CarTrade Technologies has revealed its plans to discontinue the auto sales operations of its freshly acquired venture, Sobek Auto India Pvt. Ltd, more commonly recognized for its OLX brand. The decision arises from mounting challenges in the unit economics of the auto transaction business.
Background of the Acquisition
Just a mere two months prior, CarTrade announced its comprehensive acquisition of Sobek Auto India, having invested an impressive INR 535.54 Cr. This investment embraced both the OLX Autos C2B transaction and the larger OLX classifieds enterprise.
The Pivot to Classified Business Growth
Despite the closure of OLX’s auto sales division, Sobek remains determined to amplify its classified business. Consequently, this redirection will inevitably cause a decrease in the workforce. In a clarifying statement, the company articulated its intentions, emphasizing the classified business on OLX.in (covering auto and other sectors) as a thriving venture with remarkable potential for expansion.
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Data from CarTrade highlights the impactful reach of OLX Classifieds, boasting over 100 Mn downloads. Encompassing 12 varied categories, from automobiles to real estate and electronics, the platform enjoys the patronage of nearly 35 Mn distinctive monthly visitors and hosts upwards of 30 Mn listings each year.
When sealing the acquisition deal, CarTrade spotlighted that the auto business of OLX India was operating without any debt and maintained a commendable INR 100 Cr in cash reserves. Furthermore, as of July 2023, OLX India boasted a substantial annualized gross revenue of INR 1,837 Cr.
Market Response and Competitive Landscape
The stock market reacted favorably to CarTrade’s announcement. The company’s shares, which have experienced an uptrend since the OLX purchase, escalated by over 3%, with shares priced at INR 635.45 on the BSE at 2.10 PM IST.
In the competitive sphere, CarTrade finds itself in rivalry with prominent platforms like Cars24, Spinny, CarDekho, and Droom, to name a few. Notably, the startup declared an impressive surge of over 300% YoY in its post-tax profits, reaching INR 13.5 Cr in Q1 FY24.
