Next milestone for remarketing in Asia
From a EU/US perspective, the used car market in Asia is a high-potential but underdeveloped industry. OEMs focus on new car sales, especially because a regional approach on remarketing has not been successful so far. Toyota’s regional footprint, for instance, is a complex puzzle of local production and independent importers, making it difficult for Asia’s number one to control its second hand potential.
Tech instead of OEM
Where OEMs fail, independent companies can succeed. 4 years ago, a group of young Malaysians decided to build a platform for used car sales, Carsome, one of the firsts in its kind for the South-East Asian region. Funding came from Gobi Partners, a venture capital firm, and Convergence Ventures.
After 4 years of operations, the startup employs 700 people, has traded 40,000 cars for a total transactional value of USD 300 million and is present in Malaysia, Indonesia and Thailand. The next step for the company is to ramp up geographically and cover the remaining SEA countries, such as the Philippines.
Carsome uses an online auction model of sales and offers a vehicle check service, organised as well by the startup. This means that prospective buyers or sellers can obtain quickly an independent assessment of the vehicle, which contributes to a need for transparency of second hand car sales. Eric Cheng, co-founder: “We want to establish a brand and a standard that advocates trust, transparency, consistency of service and quality assurance across the region that people and businesses can rely on to make their purchasing decisions.”
Carsome’s Series C is led by MUFG Innovation Partners (a Mitsubishi company), which holds investment from Japanese and American funds. Another USD 50 million has now been added to the company, resulting in USD 85 million total raise. This money will be used to expand, but also to stay ahead of competition in a new and profitable industry.
It makes sense. Or not?
Next to the fact that the remarketing sector is untouched by OEMs in Asia, there’s an enormous need for cars, especially in the South-East Asian growth countries. At a car-per-capita ratio of below 30, car sales have a potential for growth. However, even if its middle class is growing, not all Asian families have the money for new cars; this is where Carsome can come in.
Nevertheless, Asia might not need that many cars. Mobility solutions, especially those offered by Grab and Go-Jek (and their subsidiaries) are extremely popular and investments in public transport are being made across the continent. Add to this a lack of infrastructure for cars (roads, parking, motorways,…) and heavy congestion, there are arguments in favor of reducing the number of cars rather than increasing. For now, a clear vision and strategy around mobility is lacking, so we’re safe to say that the car is still Asia’s go-to mobility solution