Carro, the ‘Alibaba for cars,’ is growing fast and near breakeven

Additional reporting by Katrina Balmaceda Uy.

Carro had a problem in the beginning. It was met with great resistance because it was positioned as a rival to car dealers. Competition in the car sales arena was fierce too.

As a result, the company rejigged itself from an online automotive marketplace to a “wholesale marketplace.”

Photo credit: Founder and CEO Aaron Tan

That move has reaped rewards. Carro now boasts US$70 million in revenue in its latest financial year, which ended in March 2019, Tech in Asia learned from Carro CEO and founder Aaron Tan. (The startup declined to disclose the percentages that each of its business arms contributes to revenue.)

At that time, it made a gross profit margin of above 10%, because of inventory costs. “For the convenience of our buyers, we sometimes, depending on geography, pay off the seller and take the car in for a few days,” says Tan.

This benefits the buyer by reducing paperwork. “Sometimes, the seller sells the car but it is encumbered by a loan, so it makes sense for us to help take the car in, with a ready buyer at hand of course, and clear off the loan before handing it off to the buyer,” he explains.

The founder attributes his company’s rapid growth to its expansion in Indonesia and Thailand, as well as its finance business.

The company had a revenue of just US$11.6 million and a net loss of US$1.79 million in the previous financial year, its public filings show. This indicates modest spending in sales and marketing, a contrast to many startups.

“I think it goes down to having a strong understanding of LTV and unit economics. We watch it like a hawk. At the same time, it is also about knowing what to double down on (things that are revenue- and profit-generating) and when to cut losses (failed experiments or poor hires). Key is to be decisive,” he says.

It’s an approach that’s set to continue. Tan says that the startup’s net burn continues to shrink, and it hopes to break even by this year.

“We have been on a very low burn rate relative to the stage and amount of money we raised,” Tan adds.

It’s nonetheless building up its war chest, raising more than US$100 million from investors since its founding in 2015. Today, it announced the close of a cash infusion of US$30 million, which comes on top of its US$60 million series B fundraise in 2018.

“Alibaba for cars”

The problem with car-selling businesses is that they have to wait a long time for most customers to make a repeat purchase. In Singapore, for example, a person might consider replacing their car only after at least four years of ownership, says Tan.

Carro’s fintech play

Car sales and services