Investors pump money into Used cars market in India
Mumbai: Bengaluru-based YoungMonk Technologies Pvt. Ltd, which owns peer-to-peer used cars marketplace, Zoomo, has raised $5 million in a Series A or first institutional round of funding from private equity firm SAIF Partners, said two people familiar with the development. This follows the $1 million seed round that company raised from SAIF last December.
Founded in July last year by Arnav Kumar, Himangshu Hazarika and Aniket Behera, the company will use the funds to develop its technology platform and expand to seven new cities. It currently has a presence in Bengaluru and Mumbai and will launch operations in Delhi, Pune, Hyderabad and Chandigarh by the year end, said one of the two people mentioned earlier.
"The new car market in India is 2.5 million units (annual). The used car market would be between 3 million and 3.5 million units and is expected to grow at a CAGR (compound annual growth rate) of 20%," said Anil Joshi, partner with venture capital firm Unicorn Ventures.
He also said that in India the ratio of new to used cars is 1:1.3 and that the average tenure of a user using a car is four years. The online car search and listings segment has been attracting investor attention lately.
Delhi-based Cardekho.com raised $50 million in January in a round led by hedge fund Hillhouse Capital. Mumbai-based Cartrade.com raised an undisclosed amount this year from Chip Perry, former chief executive officer with AutoTrade and $30 million last October from Warburg Pinucs.
Mumbai-based Truebil.com also raised $500,000 this year from KAE Capital and People Group founder Anupam Mittal.
Zoomo allows users to list the cars for free and doesn't charge any commission on transactions. Instead, it cuts out intermediaries and claims to offer the best price to buyers and sellers. It makes money by charging users for value-added services such as processing paperwork, advance booking, loans, insurance, warranty and refurbishing. It has sold 300 cars in June and is looking to to sell 1000 cars by October, said one of the persons mentioned earlier.
Its competitor Truebil recently launched a solution that would enable users to buy used cars online. "Cars that have covered only a certain distance, of a particular model are listed as the most-valued cars on the site. These would be available for a online booking price of Rs.1,000," said co-founder Shubh Bansal over the phone.