Consolidation in Indian auto ecommerce as CarTrade buys CarWale

Photo by Dinuraj K

The auto market in India is both huge and disorganized. Naturally, this is a magnet for tech startups. A number of well-funded online portals have come up in recent times to connect sellers with buyers more efficiently in this chaotic market. But now consolidation is under way as competition gets intense.

German media conglomerate Axel Springer announced yesterday it had sold its majority stake in Indian automobiles portal CarWale to one of its major rivals, CarTrade.

This comes soon after another major player in this space, CarDekho, announced the acquisition of Times Internet’s Zigwheels. Earlier, it had acquired another portal called Gaadi from the Ibibo Group.

CarTrade’s buyout of CarWale comes a year after it raised US$30 million in a funding round led by Warburg Pincus. Chip Perry, founder of AutoTrader, in the US, later came in as a marquee investor.

Rivals with big muscles

Photo by Lingaraj GJ

CarTrade faces some tough-as-nails rivals. Sequoia-backed CarDekho heads the list. It’s been raising an awful lot of funding, some of it undisclosed still.

In November 2013, CarDekho’s parent company Girnar raised US$15 million in a series A round of funding from Sequoia Capital. A few months later, in January 2015, it raised its big series B round of US$50 million from Chinese investment management firm Hillhouse Capital and Hong Kong-based hedge fund Tybourne Capital. Sequoia too participated in this round. A month later, Indian tycoon Ratan Tata pumped in an undisclosed amount into the company. In May, another undisclosed round of funding came from private sector lender HDFC Bank. With all the money in the bank, CarDekho has some serious muscle to flex in its tussle with CarTrade.

Another well-funded rival is Lightbox-backed Droom, a mobile-first marketplace for used automobiles. It raised an undisclosed amount of seed funding from Japan’s Beenos, and then in July this year, announced its series A round of US$15.6 million. This was Lightbox’s biggest series A bet.

Droom is the latest venture of ShopClues co-founder Sandeep Aggarwal – “a battle tested entrepreneur with a tremendous amount of exposure and experience in the Indian market and in scaling businesses,” according to VC Sid Talwar of Lightbox. This swung the deal.

Big market attracts big players

Rising economic growth and size make India one of the hottest markets for automobiles in the world. It’s not just the automotive portals eyeing this juicy market either. Ecommerce major Snapdeal joined the battle this month. Its new automobiles vertical promises a slew of facilities like instant loan approvals and offers such as free insurance.

“This is going to be a platform that we believe should clock over US$2 billion in sales over the next two years,” says Tony Navin, senior vice-president of Snapdeal, in a statement on the launch of Snapdeal Motors. Snapdeal had earlier opened a portal for bikes which has already sold over 30,000 units.

All players big and small