CARS24, an e-commerce platform that deals in pre-owned cars, joined the list of unicorn startups in India by raising $200 million in Series E funding round led by DST Global on 23rd November 2020. And since then, it’s been a bumpy ride for the co-founder and CEO Vikram Chopra because of the lockdown that took place in late March. But this did not stop them from achieving the best phase in car sales and then expanding further to deal in bikes.
In an interview with Moneycontrol’s M Sriram over the phone, Vikram Chopra explains how artificial intelligence and data science will determine the company’s success and why profits aren’t a priority in the beginning.
How CARS24 Solves Customer Issues
CARS24 solves problems faced by buyers and sellers in the used-car marketplace through technology by creating a supply and demand requirement on the pan-India level. They provide the best price for their sellers with the help of an algorithm that understands pricing because of hundreds of thousands of cars they’ve sold. As for the buyer, it’s all about selection, value, and convenience. Their transaction-based model doesn’t just generate leads but CARS24 also takes up the responsibility of doing everything till the documentation process, i.e., until RC transfer is complete. This is why they have a 90% market share in all cars sold online.
So, what was their reaction during the pandemic?
Because they anticipated a recession, they expected a supply-led shock which led them to bring in more automation to the business. After the lockdown was lifted, the pent-up demand in the market created good traction and there was zero marketing during this period. Vikram Chopra said, “We were 20% ahead of our February’s numbers in November.” Since traffic is a ‘lead indicator’ and their website traffic went up by four times, they raised the round. Next year their focus will be reconditioning, two-wheelers, and vehicle financing.
Vikram Chopra further elaborates the functioning of the bike business which has already sold 3,000 bikes. He talks about reconditioning for cars being a separate business vertical in the future and of the profit margins they earn through insurance, financing, servicing, and warranty.
CARS24’s Biggest Challenge
CARS24’s focus is to get better at technology and make it the crux of its business. Vikram Chopra believes that everything in business comes down to pricing. He said,” No matter how operations-heavy it is, with services and lending, if you can nail the price, you deserve to win this market.” He believes that pricing can only be solved with artificial intelligence (AI) and machine learning (ML)
Importance of Artificial Intelligence (AI) for CARS24
For any normal human being, it is difficult to perfectly assess each car when buying hundreds of cars and thousands of models every month. Vikram states,” On the used-car side, thinking that one person can do it is practically a joke.” This is why Original Equipment Manufacturers (OEMs) specialize in the type of cars they make. But it is possible to derive the price of a car only when it is appraised in a scalable way and this is achievable through data science. How efficiently these millions of data points that are coming in are used to get good at pricing – will determine the success of CARS24. He says that 5 years ago, the process of predicting prices based on the vehicle’s condition at CARS24 was entirely manual but they have gotten better over the years and with time they aim to reach a mega level of data science and learning.
Conclusion
CARS24 aims at providing the best price and doing everything for the customer. It is India’s leading second-hand car platform that deals with over 1,50,000 certified, inspected pre-used vehicles every year. It has been leveraging machine learning, data science and artificial intelligence to optimize many of its processes. So, with a structurally powerful unit economics – profit isn’t their priority.
