10 Questions for CARSOME Sdn Bhd

Company Overview

Established in 2015, CARSOME Sdn Bhd (CARSOME) is Southeast Asia’s largest integrated car e-commerce platform with presence across Malaysia, Indonesia, Thailand and Singapore. CARSOME provides end-to-end solutions to consumers and used car dealers, including car inspection, ownership transfer and ancillary services including financing and after-sales in delivering trust, transparency and choice to customers. CARSOME is currently a non-listed company.

1. Aside to being a used car buying & selling platform, can you elaborate more about the CARSOME platform?

• The used car industry was traditionally fragmented and tedious. Understanding customers’ pain points, CARSOME offers an integrated, end-to-end ownership ecosystem covering the following areas:
  • Automotive Businesses
    • CARSOME – Digitalised car-buying and wholesale business
    • CARSOME Certified – Regional retail line offering refurbished cars
    • CarTimes – Independent car dealer in Singapore
    • LCT (Europcar) – Car rental franchise of a global rental company in Malaysia and Thailand
    • Carsentro – Used car dealership in Indonesia
  • Automotive Content
    • iCar – Largest online auto classified and advertising platform in Southeast Asia
    • WapCar – Auto content and social media operator in Southeast Asia
    • In Thailand, our brands include: Autofun, Autospinn, and One2Car.com
    • In Indonesia, our brands include: Autofun, Mobil123, and Carmudi  
  • Ancillary Services
    • CARSOME Capital – Financial solutions and insurance services for customers and dealers in our markets
    • CARSOME Service Centre (CSC) – After-sales services such as car maintenance
  • Automotive Education
    • CARSOME Academy – Emerging Technical and Vocational Education and Training (TVET) education institution accredited in Malaysia, Indonesia and Thailand addressing the skills gap in the automotive industry and further supporting the talent needs of CARSOME Certified Lab and CSCs.

2. What Are Some Key Highlights and Milestones Achieved by CARSOME in Recent Months?

• Satisfied customers – As of Q1 2023, our retail line CARSOME Certified holds a high Net Promoter Score (NPS) of 77 points within the used car industry, while the Group's wholesale business garnered an NPS of 75 points.  

• Rollout of MyGarage – Incorporation of MyGarage into the Group’s CARSOME App in June this year further elevates the car ownership experience by providing comprehensive features from real-time car valuations to service bookings and ancillary services.  

• Solid growth in ancillary services – CSCs have seen more than 100% month-on-month growth since its launch at the end of last year and are expected to reach nationwide coverage in Malaysia by the end of Q3 2023. In 2022, CARSOME Capital was awarded a digital banking license, and registered US$100 million in incremental sales.  

• Impactful digital footprint – We have one of the largest auto digital audience footprints of more than 15 million monthly active users across the network, also driving down customer acquisition costs.  

• Strong investor support – We concluded a financing round in June 2023, which further strengthened our liquidity position to US$200 million.

3. How cost-efficient are CARSOME’s operations? How are you improving cost management?

• In Q3 2022, CARSOME pivoted from a growth-oriented strategy towards an Accelerated Profitability Plan driven by three key priorities:
  o Increasing trade margins – Focusing on high-quality transactions was crucial in realising an almost doubled trade margin in 2022 compared to 2021. In Q1 2023, the Group also achieved record high margin performance.
  o Improving operational efficiency – Streamlining processes and reducing overheads led to significant improvements in productivity and contributed to operational profitability in Q1 2023. The Group also leveraged data and technology to refine its systems and processes, yielding significant efficiency gains.
  o Driving synergies from acquired businesses – Strategic acquisitions such as iCar Asia Group delivered impressive year-on-year revenue growth and significantly contributed to a reduction in customer acquisition costs of over 60% in the past year.

4. What makes CARSOME different in comparison to conventional automobile dealers? What problems are you trying to solve?

• We provide a digitalised way to buy and sell cars in a trusted way, solving customers’ pain points. Our ancillary services include insurance, financing and after-sales services, and are all digitally available through our app. Our retail line of CARSOME Certified cars are also quality-assured thanks to regional CARSOME Certified Labs offering comprehensive car refurbishment services.  

• We are one of the largest used car supply aggregators, where 90% of cars are sourced directly from customers, transacting approximately 150,000 cars in 2022 and generating US$1.5 billion in revenue. We also have a vast hub and logistics network which includes over 120 physical locations, 3 CARSOME Labs and more than 20,000 dealers.

• Today, we are delivering the world’s first integrated car ownership ecosystem, going beyond just buying and selling used cars to include ancillary and other services to offer convenience and peace of mind throughout the entire lifecycle of their ownership experience.

5. How have the acquisitions of iCar Asia and CarTimes strengthened CARSOME’s industry position? What is CARSOME’s mergers & acquisitions (M&A) strategy?  

• Multi-brand strategisation has bolstered our reach in the content and classifieds space with both brands playing an essential role in kickstarting a customers’ car ownership journey. iCar Asia and CarTimes generate leads that funnel into the Group’s platform, equipping the data engine with information key to CARSOME’s go-to market strategy.  

• In terms of M&A strategy, we focus on customer needs and filling the gaps across the value chain. Subsequently, we assess whether potential M&A candidates can value-add to our ecosystem before reaching an agreement with them.

6. What business synergies are there between CARSOME Certified Labs and CARSOME Academy?

• Recognising that CARSOME can only grow as fast and as efficiently as our staff’s capabilities, CARSOME Academy was therefore established to proactively uplift our talent pool by providing upskilling and reskilling opportunities for graduates, technical workers, and early school dropouts.  
• CARSOME Academy is essential in ensuring the high quality of CARSOME Certified Labs’ workforce, as the value of our business lies in our highly-skilled technicians responsible for quality-assured cars.

7. CARSOME is part of the consortium that was awarded a digital bank license in Malaysia. What are your plans on this front?

• Being part of the consortium will complement the efforts to expand our offerings and services. Leveraging on our existing financing capabilities (via CARSOME Capital) and now with the digital bank license, we hope to provide a greater value proposition in the auto-financing space to further elevate the car-buying experience for Malaysians, especially for the unserved and underserved communities.  
• Our mission is to simplify car ownership journeys in Southeast Asia, and that cannot be done without the support of a vast database. Having the opportunity to tap into the digital banking front allows us to access the car market from different perspectives, such as pricing car values, identifying the ideal car models and loaning time frame depending on customers’ credit profile, which is key to building an ecosystem with more transparency and efficiency.

8. What are some ongoing market opportunities and how is CARSOME leveraging them to strengthen your businesses?  

• Capitalising on Economic Growth and Rising Car Ownership – With continued economic growth, rising upper middle class, and projected increase in car ownership across Southeast Asia, we are well-positioned to capitalise on the comprehensive ecosystem it has built.  

• Addressing Market Fragmentation – Southeast Asia’s used car market is fragmented and unorganised, providing an attractive opportunity for disruption. Given the nascency of the used car e-commerce industry in the region, it also presents a more attractive market opportunity and cost structure. We believe that as a market leader, we are strategically positioned to capitalise on these opportunities and create a more organised and efficient marketplace.  

• End-to-End Car Ownership Ecosystem – Over the past few years, we have been focused on delivering a complete car ownership ecosystem, building on both retail and wholesale segments to cater to dealers and customers alike.  

• Venturing into After-sales Market – The recent launch of CSC expands our offerings into maintenance and repair services, providing more comprehensive solutions for car owners.  

• Future-proofing to meet Electric Vehicles (EV) demand – We are developing EV distribution and servicing capabilities and is prepared to serve EV manufacturers looking to penetrate Southeast Asia.

9. Describe ESG factors that are material to CARSOME and how that will create long-term value for your stakeholders.  

• CARSOME Group:
  • Job generation for locals – We have an over 4,000 strong workforce from all backgrounds, regardless of age, gender and race.
  • Embracing Diversity and Inclusion – We promote diversified and inclusive growth and champion movements such as Women In Tech. Approximately 26% out of the total 150+ senior leaders in CARSOME are women. In addition, our team of 2,999 employees from over 20 nationalities as of December 31, 2021, has grown to over 4000 employees, with over 33 nationalities.
  • Circular economy – We created a platform for continued value creation on cars throughout their usable lifetime.
  • Supporting the standard of living – We enhance economic opportunities by providing used cars at competitive pricing, contributing to greater accessibility and social mobility.
  • Stewardship – Our strong governance structure via reputable Board of Directors (BOD) and Advisory BOD members who come from diversified backgrounds.
  • Investors – We are backed by a respectable list of investors, both strategic and institutions, that continue to support our growth.
• CARSOME Capital:
  • Serving the underserved and unserved – Ancillaries such as insurance and financing products serve those who previously may not have been able to access these products and services before.
• CARSOME Academy:
  • Upskilling – Equipping local graduates, low-income groups, early school dropouts, and indigenous backgrounds with accessible programs relevant to industry needs, leading to real income generation.
  • Income generation & bright career path – Generate a fulfilling and lucrative career path with a starting salary of RM2,000, moving upwards to high thousands as they progress in their careers, made possible through the Academy’s program structure including both technical and managerial skill development.
  • Elevate the TVET ecosystem as a whole – The first-of-its-kind soft skills curriculum for an Automotive TVET institution developed in collaboration with Sunway University.

10.What is CARSOME’s value proposition for potential investors in the used-car industry?

• Fuelled by our ecosystem strategy as well as tech and data capabilities, combined with the macro tailwinds driving digitalisation across Southeast Asia, we believe that our value creation capabilities are as follows:
  • ​​​​​​​Strong growth momentum – In 2022, the Group’s revenue grew over 2.5 times to US$1.5 billion, with the newly established regional retail line CARSOME Certified contributing 35% of total revenue. In Q1 2023, we hit an operational profitability milestone for the first time thanks to significant growth in trade margin that doubled year on year. More than 80% of the trade margin came from transaction margins, leaving a huge potential upside for ancillary revenue given its increasing focus on ecosystem offerings, including Financing, Insurance, and Aftersales.
  • Vast market opportunities – Southeast Asia's used car e-commerce market and car ancillary market are set to grow by 35.2% and 10% respectively between 2023 and 2025, and we believe that we are well-positioned to capitalize on these trends.
  • Large untapped market – Using our data and tech-enabled ecosystem strategy, we believe that we are primed to leverage the estimated US$270 billion market opportunity across Southeast Asia, offering significant value creation potential.

10 in 10 – 10 Questions in 10 Minutes With Companies  

Designed to be a short read, 10 in 10 provides insights into companies through a series of 10 Q&As with management. Through these Q&As, management will discuss current business objectives, key revenue drivers as well as the industry landscape. Expect to find wide-ranging topics that go beyond usual company financials.  

This report contains factual commentary from the company’s management and is based on publicly announced information from the company.  

For More, Visit Sgx.com/research.  

For more company information, visit https://www.CARSOME.my/  

CARSOME Is Currently a Non-listed Company.