Cars24 Shuts Down Outlets In Delhi For Violating Lease Agreements: Report

Gurugram-based online used car marketplace Cars24 has found itself in a legal tussle with its landlords. The company has reportedly received nearly six legal notices from landlords in Delhi for non-payment of rent for months. They have alleged that the company then shut down the stores at various places in “violations” of the lease agreements.

The report claims that Cars24 has already shuttered about a dozen outlets in Delhi. The legal notices further allege that Cars24 has breached the contract for terminating leases before the lock-in period ended.

Founded in 2015 by Fab-furnish cofounders Vikram Chopra and Mehul Agrawal, Cars24’s mission is to revolutionise the way used cars are sold in India. Cars24 claims to create an efficient and reliable way for car owners to sell their used cars at the best price. All one has to do is book an appointment with any of the CARS24 branches, visit the branch and sell a car in a single visit. One can also get an estimated value of his car by using a simple price valuation tool on the CARS24 website.

Cars24 had more than 50 branches across 12 major cities in India and is backed by a team of more than 700 employees. Cars24 charges a commission of about 4-5% for each transaction.

It has sold under one lakh cars since inception in 2015 and clocks 3,500-4,000 transactions per month, with an average price of about INR 2 -3 Lakh per vehicle sold. In November, Cars24 claimed to have recorded a more than three-fold growth in transactions over the past 10 months. Its monthly transactions grew to 10,000 in October from 3,000 almost a year ago.

Till date, the company has raised $61 Mn from investors such as Sequoia Capital, FCI Fund and KCK Global.

On the allegations, a Cars24 spokesperson reportedly said, “We conduct periodic internal audit of all properties for compliance and are currently in the process of addressing anomalies observed with a few properties in our recent audit. As a company, we are rapidly growing and expanding our operations immensely across India.”

However, a social media search showed dissatisfied customers of Cars24. A twitter user said that Cars24 cheated them by not paying 3 months rent and GST pending. He also alleged that  they vacated at 4 am when the world was sleeping.

This is not the first tryst of Cars24 with the law. In 2018, the Delhi High Court in an interim order had asked Car24 not to indulge in unfair competition or commercial misappropriation or trademark infringement of the Olx brand, after the US-based online trade facilitator accused the car-selling platform of illegally procuring its sellers’ data.

Olx had alleged that Cars24 representatives or agencies hired by it posed as buyers on the Olx platform, chatted with sellers and procured their contact details.

Other major online used car marketplaces in India are CarDekho, Droom, Quikr, Olx, Mahindra First Choice Wheels, among others. According to an IBEF report, the Indian auto industry, one of the largest in the world, accounts for 7.1% of the country’s GDP.

The report has pegged the Indian automobile market at $125 Bn. Out of this, $100 Bn is the estimated share of automobile sales and the remaining $25 Bn includes services. It is expected to grow at a rate of about 10% to a whopping $225 Bn by 2020.