Singapore-headquartered Carro is one of the few prominent players in Southeast Asia’s secondhand car marketplace segment. The firm recently made headlines after raising a huge investment round led by SoftBank and hit unicorn status. Carro utilizes artificial intelligence in its end-to-end car buying process. This includes introducing features like behavior and usage-based insurance, as well as pay-per-km insurance and maintenance plans.
KrASIA recently spoke with Carro’s founder and CEO Aaron Tan about his company’s future. The following interview has been edited for brevity and clarity.
KrASIA (Kr): What does Carro’s billion-dollar valuation mean to you?
Aaron Tan (AT): This is just the beginning. Southeast Asia has low vehicle penetration—less than 7%—so we want to improve that and enhance financial inclusion at the same time as our fintech offerings. SoftBank has invested in automotive e-commerce unicorn Kavak and decacorn Auto1, so we can learn from similar companies from different markets, and the additional capital gives us the confidence to be a lot more aggressive.
Kr: How does Carro use AI to drive transactions?
AT: To run an effective business as a private company, you need to focus on two things: improve revenues and reduce costs. AI does both for us. By utilizing data, we can set better margins, which allows us to understand our customers better. We can see which group of potential customers has a higher likelihood to convert [into buyers], so we should recommend certain services for this set of customers. That’s how AI plays a part in effectively increasing our revenue.
Many parts of our operation, like pricing, inspections, and customer service, are supported by AI and machine learning. We use computer vision and sound technology to mimic the experience of inspecting a vehicle in person, and we use a voice bot powered by conversational AI to engage with customers.
Kr: What will Carro’s growth look like after the pandemic?
AT: The pandemic has really accelerated demand for used cars. We closed the financial year ending in March with over 2.5x growth in revenue. Many people realize that they can’t rely on public transportation and it’s safer for them to use their own cars. There is an insufficient supply of new cars right now. If you want to buy a new car, you may need to wait a year, so consumers will look online through used car marketplace platforms like ours. We believe the trend will continue this year and next year.
Kr: How is Carro doing across Southeast Asia?
AT: Indonesia is and will continue to be a key battleground for us. We transact about 10,000 units per month, mostly there. Therefore, we have made significant investments to go deeper and harder in Indonesia. We recently obtained a lending license from Indonesia’s financial authority OJK, so we’ll double down on this as well. We launched a remote showroom recently, where we bring cars into malls, and people can perform inspections on their own. Potential buyers can make appointments and use a mobile app to lock and unlock the car. We’ll continue adding more innovations like this. We’re also eyeing possibilities to expand into new markets like the Philippines and Vietnam.
Kr: Carro is reportedly talking to some electric vehicle companies that want to launch in Southeast Asia. What are your plans?
AT: EVs are a small part of the market today, but they will be increasingly important in the next few years. EVs will help us drive liquidity into the business. There will be trade-ins when people make the shift, and our job is to find a match and deliver the green cars to end customers or dealers, so the more people that switch to EVs, the better for us. I’m a strong believer in EVs. I think EV penetration could be about 5% in the next two or three years.