Mumbai Cars24 Services Ltd. has laid off 600 employees, a person familiar with the development said, even as the used-cars platform moves forward with its international expansion plans. All the employees asked to leave were from India and after their annual assessment, the person said on condition of anonymity.
A Cars24 spokesperson declined to call it a “layoff,” saying “it’s a business-as-usual performance-linked exit that happens every year.”
The company, which is backed by SoftBank and Alpha Wave Ventures, will head to profitability after the reduction in staff, said a second person without knowledge of the details.
Most of the employees asked to leave were in junior positions, the first person mentioned above said. “It (shortage) is not because of money. We are expanding globally as well.” News website Inc42 first reported the layoffs.
Prior to this development, Cars24, which was founded in 2015 to help consumers buy, sell and finance used cars, had about 9,000 employees.
The company raised $300 million in equity and an additional $100 million in December 2021 at a valuation of approximately $3.3 billion.
At the time, Cars24 said it would use proceeds from the latest fundraising to fuel its international expansion and grow its renewables labs, while accelerating growth to gain market share.
In 2021, the company forayed into international markets such as Australia, UAE and Thailand. At the time, the company also announced plans to expand its presence to 6-7 countries in 2022. She was also eyeing expansion in Saudi Arabia, Indonesia and Malaysia.
Co-founder Gajendra Jangid said in an interview last December that international markets comprise 20% of the company’s total revenue, due to the high ticket size. Jangid said the company’s annual recurring run rate stood at $1 billion in December 2021.
Cars24 Reports Consolidated Net Sales 2754.9 crore in the financial year 2020-21, down from 3,023.3 crore in 2019-20, which in turn was almost double the FY19 net sales 1,654.61 crores. Also, it has reduced its losses over the years.
Company reported loss of 191.5 crore in FY 2011, less than 291.6 crore in FY20 and 325.6 crore in FY19.
The used-car platform joins a number of startups in sectors that have recently asked employees to lay off, potentially to conserve capital in a difficult funding environment.
“Currently there are inflationary pressures, and given some uncertainty, there is little sense in playing with some organizations, not all. They have as lean as possible,” said Rituparna Chakraborty, co-founder and executive director, TeamLease Services. There is an internal message to be and focus on low cash burn, providing staffing solutions to businesses including startups.”