The rumours that have been around since June of this year seem to have come true. Sequoia Capital backed Cardekho has acquired Ibibo group company Gaadi.com reports ToI.

The acquisition by Cardekho.com is a clear sign that the online auto classifieds sector in India is headed for a consolidation. Cardekho and Gaadi both are leading players in this space, and them coming together means they will now become the largest player in online auto classifieds and information space. There are number of small and medium sized auto portals in India, and the combined entity will now compete with likes of Carwale.com and Cartrade.com.

The financials remain undisclosed – however, ToI reports that Cardekho is expected to have paid around $11 million (Rs. 66 Crore) for Gaadi.

Interestingly, Amit Jain, CEO of Cardekho has mentioned that both Cardekho and Gaadi will run independently and remain separate businesses.

Cardekho’s parent company Girnar Software was founded in 2007 by 2 brothers Amit and Anurag Jain both IIT-Delhi Alumnus. It had received $15 million funding from Sequoia Capital last November. Gurgaon based Gaadi.com was acquired by Ibibo group in 2011 and had been running it since.

Ibibo group CEO, Ashish Kashyap has said that post acquisition, the group with completely exit auto classifieds space to focus on the online travel sector in which they own 4 separate portals, Goibibo.com, TBOGroup, Redbus.in and YourBus.com.

Pre-owned car market is growing in India and is expected to triple to close to $100 million in next 5 years.

Our Take

The interesting factor about this acquisition is that both the entities will remain separate businesses. This is quite surprising because both Cardekho as well as Gaadi are in same space and generally a combined single entity would have meant lower burn rates and singular focus. The combined entity would have also meant lower advertising spends on advertising and branding.

Cardekho has larger traffic of the two – It gets approx 4 million visitors a month compared to Gaadi’s 2.5 million. Obviously, Cardekho will remain the dominant brand of the two and even though Gaadi will remain a separate business, we think that it will slowly be phased out.

With this acquisition, the nearest competition to Cardekho-Gaadi will be carwale.com, who currently attract 5.4 million visitors a month and were the largest player until this acquisition. Cartrade.com, the other player attracts roughly 1.5 million visitors making them the 3rd largest player in India.