SINGAPORE — As Chief Financial Officer of Carsome, Juliet Zhu understands that enabling seamless transactions through the Malaysia-based used-car online trading platform is key to transforming the conservative image of the industry.
Helping partners and customers to have more access to financing avenues, ranging from lending to insurance, would accelerate Carsome’s growth and help it become “the brand that can win the trust of customers”, Zhu told Yahoo Finance Singapore in a recent interview.
The current state of the used car industry is characterised by “a lot of friction”, according to the former venture capital veteran.
“The image of the used car sales industry might have been worse due to a plethora of reasons - the lack of a trusted database of car history, an industry inspection and grading standard, as well as a (reliable) pricing engine,” Zhu said.
Headquartered in Kuala Lumpur, Carsome claims to be Southeast Asia’s fastest growing car-trading platform. Apart from Malaysia, Carsome has operations in Indonesia, Thailand and Singapore.
Co-founded and led by Eric Cheng and Jiun Ee Teoh in 2015, Carsome positions itself as a one-stop shop for car sellers and car dealers, providing services ranging from inspection, valuation, bidding, payment to logistics. The platform says customers can sell their cars as fast as within 24 hours.
Carsome groups over 6,000 used car dealers regionally, and over 40,000 cars are transacted on the platform totalling more than US$300 million annually, Zhu said.
To fuel its growth, Carsome is tapping the funds that it received from its investors recently. In December, it raised US$50 million in its Series C financing round with new investors including MUFG Innovation Partners, Daiwa PI Partners, Endeavor Catalyst and Ondine Capital and existing investors Gobi Partner and Convergence Ventures. The round pushed the total raised by Carsome to US$85 million to date.
The funds would mainly be used to enhance Carsome’s technology capabilities, improve user experience for buyers and sellers through research and development, expand its inspection centres and grow its financing business, Zhu said.
Carsome is partnering MUFG and its subsidiaries in Southeast Asia to provide integrated financing access for dealers and consumers via its platform. MUFG owns PT Bank Danamon in Indonesia and Krungsri Bank in Thailand.
Dealers and sellers also have more financing options after the company last November signed an agreement with Funding Societies Malaysia, the largest peer-to-peer financing platform in Malaysia.
Zhu’s experience in venture capital would be instrumental in helping Carsome to expand with the funds secured. She was most recently working at Fosun RZ Capital, a global venture capital under Fosun Group, and had stints in Southeast Asia-focused venture capital firms Jubilee Capital Management and Centro Ventures.
Potential of Southeast Asian markets
The funds raised will help Carsome to expand in the smaller cities in its existing markets in Southeast Asia, said Zhu, who joined the company at the beginning of this year.
The opportunities in the used car markets in Southeast Asia are “most exciting yet understated”, with many middle-class citizens in the region aspiring to buy a car, according to Zhu. Malaysia is the biggest market for Carsome.
“The industry is one of the few spaces in the region that is comparable to the size of (the market in) China with easily more than US$100 billion of untapped market in trading and financing alone,” Zhu said.
“We are looking to grow into second- and third-tier cities of the existing markets so we can deepen the penetration and fully materialise the potential of our regional platform.”
In the region, Singapore is more of an outlier market for the company. “Cars in Singapore have a maximum life of about 10 years, changing hands three to four times max, compared to other markets like Jakarta, where you can see older cars of 12 years or more still on the road,” Zhu said.
In terms of its bottomline, Carsome is “operationally profitable” in Malaysia and aims to be profitable in Indonesia and Thailand by the end of this year, she added.
Other future plans
Carsome aims to hire more people to boost its 700-strong headcount this year in line with its business expansion, Zhu said. Singapore has the smallest operations with less than 10 employees.
“We are planning to grow another 20 to 30 per cent in terms of headcount, mostly in the tech and product team to further automate the process and improve on operational efficiency.”
Carsome is also looking at partnering ride-hailing players Grab and Gojek to sell used cars to them in the region, Zhu said.
When asked if Carsome has plans for an initial public offering, Zhu said Carsome is not ready to seek a listing yet. “That’s definitely something we look forward to. I don’t think we have fully materialised our potential and want to be profitable before thinking about an exit.”