Gurugram-based used car marketplace, Spinny, has become the latest Indian startup to initiate employee layoffs. Approximately 4.5% of its total workforce, which amounts to around 300 employees out of a total of 6,500, have been downsized. The decision to reduce staff was a result of the merger of Truebil and Spinny Max with its main Spinny platform.
Spinny Merger Details and Business Reorganization
Spinny acquired Truebil, a platform offering budget pre-owned cars, in August 2020. In addition, the company brought Spinny Max into its fold, catering to premium used cars. As part of the merger, the Truebil website has already been redirected to the main Spinny website. The company stated that this business reorganization intends to strengthen its go-to-market model, reduce costs, and improve its margin profile, thus accelerating the path to profitability.
Spinny Layoffs Amidst a Growing Used Car Market
The layoffs occurred when the used car market in India predicted to outgrow the new car market. According to the OLX Autos-CRISIL Study 2021, the Indian used car market projects to reach 70 lakhs cars sold annually by 2025-26, a significant increase from 38 lakhs sold in 2021-22.
Financial Challenges for Used Car Marketplaces
While the used car market shows promising growth, many used car marketplaces, including Spinny, have been grappling with heavy losses. The startup reported the highest surge in losses among the three leading used car marketplaces, including Cars24 and Droom. The significant increase in marketing expenses was a contributing factor to the 4X jump in the company’s loss in FY22, reaching INR 490 Cr from INR 110 Cr in FY21.
Spinny’s Journey, Funding, and Layoff Trend in Indian Startups
Founded in 2015, Spinny offers a full-stack pre-owned car platform, utilizing the online-to-offline (O2O) model to enable customers to discover cars online. The startup achieved unicorn status in late 2021 after raising $283 Mn in a Series E funding round led by ADQ, Tiger Global, and Avenir Growth. Despite raising significant funding, the startup is among the Indian startups resorting to layoffs as a cost-cutting measure amid the funding winter that followed the Russia-Ukraine war. Indian startups have collectively laid off over 28,000 employees since the beginning of 2022 to navigate through the recession-like period.
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