India's used-car startups are pursuing diversification strategies to achieve profitability in a challenging market environment. According to reports from Mint, Cars24 has expanded beyond its core used-car marketplace over the past two years, including new car sales, personal loans, and credit-score services alongside car financing. The company's most recent move has been a push into AI, launching a dedicated $20 million AI Labs initiative in June and expanding into a separate enterprise AI venture, Deployment Inc., with a $5 million commitment. Similarly, Spinny has partnered with original equipment manufacturers including JSW MG Motor India and Nissan Motor India to build a certified pre-owned electric vehicle ecosystem and enable faster vehicle exchanges.
Despite diversification efforts, profitability remains elusive for India's used-car startups. As reported by Mint, Droom's valuation has slumped from $1.2 billion in 2021 to $360 million in 2025, while revenue declined from a peak of ₹390 crore in FY22 to ₹164 crore in FY26. The company has implemented layoffs over the past six months following a similar exercise at Cars24, which eliminated 200 jobs in April 2025. However, some positive developments are emerging - Cars24 reported a 27% jump in adjusted net revenue to ₹1,411 crore in FY26, from ₹1,108 crore in FY25, with Ebitda loss narrowing 36% to ₹357 crore. Spinny recorded a 24% rise in revenue in FY25 to ₹4,746 crore while its net loss narrowed to ₹424 crore from ₹590 crore.
The used-car market continues to face structural challenges that impact profitability. According to a Redseer report released in June 2026, nearly 79% of India's used-car transactions still take place through unorganized channels. The used-car market, currently valued at $53 billion, is projected to reach $68-78 billion by FY31. As reported by Mint, organized platforms bear higher costs for vehicle inspection, refurbishment, technology, and customer acquisition, while holding inventory ties up capital and exposes them to depreciation and demand fluctuations. Industry expert Som Kapoor from EY-Parthenon India noted that used-car players need to be 'sharper on the cost side' with margins following, while diversification could reflect this strategic shift.
Droom is pivoting toward leveraging its digital infrastructure and AI capabilities rather than pursuing immediate public listing. According to Mint, founder Sandeep Aggarwal stated the company wants to leverage its built digital infrastructure and have a larger portion of AI at growth. The company's AI products include Droom Rental, an AI-powered rental platform, and MyDroom, its predictive planning tool that provides insights on vehicle health, repair forecasts, insurance renewals and smart mobility planning. Aggarwal acknowledged layoffs at his company but declined to specify the number of jobs affected, with EPFO data showing the workforce nearly halved from 142 in March 2025 to 69 in May 2026.
Industry experts highlight that trust remains a significant challenge for India's used-car marketplace ecosystem. According to Vinay Piparsania from MillenStrat Advisory and Research, a large part of the used-car ecosystem continues to operate through networks of independent brokers and dealers, with customer awareness low and the trust deficit high. The expert noted that customers don't find enough value in OEM-certified pre-owned cars, with too many variables in used cars without specific expertise being offered in the existing market. Despite these challenges, the sector's evolution toward AI integration and diversified revenue streams suggests continued adaptation to market conditions.
