This Pre-Owned Cars Startup Fires 6.6% Workforce: 600 Employees Asked To Leave, And It’s ‘Business-As-Usual’
Cars24 has sacked nearly 600 people in India.
This represents nearly 6.6 per cent of its India staff.
The company, which is an e-commerce platform for pre-owned vehicles, downplayed the move and said that they were “performance-linked exits”.
It employs around 9,000 people in India and also has presence in the Middle East, Australia and Southeast Asia
It said that this is “business-as-usual” and such exits happen every year.
The Real Truth?
The layoffs could be an effort to save cash and extend runway as raising new money is getting difficult and investors have been asking portfolio companies to cut costs.
It had let go of 300 employees in 2019 in order to downscale its consumer financing efforts.
Back then too it said that these were performance-linked exits and not layoffs.
It is not known which positions have been affected but sources at Entrackr suggest that a majority were from operation and marketing verticals.
Back in February, it had announced its annual ESOP (Employee Stock Ownership Plan) buyback worth around ? 75 crore to reward its employees.
The company has consistently undertaken annual ESOP buyback initiatives for its existing and former employees In the last four years.
The value of total buyback stands at around Rs 113 crore.
Loss Making Business?
The market for used cars in India is growing due to many preferring not to buy new cars for economic reasons.
However, Cars24 has not yet attained profitability, and neither have competitors like Spinny and CarDekho.
In fact, an examination of 100-odd unicorns in India shows that Cars24 and its competitors have losses ranging from Rs 110–340 crore.