Carsome lands $350k in seed funding to take auto sales portal regional

Malaysia-based automotive portal Carsome today announced it has raised US$350,000 in seed funding. The round was led by 500 Startups and Idea River Run, and will go towards expansion plans into multiple cities, which will be announced later this year

Specifically, the startup will be going to two other countries in the last quarter of the year, and four more early next year, founder Eric Cheng tells Tech in Asia.

The portal aims to be a one-stop shop for car buyers to compare, research, and select the best price offered by Carsome’s “certified dealers.” Its main difference from local incumbent Carlist – a classifieds site for new and used cars – is that it provides a smarter end-to-end car buying experience.

“For the usual first-time buyer, buying a car can be more frustrating than fun. Car buyers have to go through long hours of research, getting feedback from friends and family, as well as information from 10 to 20 sites before deciding on the car that’ll take them home,” Cheng explains. “Moreover, there is a lack of transparency and bad retail experience, especially for first-time car buyers where they have a fear of being cheated.”

Transparent

Transparency is essential to the Carsome experience. Receiving separate quotations from dealers helps car buyers to skip the haggling and get the best prices upfront. “Quotations from Carsome Certified Dealers are pre-negotiated, which gives an edge to car buyers purchase via our platform,” Cheng adds.

Carsome threesome: COO Jteoh, CEO Eric Cheng, biz dev Eugene.

Both car buyers and dealers seem to love the idea. The five-month old startup sees an average of 150,000 active users monthly – its user base has been growing 25 percent month-on-month – and has landed partnerships with over 100 dealerships across Klang Valley, Johor, and Penang. Cheng estimates that “based on internal transaction data […] users can save an average of MYR 3,000 (US$710).”

Unlike with Carlist, dealers are not required to pay listing fees. Instead, they are charged based on the sales that are made – a transaction-based model. It means dealers can save on marketing costs and the conversion rate of leads to actual sales is around 20 percent, according to Cheng. He claims that Carsome is seeing “a huge volume of sales” of cars that are valued at an average of MYR 70,000 (US$16,600) each. So far, more than MYR 6 million (US$1.4 million) worth of sales have been made via the site.

What if competitors start to cut in on its turf and offer the same services? Cheng and his co-founder Teoh Jiun Ee are one-step ahead – they are looking to provide car brands with in-depth marketing data analytics as well. These will purportedly offer “insights on consumer trends and ultimately increase in sales volume.” To date, they have landed partnerships with some big names such as VW, Honda, and homegrown brand Perodua.

Khailee Ng, managing partner of 500 Startups believes that the Carsome team “is the first to introduce a globally successful business model in the Southeast Asia market.”

“They are introducing a working business model that is successful and proven by Beepi in the US, Carwow in the UK, and Truecar, a public-traded company in the US with a market cap of US$563 million,” explains Ng.