CarTrade to shut OLX’s consumer auto sales biz months after acquisition
Online auto platform CarTrade Tech Limited will shut down the recently acquired OLX's C2B (consumer to business) auto sales business unit, reduce human resource and other administrative cost of the said business, owing to the unit economics challenges, according to the regulatory filing by the company. The estimated time of the closure is approximately three to four months, says the company.
"Sobek Auto India Private Limited ("Sobek" or "OLX"), a wholly owned subsidiary of CarTrade Tech Limited ("the Company" or "CarTrade") has made a strategic decision to shut down their own C2B operations of Auto transaction business ("C2B Business") considering the challenges faced with its units economics. Sobek will continue to grow its Classified business (Olx. in - which includes both auto and non-auto verticals)," the company says in a statement.
"The Board of Directors of Sobek at their meeting held today i.e. on October 25, 2023, have decided to shut down their own C2B (consumer to business) operations and reduce human resource and other administrative cost of the said business and explore partnerships with other players for the same," it adds.
The development comes months after CarTrade acquired a 100% stake in OLX’s classified and auto business in India worth ₹535.4 crore in August this year. CarTrade had then said that the acquisition of OLX auto is in line with the company’s objective "to undertake investments which provide synergistic benefits to the existing businesses of CarTrade Tech."
According to the company, OLX will now focus on classified business as part of its growth plan. "The Classified business of Sobek demonstrates profitability and substantial potential for future growth. Sobek has thus made the strategic decision to concentrate its energies and resources on the classified business, recognizing its immense potential for sustained growth and value creation," the company says.
"OLX Classifieds is a prominent player in the Indian classifieds industry, boasting over 100 million app downloads. It offers a wide spectrum of services across 12 diverse categories, encompassing automobiles, real estate, electronics, and more. The platform consistently garners the attention of approximately 35 million unique visitors on a monthly basis, facilitating over 30 million listings annually. OLX remains committed to its support to dealers, fostering the growth of its classified business, and will continue to invest in its development," it adds.
Notably, OLX's auto sales business has been grappling to earn profits over the past few months. Earlier this year, investment firm Prosus exited OLX Group’s auto sales business in several countries including Argentina, India and Indonesia citing global macroeconomic headwinds and market challenges. In June this year, OLX Group laid off as many as 800 employees from the auto sales division.
At 1:47 pm, the share price of the company was trading 2.13% higher at ₹629.25 apiece on the BSE. During the session, shares of CarTrade Tech surged as much as 3.94% to hit an intraday high of ₹640.70 on the BSE. The market capitalisation of the company stood at ₹2,943.17 crore, with 9,096 shares exchanging hands on the BSE as against the two-week average of 0.13 lakh shares.