Carro sees “record” EBITDA as its fintech and other verticals get spotlight

Last September, used-car platform Carro announced that it had doubled its revenue year on year to more than S$650 million (US$489 million) in its financial year ending March 2022. It also doubled its gross profit over the same period.

The Singapore-based company’s recently released financial statements for FY 2022 back that up. But they don’t show what Ernest Chew, the firm’s chief financial officer, describes as a “record full year EBITDA” for its recently completed FY 2023, for the year ending March 2023.

However, the FY 2023 financial statements are not yet publicly available, and in any case are unlikely to contain EBITDA figures.

Meanwhile, the FY 2022 statements show that Carro made an operating loss of US$18 million, which was an increase of 229% over the one-year period. This was due to total expenses widening by nearly 2.5x.

While gross profits did rise from US$12 million to US$26 million, the company’s gross profit margin declined slightly from 6% to 5% in FY 2022. This is half of the 10% margin it achieved in FY 2020.

Apart from Singapore, Carro currently has operations in Indonesia, Thailand, Malaysia, and Japan. Chew tells Tech in Asia that its top three markets are Indonesia, Malaysia, and Singapore.

Financial services “very important”

While Carro is known for its auto marketplace, this is just one of its five business segments. The others are fintech, insurtech, mobility, and repair and maintenance.

In an interview with consultancy firm McKinsey in 2020, Carro CEO and founder Aaron Tan described financial services as “a very important vertical” and something the firm “needed to get right.”

Carro founder and CEO Aaron Tan / Photo credit: Carro

The firm offers auto financing through its fintech subsidiary, Genie Financial Services. In FY 2022, its loan book grew to US$285.7 million, doubling from the previous financial year.

Chew says that the company typically obtains secured borrowings from banks in order to finance its lending activities.

“We lend at a fixed rate and also borrow at a fixed rate for the lifetime of the loans we originate,” he adds. As a result, the firm’s net interest margin is fixed and rising interest rates do not affect its existing portfolio.

Given current macroeconomic uncertainties, Chew says that Carro has tightened its lending policies. For example, it has adjusted lending rates, required a higher down payment on certain types of cars, and been more selective on loan approvals.

The company also offers auto insurance in Singapore and Malaysia through third parties like Income Insurance and MSIG.

Expenses are creeping up

US$451 million in liquidity, US$195 million in undrawn financing

Acquisitions and expansion

IPO ready