It’s Tuesday, and today we’re diving into Vutto, an Indian company based in Delhi operating in the used motorbike space. Founded by Rohit Khurana and Sitaram Ankilla, the company recently completed a $7 million Series A round led by RTP Global, with support from Blume Ventures.

Not that long ago, I wrote about OKXE, a Vietnamese company that facilitates the buying and selling of used motorbikes. This time it’s India, and I wanted to see what’s different about the Indian market.

But let’s start with what’s the same. And the main thing that’s the same is the reliance on motorbikes.

Every year, an already massive base of 260 million two-wheelers (2W) adds almost 20 million new vehicles. 2W penetration is 5.5 times higher than that of cars.

The used market is also, let’s say, substantial: around 9 million used 2Ws were sold in 2024, up from 6.6 million in 2016. It’s shaped by two, in some sense, contradictory forces. On one hand, there’s strong income growth, especially in rural areas. On the other, over the past few years, the cost of new 2Ws has increased by 30-40%, driven by rising component costs. So you have new consumers entering the market who can’t yet afford a new motorbike, and existing consumers who can’t upgrade because prices have climbed too high.

Another key feature is that, similar to Vietnam, the market is largely unorganized — some estimates suggest up to 99% of transactions happen informally. Trust is also limited. And as you might expect in such conditions, dubious practices exist.

That’s the basics. But those factors alone don’t make the Indian market distinctive. I’d argue three things do.

1. Repossession auctions. While not uniquely Indian in concept, their scale and structure are. Massive, nationwide, simultaneous auctions are held to sell repossessed vehicles. Shriram Automall is a good example. Combined with clear rules on repossession and resale, this creates a large, verified secondary market. On top of that, the loan market for 2Ws in India is expanding rapidly, by over 30% annually. That means the potential repossession pool is growing fast, even if defaults remain rare.

2. VAHAN. Built on Aadhaar (the biometric ID system), VAHAN is India’s centralized platform for vehicle ownership transfers. The buyer and seller authenticate with Aadhaar, pay a small fee, and complete the transfer online. This does two things: it makes the process far less stressful and adds transparency. Mot only for the current transaction (from original owner to second owner) but also for future ones (second to third, and so on).

3. Delhi’s ‘end-of-life’ rules. Under a framework introduced in 2018, the sale of diesel vehicles older than 10 years and petrol vehicles older than 15 years is prohibited. Enforcement, though, has been inconsistent. To help with that, the Delhi government recently banned refueling of end-of-life vehicles — effectively pushing owners of older 2Ws to sell before they quite literally run out of fuel.

To sum up: both supply and demand in this highly informal market are growing, driven by different forces, leaving an opportunity for someone to step in and formalize it.

Vutto is a hybrid online-offline marketplace offering refurbished two-wheelers (2Ws). Since it’s a marketplace, it brings together several types of participants. In this case, two.

On the supply side, there are those looking to sell their 2Ws. These can be individual owners as well as banks and financial institutions. In the latter case, these are repossessed vehicles, and Vutto provides a channel for lenders to recover value from them.

To sell a motorbike, the process starts with a quick online assessment, where the seller is offered an estimated price based on model year, mileage, and other parameters. If satisfied with the quote, the seller brings the motorbike in for a physical inspection, where it’s checked against 200 checkpoints. If both sides are happy with the final valuation, the seller is paid on the spot.

On the demand side, buyers can either browse the website for a suitable model or visit one of the company’s three showrooms. Once they find a bike they like, they can take a test drive. And if all goes well, make the purchase. Each sale includes:

Buyers can also purchase on credit through Vutto’s financing partners.

Between the time a bike is purchased from the old owner and sold to a new one, it goes through a refurbishment process. This allows Vutto to position its offering as “as good as new”, but at 30–40% lower price points.

Because of the refurbishment component, Vutto isn’t a pure marketplace. It buys used 2Ws, refurbishes them, holds the inventory, and then sells them. This means the company carries both price risk and working-capital risk. But also captures the full value.

How well it performs depends on three core components:

The company averages a 12-day time-to-sell, and its first location is already profitable. The faster the inventory turns, the better, mainly for two reasons. First, because cash remains tied up for less time, increasing the annualized return on contribution margin. Second, because inventory capacity is limited and per-unit margins are likely modest, faster turnover means more bikes pass through Vutto’s system each year, thus generating higher total profit.

The main revenue source is, of course, vehicle sales. But there’s also after-sales support. The three free services make it cheaper to maintain the bike with Vutto, and if those initial services go well, customers are likely to return out of habit and risk aversion.

While the company doesn’t mention it explicitly, it’s likely that Vutto also earns a commission from financing partners, since it’s the one bringing in the buyer.

Margins being squeezed from multiple directions are, I think, the biggest threat to the business. The increase in goods and services tax (GST) on used vehicles from 12% to 18%, which came into effect this year, directly cuts into profitability. New emission laws that the Delhi government is actively pushing could also remove a large share of older bikes from circulation. Competition is intense, and several companies in this space that previously raised funding have since gone bankrupt, showing that raising capital doesn’t necessarily translate into a sustainable business.

Vutto could also run into internal risks: expanding stores too quickly, seeing its time-to-sell worsen, or facing a shrinking spread between buying and selling prices. There are many ways margins could compress, aand without a sustainable competitive advantage, even small market shocks could be difficult to absorb.

The gig economy in India is booming. Quick commerce is the most visible example. That sector alone employs millions of riders and will continue to do so. Combined with rising overall motorbike ownership, it’s highly unlikely that demand will shrink anytime soon. People have more disposable income and greater access to credit, both of which lift the entire market, and Vutto along with it.

I also like how deliberate the company seems to be. Something I mentioned in the Fairdeal.Market piece. Vutto currently operates in just one city and is already profitable with its first store. It appears to understand the risks of scaling too fast, choosing instead to move gradually, proving the model works before expanding further.

And while I don’t expect Vutto to build a durable moat, elements like the warranty and free servicing do help differentiate its product, at least to some extent.

There aren’t many countries where a single city can serve as a massive market on its own. Still, I wonder how many companies focus on dominating just one city before expanding. Do startups scale too quickly: not only from one country to another, but even from one city to the next?