Carsome and Carro: A neck-and-neck race to transform how people buy cars

Selling off a company car in five business days was a “welcome surprise,” says Hardesh Singh, who co-runs a startup accelerator in Kuala Lumpur.

He had been thinking about selling his five-year-old Peugeot since last year, but he was hesitant since the bank still held the car deed while the loan was being paid off.

But when Singh spoke to Carsome, the Malaysia-headquartered company’s agent assured Singh that none of these concerns would be a problem. “Carsome cleared the loan with the bank directly and deposited the balance into my account,” he says.

Singh sits on one end of the used-car market, while on the other end are buyers who will give his Peugeot a new home. In the middle are companies such as Carsome and Carro as well as car dealers and classifieds players. Together, they constitute what has been a busy and fast-growing industry.

Photo courtesy: Carsome

As the debate on which country has the best nasi lemak rages on, these two companies have taken the Singapore-Malaysia rivalry to a new front. Singapore’s Carro raced past the US$1 billion valuation mark after raising US$360 million in June and plans to go public in the US within two years. Carsome is also believed to be on the unicorn track and is considering a merger with a special purpose acquisition company to make its US stock market debut.

While the companies have identical models, there are some slight differences. They compete for the same target audience and have even taken this rivalry onto the streets and beyond. But they both bring transparency into an otherwise opaque and fragmented industry.

They have also managed to build a thriving business off a tiny slice of the overall used-car market. According to a report by Singapore-based consultancy Momentum Works, 6 million pre-owned cars were sold in Southeast Asia in 2019. Out of the number, only 2% to 3% of the transactions took place via platforms such as Carro and Carsome.

How the wheels turned

Carro and Carsome were established during the same year: 2015. Both operate in Indonesia, Malaysia, Singapore, and Thailand. Besides carrying out inspections, the companies also have financing components as well as brick-and-mortar centers.

With widespread adoption of work-from-home norms, consumers like Singh don’t see themselves buying a car anytime soon.

But the demand for cars will always be on the rise in certain markets, says Eko Kurniadi, partner at Alpha JWC Ventures, a firm that has invested in Carro. This is especially true “in emerging countries like Indonesia, where car ownership is viewed as a symbol of achievement and welfare,” he says.

There are long-term macro shifts that would have happened in the industry regardless of current events like the pandemic, says Oliver Rippel of Asia Partners, one of Carsome’s investors. Correlating with rising affluence in Southeast Asia, car ownership is likely to go up over time, he adds.

See more: Fast-growing Carro says it’s been profitable for nine months

While Carro and Carsome clearly have their investors’ confidence, their financial reports also offer proof of their popularity among consumers.

Same but different

Where rubber meets the road