The introduction of a subscription model early this year is probably the biggest breakthrough yet in Singapore-based automotive marketplace Carro’s journey. With this novel approach, the four-year-old startup aims to transform car ownership in Southeast Asia. For this, it has just added US$30 million to its war-chest, taking the total Series B funding round to US$90 million, from an impressive list of investors, including SoftBank Ventures Asia, EDBI, US-based charity Dietrich Foundation, NCORE Ventures, Hanwha Asset Management, Insignia Ventures, B Capital Group, Singtel Innov8, Golden Gate Ventures, and Alpha JWC, also joined the round.
The company has also acquired Indonesian C2C marketplace Jualo.com, with more similar deals expected in the near future as it continues to expand in Asia.
In this e-mail interview with e27, Carro’s Founder and CEO Aaron Tan talks about the subscription plan, expansion strategies and more.
Below are the edited excerpts:
You have just added US$30M more to Series B. Is the round now closed, or are you expecting more investors to join in the coming months? What is your target?
The round is now closed; we decided to extend the round because there was an overflow of interest in our Series B round. There were a number of strategic investors interested in participating in the round.
US-based charity Dietrich Foundation is also an investor in this round. How does a partnership with Dietrich aligns with your goals? What value does it bring to the table?
All investors will bring value to table. American based investors bring very interesting insights on how the market could develop, including sharing lessons regarding potential pitfalls, insights into what worked and what didn’t work.
You have now expanded to Thailand and Indonesia. What opportunities do you see in these markets? Do you follow the same business model in these two markets? How did you win the market regulators’ as well as dealers hearts in these markets?
We have had a great response in both Indonesia and Thailand — with over 70 per cent of our current transactions taking place outside of Singapore. In Indonesia, Carro has over 1,000 dealership partners; in Thailand, Carro has grown over 100 per cent QoQ.
In both markets, Carro is focusing on working closely with dealerships — supporting their growth by digitising their sales channels, allowing them to reach out to a larger pool of private sellers across the country to grow their revenue. Carro helps provide a worry-free selling experience for private sellers, including a transparent communication channel, checking the cars’ condition, and negotiating prices.
Malaysia is another market with massive growth opportunities. So are many other countries in Southeast Asia. Do you want to see yourself present in all across Southeast Asia? What are your ultimate goals?
Our aim is to be the leading automotive marketplace in Southeast Asia. We will have further updates and news about market expansion and acquisitions coming soon.
Carro started off as a pure classifieds platform in 2015, although the space was much crowded back then. What events led you to introduce a subscription platform, a novel concept? Is subscription your main revenue channel now?
We aim to transform car ownership through our 360-degree approach, which includes buying and selling, financing, insurance, subscription, workshop and roadside assistance. The subscription model is one such aspect of the whole picture. Our market research showed that drivers are looking for the convenience and flexibility of owning a car without needing to worry about annual depreciation and unexpected expenses. That’s why we decided to introduce a subscription-based service, where users can pay a flat monthly fee that covers all costs associated with car ownership – such as insurance, road tax, warranty, 24-hour assistance, and maintenance costs.
There is a perception that owning a car in Singapore is quite hard. How did you beat this perception through subscription plans to win the government and dealers?
It is all about consumer education and providing real value. At the end of the day, subscription is a better alternative than owning a car.
From the perspective of the dealers the economics makes sense, but more importantly it is more convenient and in line with the lifestyle of the current generation.
If you come down further, South Asian markets also presents big opportunities. Common man finds it hard to own a car in countries like India due to high bank interest rates. Do you plan to launch subscription service in this part of the geography?
The response to the subscription service in Singapore has been overwhelming — with over 3,000 people signing up to the service since we launched. We know that today’s drivers are looking for flexibility and convenience, and are planning to launch the subscription service in other markets.
Carro is a wholesale marketplace whereas Jualo is a C2C marketplace. What synergy do you see here? How is this deal going to benefit you in the long term? Can you share the terms of the agreement?
Carro and Jualo.com have a lot of synergies — the Jualo.com brand resonates very strongly in Indonesia, with over four million users per month visitors and over US$1 billion worth of transactions being facilitated on the platform. Jualo.com’s brand personifies the intent of selling, something that we want to strongly be associated with.
Jualo.com will continue to operate as is, and we will help grow the business, especially with a strong focus on the automotive sector.
Any other acquisitions in the pipeline?
We are planning more acquisitions and market expansions later this year.