India-based used car marketplace CarDekho has closed its flagship TrustMark stores, abandoning b-to-c used car sales.
In an interview with Entrackr, CarDekho CEO and co-founder Amit Jain said: “CarDekho was in the used cars retail business for about two-and-a-half years and continuously lost money. Running a retail business was costly because of the high burn on parking, showrooms and manpower. We were losing money in the b-to-c model without any sight of profitability. The cost of capital didn’t give any reason for us to continue.”
Jain provided an example: The company buys a used car for about $6,000 U.S. and sells it for about $6,600 three months later. In the meantime, it had spent $300 on refurbishment, $180 on interest, $90 on parking, $100 on labour, $70 on registration fees, $180 on management and about $35 on additional costs — adding up to a sum significantly higher than the $600 that CarDekho made on the sale of the car.
Rationalizing why the b-to-c model works for small-time dealers, Jain said that they don’t spend nearly as much on showrooms and parking yards, as they owned them. Moreover, dealers have shorter turnaround times, typically selling used cars within a week or two and don’t spend money on the “experiences” that digital-first retailers such as CarDekho emphasize, he noted.
CarDekho ventured into asset-heavy brick-and-mortar retail in 2020, launching its flagship TrustMark store in Jaipur, where the company is headquartered. TrustMark later expanded to multiple tier-one cities in India, including Delhi and Bengaluru.
The scaling of the b-to-c model was accompanied by the winding down of CarDekho’s c-to-b offline used-car purchasing model, which operated under the Gaadi banner. At the time, CarDekho said that this was due to the growing feasibility of home-inspection-based used car purchasing from consumers.
CarDekho’s consolidated revenue rose by 81% year on year to $193 million U.S. during the 12 months to March 31, 2022. Since then, CarDekho has continued to build strategic partnerships, collaborating with Walmart-owned Flipkart for search-and-discovery operations on the latter’s platform, for example.