‘Amazon of used cars’ CARS24 looking to shake up dealers, undercutting prices by up to 5pc
A global used car giant has launched an aggressive push into Australia's $120bn market, using artificial intelligence to slash prices and eliminate buyer stress.
Global used car trader CARS24 is aggressively moving to transform Australia’s used car market, leveraging a proprietary artificial intelligence platform that it claims saves buyers up to 5 per cent off dealership prices.
The $3.3bn-plus company, founded in India in 2015, is positioning itself as the “Amazon of used cars”. It is challenging both traditional dealers and online juggernaut Carsales by taking the high-risk, high-scale approach of owning all its inventory.
CARS24 co-founder Mehul Agrawal said if it succeeds in winning just 10 per cent of the Australian market, it will become a $12bn business.
He said the prevailing consumer sentiment in the used car market was filled with “stress, scared of what will go wrong”.
“Why carry that stress at all? Why is this industry running the same way it has run for the last 30, 40, 50 years?” Mr Agrawal said.
“Technology came and solved for books, it solved for fashion, it solved for electronics. Why has it not gone beyond and got into a category like auto?”
CARS24 disruption centres on its AI-driven pricing model. Unlike traditional dealerships, where prices are often subjective, Mr Agrawal said CARS24 has converted the process from “heuristic into science”.
He said its algorithm analyses thousands of daily listings, a car’s condition, and its history to determine a price that ensures it sits within the most competitive 10 per cent of dealership prices nationwide, typically delivering 2-5 per cent savings to the buyer.
“Pricing is no more a gut call,” Mr Agrawal said. “It is now exactly a science driven by an AI pricing algorithm.”
Crucially, the system is designed to remove emotional and human bias from the transaction for both sides. For sellers, the platform prices the vehicle without human interaction, preventing dealers from trying to “judge your desperation to sell”.
“We want to price the car the same no matter who the seller is,” Mr Agrawal said, highlighting the contrast with marketplace aggregators that do not know the “real transacting price”.
While focused on the traditional used car segment, CARS24 is also grappling with the severe volatility in the second-hand electric vehicle market, as well as faster depreciation rates than internal combustion engine-powered cars.
Mr Agrawal attributed the pressure on EV pricing to the constant launch of new, feature-rich Chinese brands, which puts the earlier generation of cars “into question”.
The central issue, according to Mr Agrawal, is consumer anxiety.
“With EV, a lot of uncertainty comes about again, the battery life and the sustainability in the longer run, and therefore buying a second-hand EV carries a greater risk in everyone’s head,” he said.
Mr Agrawal said that the range anxiety also remains one of the “biggest barriers” to wider adoption in the Australian market.
CARS24’s current method for assessing the health of used EVs is a two-step process: initial pricing for sellers is based on the average tenure of the battery, while the final price is determined once the vehicle is in stock and subjected to a reconditioning centre inspection using specialised devices.
“I think all they need is someone to stand up and put raise their hands and say, ‘You know what, I’ll take care of it. Don’t worry’,” Mr Agrawal said.
Mr Agrawal said CARS24 was on track to sell about 600 cars per month in Australia and aims for significant expansion. The long-term goal is to secure a 10 per cent market share of the nation’s $120bn used car market, a feat that would establish it as a “$12bn company” in Australia.
To achieve this, the company is prioritising “throughput and scale” rather than “optimising for margins”. The company has invested $600,000 in a 15,000sq m operations and logistics hub in Villawood, Western Sydney. The facility is set to serve as a key fulfilment and refurbishment centre, capable of processing more than 400 vehicles at a time.
The company currently manages an average inventory turnaround time of 30 days from purchase to sale, a measure of efficiency critical to their high-volume, lower-margin strategy. Initial focus will be on “going deeper” into the three major states – NSW, Victoria, and Queensland – before expanding to other cities, including Newcastle and Perth.
Mr Agrawal said the company’s primary metric of success, even ahead of revenue and profitability, is its net promoter score – a measure of a customer’s likelihood to recommend a company’s products or services to others – and customer experience. This focus is backed by consumer guarantees that include a 300-point inspection, extended warranties, and a highly unusual seven-day money-back return policy.
“I think that customer first mindset will lead to scale,” Mr Agrawal said. “Magic will follow.”
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