Co-founder and chief executive officer Eric Cheng says maintaining substantial market share is crucial to its expansion plans.
“To have true regional market leadership, we must have a substantial market share of the overall used-car market in the region, cementing our presence and brand as the Visa/Master of the used-car industry,” he says.
Carsome recently secured US$50mil (RM207mil) in a Series C funding round, bringing its total amount raised to-date to US$85mil.
The funds would mainly be used for the enhancement of its technology infrastructure, for R&D to improve user experience for both buyers and sellers, to expand its inspection centres as well as to beef up its financing business.
Cheng says the company has strong market leadership in Malaysia, Indonesia and Thailand. It is also present in Singapore.
Over 40,000 cars are transacted on the platform annually totalling more than US$300mil in transaction value, excluding all loan and financing deployment.
Carsome is eyeing expansion into more cities in South-East Asia and the new funds will help accelerate its financing product offerings for dealers and consumers, which will be rolled out over the next 12 months.
“We have been offering our financing products to our dealer network at a smaller scale to test and prove the existence of such market potential and product feasibility. The challenge is, on a large scale, the risk and tenure profile needs to be matched with the right capital structure. This is why we are partnering with other funding partners in each market to roll it out at scale,” says Cheng.
Last month, the company announced a partnership with peer-to-peer (P2P) financing platform Funding Societies Malaysia to offer financing products to local car dealers for the purchase of used motor vehicles. The collaboration could benefit some 1,600 used car dealers under Carsome with a total financing amount of US$200mil.
Cheng notes that the market has evolved massively over the years as the Internet and mobile penetration rate has increased at a phenomenal pace.
“This has led to the discovery of many online platforms and tools allowing for better information search to suit the needs of the people. The used-car market has been traditionally an offline business, where there is a lot of mispricing and asymmetric information.
“This has changed massively in today’s world and we foresee that things will continue to evolve and change for the better.
“Moving forward, trust, assurance and quality would play a vital role in the used-car industry. This is where Carsome comes in to address the problems by building trust and standard across the industry to allow for better comfort when purchasing or selling used cars,” he says.
Carsome prides itself in being a one-stop solution for car sellers and dealers, from inspection to ownership transfer, with instant payment and seamless paperwork. Customers can schedule a free car valuation at any of its inspection centres across the region where its inspectors will appraise the car and provide an offer on the spot. The car is then put up for bidding to all used car dealers in Carsome’s network for auction.
To date, Carsome has a coverage of more than 6,000 dealers across over 50 cities in the region and over 12,000 monthly inspections at its centres.
Carsome has over 700 employees across its South-East Asia offices.
Cheng notes that it is operationally profitable in Malaysia and targets to be profitable in the remaining markets by end-2020.
Carsome is perhaps one of the few local startups that have managed to raise funds at the Series C round. But Cheng notes that there are also a lot of diamonds in the rough waiting to be unravelled in the local market.
Apart from its focus to solve problems and innovate solutions for the industry, he adds that its supportive investors have also helped the company come this far.
The current financing round welcomed new investors including MUFG Innovation Partners (MUIP), Daiwa PI Partners, Endeavor Catalyst and Ondine Capital. Existing investors Gobi Partners and Convergence Ventures also participated in the round.
As part of the strategic investment, Carsome will collaborate with MUFG and its subsidiaries in South-East Asia to provide integrated financing access for dealers and consumers via Carsome’s platform. MUFG owns both PT Bank Danamon Indonesia and Thailand’s The Bank of Ayudhya Public Company Limited.
“Carsome is building locally-relevant solutions for the new generation of car owners and dealers. In less than five years, they have built a category-defining business and launched a world-class platform that has been adopted by over 6,000 used car dealers and transacted more than US$300mil in used car sales a year. We’re pleased to continue supporting Carsome on their mission to shape the future of car ownership in Asia,” says Thomas Tsao, founding partner and chairman at Gobi Partners.
“Over the past few years, we’ve admired the innovation and speed that Cheng and his team have brought to the marketplaces that they serve. The combination of our investment with their bespoke technology, digital expertise and dealer relationships will supercharge Carsome’s ability to compete and win in Malaysia, Indonesia and Thailand,” adds Daiwa PI president Hideki Araki.