Aiming To Be A Unicorn By 2021: CarDekho
Cardekho.com, one of the pioneering auto portals in the country and a fully owned subsidiary of GirnarSoft, is one of the rare Indian startups which has run into profits. While interacting with BW Businessworld, Umang Kumar, President, CarDekho, has affirmed that the boom in the auto advertisement market will enable it to be a unicorn in the next three years. Below are the edited excerpts of an exclusive interaction.:
What is the size of the Indian automobile advertisement market? And how big are you betting on it especially on the digital medium of that market?
The overall auto advertisement market is about Rs. 6,000-7,000 crore and out of that roughly 12-15% of that pie has gone digital. This is growing at a nominal GDP rate due to the growth in volumes as well as the increase in prices of vehicles. The underlying Rs. 6,000 crore (market) is growing at about 13%. On top of it, the shift to digital (medium) is growing very intensely and will get to about 20-25% (out of the overall market). Obviously, it will not get to the US kind of numbers which is at 42%. In China (it is) 54%, and UK (it is) 55%. When it gets to that kind of numbers in the next 5 years, we tend to get a very large chunk of that pie. The digital advertisement market continues to grow in the next 10-15 years.
Within the digital auto advertisement space, which vertical is your biggest revenue generation? Will it be the same in the foreseeable future too?
Fundamentally, the single largest revenue stream is from new car marketing budget. Hence, 85-90% of our business is (related to) new cars. We directly influence 20-25% of all new cars bought into the country. Around 60-70% of those who buy new cars in the country would research on one of our sites. 25% of those buying cars in the country would be through leads on our side. From the new car perspective, we have built a platform where millions of people (can log on to). We have 50 million sessions which translate to about 27-28 million visitors a month. As far as the partners are concerned, we work with about 7-8 OEMs and about 2,500 to 3,000 new car dealers across the country. On the used car's side, we operate with around 1,300 odd dealers out of which 300 work with us on Insurance and 200 of them on Finance. Right now, these are people who are looking to buy new cars or new bikes. These are a combination of our auto portals that we have. We are helping them (our visitors) read our high-quality content and see high-quality images, compare vehicles against each other, research vehicles, etc. So we, sort of created a destination where they (our visitors) can answer all questions they have about the vehicle that they potentially want to purchase.
Would it be fair to say that auto portals like yours have managed to disrupt the automobile retail market in the country?
I would say, to an extent, we are disrupting print advertising (in India) because money is shifting away from that medium to online. Whether it is going to shift to Google, Facebook or to somebody like us is really the question. We are not changing anything in the offline retail industry per se or the way the new car dealerships are operating. We are primarily a discovery platform where consumers can research on what cars they want to buy. (This is) something which they were not able to do it fully earlier. What we are doing in the used car space is a great example now. While new car finance penetration is 65%, for used cars, the penetration it is only closer to 12%. Given that it is a higher ticket size purchase, people’s need for finance is obvious. We sat and understood exactly what the problems are in that sector and discerned that it is not a friendly model from a consumer or bank perspective. They (banks) have a problem around asset risk and title transfer. Our RTO and the process of transferring a car from A to B is a slightly broken process. It is not completely online and is a state subject. What we do is since we inspect every car and have our own valuation index and price grid, we tell the banks what the value of the car is. So it helps the banks to figure out the intrinsic value of the car it is financing. By solving those problems, we are aiming to get this (used car) finance penetration from 12% to 30-40%. In the process of that, we will create thousands of additional jobs. As more people will be able to buy used cars, there will be a knock-on effect on the entire (automotive retail) industry.
Being a startup, what kind of technical disruption have you created to make the lives of consumers easier?
And that I think is the single biggest innovation that we have done. Earlier, such a destination did not really exists for people to figure out what else that they want to do. On top of that, we are working on the second wave of innovations for our consumers. We are looking to solve a problem around bike financing with the first-of-its-kind initiative of the online-only process. We are also aiming to improve the affordability of cars. We are also making a lot of investments in the Virtual Reality & Augment Reality space and have acqui-hired a company called Volob (Technologies) about two years ago. In partnership with some OEMs, we will come up with complete virtual showrooms by the end of this year. A lot of that technology will be supplied by us. But we are just vendors who have actually helped build and facilitate that at the back end. The third major that we have worked on is we have built some of the mobile SAS backend tools globally for managing an entire sales process of new cars. We have already inked a deal with one global OEM which are using it for their 6,000 dealer sales executives pan-India. We have also got our first global deal across the Asia Pacific market for the same tool. We are confident of bagging a couple of similar deals in India. I think the output of all we did in all these years will be visible this year.
When do you intend to be a unicorn?
During FY 2016-17, we recorded a triple digit growth in revenues and did well over Rs. 100 crore in revenues. This year we will be able to generate cash and (earn) proper profits unless we decide to ramp up our marketing spends in a huge way. We have raised US$ 80 million over the last few years. Fundamentally, this quarter (Q4 FY 2017-18) we will be profitable as a company. We were actually very profitable in the last quarter (Q3 FY 2017-18) as it was a peak season because of festive sales during the months of October, November, and December (2017). Our need for further capital is not really there. That said, there are always expansion opportunities that we look at. We are even open to the idea of going for an IPO in the long term. If we can become a unicorn by 2021, it would be fantastic.
