India's used-car startups Cars24, Spinny and Droom are pushing into AI, EV partnerships and personal loans after a decade of growth failed to deliver consistent profits in a fragmented market.
Alpha Score of 48 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
India's three largest used-car startups are hunting for new ways to make money. Cars24, Spinny and Droom have each pushed into fresh segments – personal loans, certified pre-owned electric vehicles, enterprise AI – as a decade of growth has failed to deliver consistent profits.
The core problem hasn't changed. Nearly 79% of used-car transactions in India still happen through unorganized local dealers, according to a Redseer report from June 2026. The organized players carry higher costs for inspection, refurbishment, technology and customer acquisition. Inventory ties up capital and exposes them to depreciation and demand swings. The used-car market is projected to reach $68-78 billion by FY31, up from $53 billion today, but the organized share is growing slowly.
Droom's trajectory shows the pressure. Its valuation has fallen from $1.2 billion in 2021 to $360 million in 2025. Revenue dropped from a peak of ₹390 crore in FY22 to ₹164 crore in FY26, according to a valuation report dated May 13. The company's workforce has nearly halved: EPFO data shows registered employees fell from 142 in March 2025 to 69 in May 2026. Founder Sandeep Aggarwal confirmed layoffs but declined to specify the number. He acknowledged delays in gratuity payments, saying they would be resolved soon.
Aggarwal said Droom is in no rush for a public listing. The company is instead focused on monetizing the digital infrastructure and AI products it has built, including Droom Rental and MyDroom, a predictive planning tool for vehicle health and insurance renewals. "We want to leverage what we have built as digital infrastructure and try to have a larger portion of AI at growth," he said.
Cars24 has taken a different route. The SoftBank-backed company has expanded beyond its core used-car marketplace into new car sales, personal loans, and credit-score services. Its most ambitious bet is on AI. After integrating the technology into core operations, the company launched a $20 million AI Labs initiative in June. It has since spun out a separate enterprise AI venture, Deployment Inc., with a $5 million commitment.
"On the used car business itself, it is hard for three reasons. Every asset is unique. The journey needs long assisted handholding. The operations are complex," said Shivanshu Makkar, who leads finance, strategy and governance at Cars24. "We have spent years solving those three, and the unit economics are now in place, with the consumer business growing over 40%. AI is the second unlock. It lets us do all three at a much lower cost as we scale."
The numbers support that claim. Cars24 reported a 27% jump in adjusted net revenue to ₹1,411 crore in FY26, from ₹1,108 crore in FY25. Its Ebitda loss narrowed 36% to ₹357 crore. Makkar said the core business remains used cars, but the company now sees itself in "the business of vehicle ownership" rather than single transactions.
Spinny, backed by a mix of institutional investors, is pursuing partnerships. The company has struck deals with JSW MG Motor India and Nissan Motor India to build a certified pre-owned EV ecosystem. It also partnered with CarTrade to improve the buying and selling experience. Founder and CEO Niraj Singh said the goal is to play a role across more of the ownership journey, from discovery to EV upgrades.
Spinny recorded a 24% rise in revenue in FY25 to ₹4,746 crore, while its net loss narrowed to ₹424 crore from ₹590 crore.
Analysts say the diversification reflects a recognition that the core used-car business alone may not deliver the margins investors expect. "They need to be slightly sharper on the cost side; the margins will follow," said Som Kapoor, partner and leader for future of mobility at EY-Parthenon India. "The diversification we are seeing, whether through collaborations with OEMs or entering other sectors, could be a reflection of this."
Trust remains the biggest structural challenge. Vinay Piparsania, founder at MillenStrat Advisory and Research, said a large part of the ecosystem still operates through networks of independent brokers and dealers. "Customer awareness is low and the trust deficit is high. On top of that, customers don't find enough value in OEM-certified pre-owned cars. There are too many variables in used cars without specific expertise being offered in the existing market," he said.
ICE (Intercontinental Exchange Inc.), which operates used-car data and auction platforms, carries an Alpha Score of 50/100 – a mixed signal that reflects the sector's ongoing margin pressure.
For all three startups, the next year will test whether new revenue streams can offset the costs of operating in a market where the unorganized sector still calls the shots.
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