Singaporean classifieds marketplace Carousell has entered into the online used car marketplace with the launch of its auto sector, which is already accounting for a third of the group’s revenue.
The news comes at a time when all eyes are on Carousell, which is on the verge of becoming Southeast Asia’s next unicorn after bagging a USD 80 million investment from a consortium led by South Korean tech giant Naver last September. Carousell’s co-founder and CEO Quek Siu Rui told CNBC in an interview last October that the firm is increasing its focus on becoming profitable “in the next three to four years.”
The snap-and-sell startup, with a valuation at over USD 900 million, will gear up its Southeast Asian expansion plans through local classified automobile platforms that it owns, including Mudah Auto in Malaysia, Cho Tot Xe in Vietnam, and Carousell Autos in the Philippines, Hong Kong, and Singapore, cooperating with transactional platforms OneShift and Revo Financial.
“We’ve been developing our AI capabilities so that users can seamlessly set up detailed car listings with just a few taps, expanding partnerships such that secondhand car conditions can be certified with a warranty, and building capability from our vast historical data sets to enhance users’ ability to get a fair price,” Gaurav Bhasin, chief strategy officer of Carousell, told KrASIA.
“Carousell’s regional footprint and deep experience in online classifieds, including used cars and ancillary services categories, position it as a strong player in this space,” Roshan Raj Behera, a partner at research and consulting firm RedSeer, told KrASIA.
Used car sales volume was 1.3 times that of new vehicle sales in 2020, according to data from Mordor Intelligence. The ratio is set to double in the upcoming decade as the region’s economy burgeons.
Booming used car sales highlight the surging demand among Southeast Asia’s strong middle-class population, which will more than double from 135 million to 334 million by 2030. Behera said that the region’s recovery from the pandemic will help stimulate the organic demand for used cars, but a period of “prolonged macro [economic] weakness” could hurt demand.
A handful of strong players are also mushrooming amid growing demand, with plans to go public. These include Malaysia-based Carsome, which completed a USD 30 million Series D round last December, and Singapore-headquartered Carro, which raised SGD 150 million in debt financing facilities last October. Both firms told KrASIA in previous interviews that they are set to go public by 2023.
While Behera believes that competition is set to intensify in the region over time, it mirrors the tremendous growth potential of the automotive e-commerce space. “The development will incentivize other online players to further step up their game,” he added.
“From a long-term perspective, e-commerce players that offer the best value-prop for sellers, such as price transparency, convenience, and high conversion, sellers that provide the automobile’s condition and price, and dealers that offer quality assurance, quick turn-around-times, and so on, are likely to perform better than their competitors,” Behera said.
Trust continues to be the biggest barrier, according to Bhasin. Unfazed by the competition, Bhasin said Carousell’s auto sector is the most visited auto classifieds platform in the region.
“As a regional group, we are exploring more partnerships across the car ownership value chain and will make announcements in the months to come,” he said. “Our goal is to eventually expand our product offerings into all aspects of the used automobile ecosystem,” he added.