Prosus Ventures is exploring options to offload OLX Group’s used-car marketplace—OLX Autos—as reversal of pandemic trends have led to a significant and persistent slowdown in the pre-owned car market, the Amsterdam-based investment company explained in a statement.
The move comes shortly after the OLX Group, in January, fired over 1,500 employees, or 15 percent of its global workforce, as part of a restructuring plan to cut costs in a souring economic environment. Several employees were also laid off in India, a market OLX Group entered as early as 2009.
While the core classifieds business of the OLX Group has continued to deliver a strong performance, the OLX Autos vertical has been eating into profits. "The exit of OLX Autos will lead to a significant improvement in the profitability profile of the Classifieds segment as a whole," said Prosus, explaining the decision to cut the vertical loose for a better cash position at the company-level.
For the six-month period ending September 2022, Prosus blamed OLX Autos for single-handedly expanding its adjusted EBITDA loss at the company-level from $105 million to $251 million. The key reason for the bleeding at OLX Autos has been an industry-wide phenomenon, as selling of used-cars changed during the pandemic, with a capital-intensive refurbishment model and ‘direct-to-consumer’ drive.
Between April and September 2022, OLX Autos sold 114,000 cars at a 60 percent year-on-year growth, but at a $206 million loss over the same period, which dragged OLX Classifieds' bottomline in spite of profits at OLX Europe and OLX Brazil.
“While OLX Autos has built leading positions across many of its key markets as a result of its strong technology platforms and local focus, pursuing a global growth strategy is no longer the right approach for our shareholders," said Prosus Ventures, which is a subsidiary of the South African tech giant—Naspers.
Naspers, which was also among the earliest investors in Tencent, acquired majority of ownership in OLX in 2010 and brought it under the oversight of Prosus.
In India, Prosus’ portfolio of startups includes unicorns such as BYJU’s, Swiggy, Meesho, PharmEasy, Mensa Brands, ElasticRun and The Good Glamm Group.
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