Carsome, a used car platform based in Malaysia, received USD30 million during its latest funding round with Asia Partners leading the way. The deal was reported to be one of the largest all-equity financings in Southeast Asia’s online automotive industry. The deal may also signal changing consumer habits in Malaysia with investors hoping it happens elsewhere.
Founded in 2015, Carsome announced that 100,000 cars had been sold through the platform. That was not the only bit of good news the company received recently. The third quarter of 2020 saw the automotive outfit record its highest-ever quarterly revenue growth. Additionally, Carsome reported operational profitability in October.
All of that impressed investors and explains why it was handed USD30 million in funding. However, it was the company’s ability to change public sentiment about used car buying in Southeast Asia that has allowed it to flourish. Much like real estate, the secondary market for cars is best described as tepid in most countries.
The key for Carsome in Malaysia was to develop a platform supported by processes that instilled confidence in potential buyers. In order to accomplish this, the firm has launched several programs.
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Carsome a hit in Malaysia
Among Carsome’s most notable measures is the comprehensive 175-point inspection that every automobile on the platform must pass in order to be listed. Additionally, purchases are backed by an extended warranty and a money-back guarantee.
Earlier in 2020, Carsome opened its flagship store in Malaysia that’s different from traditional car dealerships. Interested buyers must make an appointment online and pick the car they wish to test drive. No other vehicles are stored on site. The automotive retailer also set up official shops on both Shopee and Lazada to boost its presence.
These measures have allowed the company to find success in Malaysia, but its efforts elsewhere in the region are stuck in neutral. Carsome is active in Indonesia, Singapore and Thailand, but these markets account for less than 40 percent of all business.
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The answer
Carsome received USD30 million in funding because investors believe its model can be scaled up in other countries after finding success in Malaysia. Of course, that’s easier said than done. The foundation for success is there. However, Carsome will need to invest heavily to alter consumer habits in countries like Thailand where secondhand car buying is still a novel concept.
