CarDekho, a prominent player in the auto industry, recently disclosed a substantial 46.3% surge in its annual total income, primarily attributed to increased service sales. These services encompass listing and selling vehicles for automobile manufacturers, along with advertising and digital marketing solutions. The company, often referred to as an auto tech unicorn, also extends digital marketing solutions to dealers to assist in lead conversion and sales. Furthermore, it directly sells insurance products to consumers through its platform. Despite this remarkable revenue growth, CarDekho remains in the red, with elevated expenses impacting its financial performance. The company reported a consolidated loss of Rs 565.95 crore for the fiscal year ending on March 31, 2023, which is 2.3 times higher than the previous fiscal year.
Expenditures at CarDekho surged across various categories, including rent, legal professional fees, and IT costs. The most significant increase was observed in advertising and promotional expenses, surging over 50% compared to the previous year. While the company’s consolidated revenue reached Rs 2,408.41 crore, compared to Rs 1,646.3 crore in the prior year, it fell short of achieving profitability.
In the preceding fiscal year (FY22), CarDekho had started showing signs of improvement with reduced losses. The company had expressed optimism about achieving profitability on a consolidated level by FY24, but the FY23 results suggest additional challenges to overcome before breaking even. Although there were discussions of a potential initial public offering (IPO) in the second half of 2022 or early 2023, these plans have yet to materialize.
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CarDekho has been concentrating on expanding its insurance and lending business, with InsuranceDekho recently raising $150 million in its first investment round, led by Goldman Sachs and TVS Capital Funds. Following a trend in some of its competitors, such as CarTrade, which recently discontinued the OLX auto sales business it had acquired just two months earlier, CarDekho is also reducing its involvement in asset-heavy used car sales and emphasizing the expansion of its service offerings.
