Unicorn start-up Cars24 opens $5m Vic facility

More than 150 new jobs will be created from this $5m Mega Refurbishing Lab that is promising to change how Australians buy used cars.

Cars24 Australia chief executive Olga Rudenko. Picture supplied.

Global used car start-up Cars24 has spent more than $5m to build what it says is Australia’s largest hi-tech Mega Refurbishing Lab, a 50,000 square metre facility in Laverton that will hold up to 5,000 cars, refurbish 1,200 cars every month and that the company says will create over 150 jobs for Victorians.

Cars24, which was founded in India and is led locally by former Uber executive Olya Rudenko, says the facility, which opened this week, is its largest international investment to date and is the largest of its type in Australia.

Under Cars24’s online delivery business model, the start-up owns every cars it sells and invests at least $2,000 in each car to maintain mechanical standards and improve the car’s appearance. It’s a vastly different model to traditional car dealers who invest around $500 in refurbishing a car before sale with a 30 per cent profit margin, Ms Rudenko said in an interview.

“If you look at the traditional dealership, they have a shop with maybe a couple of mechanics where they fix up the cars and outsource a lot of the work,” she said. “Our work is all in-house, which is why we now a focus on this concept of mega facilities, so we can do all of the work at scale and control the quality and the cost.

“This is a sector that is going backwards rather than forwards, so we are probably the exception that is moving the sector forward and employing people at this scale.”

CARS24 chief executive Olga Rudenko.

Some 30 per cent of Cars24 customers have their car delivered to their door on the same day they ordered it, Ms Rudenko said, and customers then have a 7-day risk free trial.

“We sold over 7000 cars last year, this business model is resonating,” she said. “Traditional dealers give you a fancy service but they include it in the price. We keep the prices competitive for our customers but we‘re also putting more money into the cars. Your average dealer might invest $500 into the car but we’re investing much more than that.

“We‘re now valued at $3.4bn and the investment we’ve raised cushions us as a business to be able to continue for five-plus years, which is pretty unusual for a start-up but we are at that position, and we’re growing. We’re also on track to get into a sustainable business model where we wouldn’t need more capital investment.”

She added that once the Cars24 site is fully operational, the company intends to open another facility of a similar scale in Sydney.

The executive, who also previously held senior roles at Redbubble and Seek, said that she was surprised at first when Cars24‘s founders asked her to ’effectively become a used-car salesman’ and join the company.

“I thought you‘ve got the wrong person here, given I was from Uber and Redbubble,” she said. “But the more I started thinking about it and the problem this business is solving, it became clear the scale of the problem and that the upside to solving it is incredibly large. Less than 1 per cent of the industry is online right now, so we’re just at the start of this journey.

“Once people experience this they say ‘why you ever buy a car any other way?’, it’s something we’re trying to change and we think it’s really a lot like the early days of Uber.”

Originally published as Unicorn start-up Cars24 opens $5m Vic facility