Investing in Spinny

Building India’s most trusted used car brand

Published
8th April 2021
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4 min

Used Cars is a large, growing market

Over 4M used cars are sold annually in India. This corresponds to a market size of $15-18B, growing anywhere between 8-9% every year. This growth will only accelerate with several macro-tailwinds like low car ownership rates, increasing social acceptance of used cars, shortened car ownership cycles (average car ownership period in India dropped from 6-7 years in 2011 to 4 years in 2016), improving car / road quality and increasing price points of new cars. We believe that India's used car market will grow to at least ~$30-35B by 2026-27. The ratio of used cars / new cars sold in India has increased to ~1.3 today (from ~1.2 in 2017), which is still quite low compared to >2 for developed economies (USA – 2.6, UK – 3.0, Germany – 2.0).


One third of India’s used car market is C2C today and does not involve any middlemen. Organized dealers account for 15% of the total pie while semi-organized and unorganized dealers account for over 50%. However, over the past few years semi-organized and unorganized dealers have been losing share to organized players

Despite the growth of organized channels, buying used cars is a broken experience

With the majority of the market dominated by unorganized/semi-organized sellers, buyers are extremely fearful of buying the wrong car

Nobel laureate George Akerloff, upon examination of the used car market, called it ‘market of lemons’ - a market where the seller is almost always better informed than the buyer. Unlike a new car purchase, each SKU in a used car showroom/market is different (quality, number of kms driven, vintage etc), which makes it extremely cumbersome for the buyer. With the majority of the market dominated by unorganized/semi-organized sellers, buyers are extremely fearful of buying the wrong car. Given the lack of technical knowledge of buyers and minimal digitization of condition history of a vehicle, dealers often resort to malpractices and exploit information arbitrage to make an opportunistic sale. This is one of the primary reasons that the share of online purchases in this market is sub-5%.


Over the past few years, several organized players with varying business models have tried to tackle these problems. Online classifieds platforms continue to operate as lead generation platforms but have been unable to gain visibility into transaction closure. C2B auction players on the other hand have largely focused on solving for customers who are looking to sell their car. None of these models solve for the lack of transparency and trust faced by used car buyers. OEM managed programs address some of these concerns, but being franchisee led, they are not able to offer a consistent and seamless consumer experience. An ideal technology -led solution for this market will allow consumers to access a large catalogue of used cars on the click of a button, book test drives and conclude the transactions seamlessly and digitally, while being confident that they know everything about the car they are buying. This is exactly what Spinny is trying to achieve, as we elaborate in the next section.

Spinny’s full-stack O2O approach is the best way to solve the real customer pain point

The full stack approach allows Spinny to know every nuance of the car

Spinny follows a full-stack O2O model, where it buys, refurbishes and sells used cars, and provides a detailed inspection report to the buyers. It also offers free 5 day replacement and 3 month warranty to give additional comfort to the buyers. Over the past 3 years, by virtue of its deep understanding of the market and consumers, and its culture of customer obsession, Spinny has been able to establish itself as a highly trusted brand. The full stack approach allows Spinny to know every nuance of the car. This coupled with its razor sharp focus on consumer experience and transparency, enables Spinny to inspire trust which so far has been elusive in this market. Below is a comparison of Spinny’s approach with other prevalent models:


On the unit economics side, a full stack model allows Spinny to capture maximum value in the chain, which earlier was being split across 3-5 intermediaries in the used car supply chain. Over time, this will also allow Spinny to offer better prices on the supply side and offer a much larger and diverse catalog to its consumers

Consumer obsessed, super frugal and a highly resilient team

A highly frugal and capital efficient DNA, super high customer obsession and deep knowledge of the space and consumer behaviour

Before we invested in Spinny, in every meeting with Niraj, Mohit and Ramanshu - three things clearly stood out: a highly frugal and capital efficient DNA, super high customer obsession and deep knowledge of the space and consumer behaviour. Niraj’s passion to build the most trusted brand in arguably one of the most trust-deficit categories was infectious. As we engaged with the broader Spinny team during our diligence, we realized that all these things percolate deeply across the entire organization. This translated into a super strong consumer experience: even when Spinny was cash-strapped - consumer NPS scores remained super high. In an internal survey, Spinny’s buyer side NPS was over 85. Our consumer calls validated this and we could hear the delight in their voices. Below is a snapshot of the early reasons consumer gave for choosing Spinny:

Inspired by our customer conversations and convinced by the team's understanding of the market and the business model, we led Spinny’s Series A in late 2018 and doubled-down in the Series B round in late 2019. Since then our confidence in the team has grown each passing day. Even at today’s scale and despite rapid growth, Niraj continues to obsessively focus on consumer experience (as is visible in their customer reviews) and the organization remains as frugal. We witnessed the tenacity of the Spinny team during the Covid-19 lockdown, when the business came to a near full halt for two months. Spinny bounced back strongly and is already well ahead of its pre-pandemic numbers. We are excited to extend this partnership further in Spinny’s Series C round as they disrupt the used car market. We are also super-thrilled to have onboard General Catalyst as a partner, who through their investments in Vroom and Cazoo, bring a lot of experience with them.

Founders of Spinny: Ramanshu, Niraj and Mohit
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