Carro swaps growth for profitability, as losses fall 92% in FY24

Sometimes, you have to go into reverse to make progress.

Used-car marketplace Carro says it cut its operating losses by 92% to S$9 million (US$6.7 million) in its financial year ending March 2024 (FY 2024).

While this came at a cost, with the company posting a year-on-year decline in revenue growth of about 6% to US$781 million, gross profit margins improved from 8% to 12% during the same period.

Carro attributes these results to a focus on “growth on higher-margin revenues” and changes in its “geographical mix,” the company tells Tech in Asia.

Carro group CEO Aaron Tan / Photo credit: Carro

The used-car marketplace sector has been on a roller-coaster ride over the last few years, as rising interest rates have sent investors fleeing. A shortage of new cars also led to more people buying used cars instead, making consumers less able to afford them.

US industry leader Carvana saw its share price decline by 99% between August 2021 and January 2023. However, since that low, interest rates have peaked, and companies like Carvana have restructured their businesses to make them more efficient.

The US-based firm’s shares are now up by over 5,000%, giving the company a market capitalization of US$52 billion.

Carro, along with its Southeast Asian peer Carsome, are both eyeing the possibility of an IPO in the next couple of years.

The latter recently reported that its revenue for the second quarter of 2024 had increased by 9% from the previous quarter, while EBITDA increased over three-fold over the same period. Carsome also said its gross margin for Q2 “exceeded 10%.”

Along with its FY 2024 results, Carro announced that it had received a strategic investment from Woori Venture Partners, a VC subsidiary of Woori Financial Holdings, one of the largest banks in South Korea. Terms of the deal were not disclosed.

Chasing ‘higher-quality’ revenue

While the company sold 11% more vehicles in FY2024 than the year before, Singapore’s contribution to overall sales volumes decreased, a Carro spokesperson says.

Falling car sales in Singapore was a dampener on revenue growth in FY2024. That’s because the value of cars in the country is “10x or more” compared to its other markets, according to the company.

Vehicle ownership is notoriously costly in the city-state, with some estimating that it is the most expensive place in the world to buy a car.

Beyond buying and selling

IPO-ready?