INTERVIEW: The CEO of the biggest startup in the used car e-tail explains why he is skipping the 2021 IPO frenzy

The plan is to just focus on driving growth. We've got our core car business in India, which is now the largest by far in the country, but, at the end of the day, we still have a 5% market share.

I think the priority is just building the India auto business and making sure we scale it while driving customer experience. Simultaneously, I think a very important element that supports the group is our personal finance.

Right now, how many Indians out there will have ₹5,00,000 of cash liquidity in their bank account to actually go out there and buy a second-hand car. So our NBFC (non-banking financial company) has been scaling up quite aggressively to help support the growth. So that's the second piece.

The third piece is that online car ownership in India stands at 2% penetration, including both new and old, in India. A lot of our customers are moving in from bikes, so we're building a bikes business as well.

Mundra: In my mind, an IPO is always a means to an end, it is not an end by itself.

The end goal for us is to really build the most incredible auto ecommerce company in the world. I think when the time is right, when we feel that it's the right time to go down that route, we'll look at it. That's kind of it's not a stake in the ground that we put.

We do not have any immediate plans but we might look at floating our IPO in the next 18-24 months, Mundra later said in an email conversation.

Mundra: No, quite honestly. In some sense, that could be a headwind, but I think a bigger tailwind is just that consumers have now increasingly realised that they want personal transport. What COVID did was, even in larger metros where there were people who had let go of their cars because they thought they would have the option of shared cabs, came back to owning a car.

But obviously, I'm sure if your prices continue to grow it creates some challenges for nothing that beats it right now. The cost of ownership at the end of the day, as fuel prices go up, go up too. And, therefore, there'll be a segment of customers who might choose not to go for car ownership.

Mundra: This is where my favorite number — the 2% car penetration — comes into play. In a market with a 2% car penetration, I don't think we really need to worry about us not having enough people who want to buy a car because there is a whole population buying their first car.

Between first time buyers and consumers who want to upgrade, I don't see any dearth of demand in India.

Mundra: I would split it between India and international. In India, we've got the car business, the right people, the right business, we've got financing.

We want to continue to drive growth in the regions that we already have entered in, which is Australia, Dubai and Thailand. Then, use that money to actually expand into a select set of new territories. So I would say that's effectively where we would use our products.

We've got ahead of Southeast Asia. While Thailand has been the first country that we've gone to live in the office exploring others as well.

Mundra: These markets are really a function of supply and demand. It was about, is there demand for used cars? Is it a crowded space in terms of players already in the use of space? And, we basically apply those filters to identify markets that we'd like to go up.

Mundra: One of our biggest differentiation is that we're not auto classified.

The biggest difference is that we buy cars from the end consumer, we refurbish them and then we sell them right. It just gives you a very strong control over the customer experience. This kind of all-in play that we have in ecommerce — where we are investing in our inventory, we are investing in our refurbishment, we are ensuring that we're engaging directly with the consumers — is one core kind of differentiation for us.

Getting a used car loan is very hard because banks struggle to, kind of, value the asset. And that's where we have core competency. So, we are able to easily integrate our personal financial consumer finance with the purchasing journey that a customer makes, which is I think very unique, but there's no other player that actually has the NBFC license required.

Mundra: They're not in the retail side. They're very few on the retail side. This is about you as a consumer coming to Cars24 and saying I want to buy a car and will you be able to give me a loan with a 90% loan-to-value (LTV).

We've now reached the point where customers with a very high credit score can even get a zero down payment option. It comes from the NBFC license that we have that enables us to really do this in a very deeply integrated fashion.

Mundra: I'm super passionate about that. When we buy cars from an end consumer, we have to refurbish it before we sell it. If you're a customer and you buy a car from Toyota, you're getting into a relationship with Toyota. But if you bought a Toyota from cars24, you're getting into a relationship with Cars24.

The quality of the car is going to be the number one driver of your assessment of your experience with Cars24. One of our realizations was that no matter what you do, the refurbishment — which is so core to the customer experience — you have to control it. So what we decided to do was kind of go all in and say look, we will create seven MRLS as we call them across India, which cumulatively will give us the ability to refurbish over 20,000 cars per month.

It's essentially us running a manufacturing footprint. It allows us to control quality, costs and delivery as well as growth for the end consumer. Three of these refurbishment labs have gone live, the fourth went live on Monday, and then three more go live over the next 45 days.