said a person aware of the matter.