Carma Raises $20M Seed Round - Aussie Online Used Car Dealership

Carma Enters Australian Used Car Market with $20 Million Seed Funding

A new player, Carma, is making its debut in the Australian online used car market. The startup recently secured a $20 million (AUD $28 million) seed round led by Tiger Global, a U.S.-based investment firm.

For the past nine months, Carma operated discreetly, utilizing the funding to assemble a leadership team, construct its website, and establish its initial vehicle inspection and refurbishment center located in Sydney.

Joining a Growing Global Trend

Carma is not alone in its approach. It joins a growing list of online car retailers, including Carvana and Vroom in the United States, Clutch and Canada Drives in Canada, Kavak in Mexico, and Cazoo in the United Kingdom.

The rise of these companies coincides with a global shortage of semiconductors. This shortage has hampered automakers’ ability to satisfy the increasing consumer demand for new vehicles.

Consequently, buyers are increasingly seeking convenient, contactless methods for locating, purchasing, and receiving used cars directly at their residences – a service Carma intends to provide within its operating regions.

Tiger Global’s Perspective

Griffin Schroeder, a partner at Tiger Global, stated: “We firmly believe a substantial opportunity exists to revolutionize the used car sector in Australia. This will be achieved by implementing a comprehensive, online business model that has demonstrated success in both the U.S. and on a global scale.”

Expansion Plans

Initially, Carma will serve customers in the Sydney area. The company anticipates expanding its reach throughout New South Wales in the coming months.

Further expansion is planned for Brisbane and Melbourne in the following year. Carma intends to initiate another funding round shortly to facilitate this accelerated growth throughout 2022.

Rapid Scaling with Strong Backing

Lachlan MacGregor, co-founder and CEO of Carma, commented: “Global investment in the digital used car dealership sector remains highly active, given the proven success of this model internationally.”

He continued, “The significant support from Tiger Global represents a strong endorsement of Carma’s potential. It has enabled us to quickly build a strong team, a robust technology platform, and essential physical infrastructure. We bypassed the typical startup phase and are now positioned for rapid scaling with a validated business strategy.”

Current Inventory and Sourcing

Carma is preparing to launch its online platform. The company currently maintains a stock of 300 vehicles.

These vehicles are sourced from individual sellers, other dealerships, and auctions, with the inventory expected to exceed 500 shortly, according to a company spokesperson.

Quality and Transparency

“Our vehicles are generally less than five years old, with mileage typically under 100,000 kilometers (62,137 miles), and equipped with modern features,” explained a Carma spokesperson to TechCrunch.

“Upon acquisition, each vehicle undergoes a comprehensive mechanical inspection, repair, and reconditioning process at our in-house facility. Vehicles are then professionally photographed at our advanced facility in Sydney. We are committed to selling only vehicles that meet our stringent quality standards.”

Customer Experience

Carma’s platform will feature 360-degree, high-resolution images of both the exterior and interior of each vehicle.

Any imperfections will be clearly identified and photographed. The company promises transparent pricing and readily available customer support via phone and online channels.

The checkout process is designed to be swift, potentially completed in as little as 10 minutes. Vehicles are then delivered to the customer’s home, with a seven-day trial period. A full refund is offered if the customer is not completely satisfied – a common practice within the industry.

Market Opportunity

The Australian used car market is currently fragmented. Online car buying options are largely limited to classified advertisements and platforms like Facebook Marketplace.

Carma currently faces limited direct competition, presenting an opportunity to establish a dominant market position.