Spinny has spun off a narrative that India’s largely fragmented market of clunkers and trade-ins is on a swing.

The full-stack used-car platform last week saw its FY25 topline zoom 25% to INR 4,657 Cr, while it slammed the brakes on its losses from skidding beyond 28% at INR 424 Cr. This was the second straight year for the company to cut down on losses.

Although most new-age tech platforms are deep into the red and struggling to set the unit economics after raising capital in quick succession, the financials for the last fiscal tell a different tale. While Car Dekho hopes to rebound in FY25, Cars24 promises to keep up the revenue momentum.

In fact, a look into the used-car startup segment shows that all roads now lead to Dalal Street. Spinny and its peers like CarDekho and Cars24 plan to go public by the year-end or next year, while listed rival CarTrade recorded an 85% surge in profit for FY25.

As the used-car market paced up, investors jumped to hitch a ride down the fast lane. Spinny has raised over $664.20 Mn till date from investors like Tiger Global, General Catalysts, Abu Dhabi Growth Fund, Accel Partners, and Avenir Growth Capital. The used-car marketplace was valued at $1.7 Bn – $1.8 Bn when it closed its $170 Mn Series F round in June this year.

In the turnaround tale for startups in India, Spinny throws up a critical question on the sustainability of its inventory-led model. Inc42 took a look at the company’s playbook to understand how it managed its losses while improving its topline and assesses how sustainable the model is before Spinny rolls out its public float.

Leashing Losses, Revving Up Revenues

When Spinny began scaling in 2019-21, its business model seemed too capital-heavy to succeed. Unlike asset-light classifieds businesses like CarDekho, OLX and CarWale, Spinny purchases the cars, builds its own inventory, refurbishes the vehicles, and resells them while claiming to have its cars go through a 200-point inspection and a money-back guarantee.

This solves the consumer’s trust deficit, but locks up enormous working capital, besides raising the operational cost. This led to the ballooning of Spinny’s losses to INR 820 Cr in FY23. The used car retailer has since pulled the leash on its expenses while the demand for used cars on the marketplace kept picking up.

The company narrowed its net losses by a cumulative 48% to INR 424 Cr in FY25, despite aggressive expansion in a capital-intensive sector. This improvement was driven by a combination of revenue growth – up 43% from INR 3,260 Cr in FY23 to INR 4,657 Cr in FY25- and disciplined cost management, where total expenses grew at a slower rate than the 23% topline surge.

Its asset-heavy vehicle procurement process, however, continues to be a drag on its bottomline, with the cost to procure goods rising 23% to INR 4,304.4 Cr in FY25 from 17% rise a year before. Procurement cost makes up around 80% of the company’s total costs. While absolute spends rose with scale, efficiencies in sourcing, inspections, and turnover reduced it as a percentage of revenue.

Spinny also significantly reduced its marketing spends from INR 424 Cr in FY23 to INR 125 Cr in FY25, bringing down the customer acquisition cost. FY25 saw the........

© Inc42