Carro Achieves Unicorn Status with $360M Series C Funding

Carro Achieves Unicorn Status with $360 Million Funding

Carro, a leading automotive marketplace operating across Southeast Asia, has reached a valuation of over $1 billion following a $360 million Series C funding round. This investment was spearheaded by SoftBank Vision Fund 2, with participation from prominent investors including MSIG, a major insurance provider, and several Indonesian-based funds such as EV Growth.

Core Business and Services

Approximately 90% of the vehicles facilitated through Carro are pre-owned. The company provides a comprehensive suite of services encompassing the complete automotive lifecycle, from routine maintenance to eventual dismantling and parts recycling.

Established in 2015, Carro initially functioned as an online car marketplace. It has since broadened its scope to include multiple related sectors.

Operational Divisions

According to co-founder and CEO Aaron Tan, Carro’s operations are primarily structured around three key areas: wholesale, retail, and fintech. The wholesale division caters to car dealerships seeking inventory, while the retail segment focuses on direct sales to consumers.

The fintech arm delivers financial products to both segments, offering B2C car loans, auto insurance, and B2B working capital loans.

Funding and Future Plans

Carro’s previous funding announcement occurred in August 2019, when its Series B round was extended to $90 million. The newly acquired funds will be allocated towards strategic acquisitions, expansion of its financial services offerings, and further development of its artificial intelligence (AI) capabilities.

These AI advancements are utilized to enhance online car presentations, refine pricing strategies, and accurately assess insurance policyholder risk.

Market Expansion and Growth

The company intends to broaden its retail presence within its core markets: Indonesia, Thailand, Malaysia, and Singapore. Currently employing around 1,000 individuals across these four nations, Carro reported revenue growth exceeding 2.5x during the financial year concluded in March 2021.

Impact of the Pandemic and EV Adoption

The COVID-19 pandemic positively impacted Carro’s business, as individuals sought personal vehicles to avoid public transport and embraced online car shopping. Competitors like OLX Autos and Carsome also experienced favorable conditions during this period.

The increasing adoption of electric vehicles (EVs) in Southeast Asia presents a new opportunity for Carro, as EV purchasers often trade in their internal combustion engine vehicles.

Carro is currently in discussions with several leading EV manufacturers planning to enter the Southeast Asian market.

Sustainability and Inventory Management

“We are a marketplace, but fundamentally, we focus on reusing and recycling vehicles,” stated Tan. “This commitment to environmental sustainability distinguishes us from other regional players.”

Vehicles typically remain in Carro’s inventory for under 60 days. The platform leverages computer vision and sound technology to simulate an in-person vehicle inspection experience.

Innovative Features: Showroom Anywhere

When a user views a Carro listing, an AI bot proactively engages, providing detailed cost information and addressing inquiries. Listings include 360-degree views, interior visuals, and the ability to virtually start the engine to assess its sound. Inspection reports and defect information are also readily available.

To cater to customers desiring a physical inspection, Carro recently launched a beta program called Showroom Anywhere, currently available in Singapore. This allows users to unlock and inspect cars parked throughout the city using QR codes, without the presence of a salesperson. Test drives are planned to be integrated into this service.

Automation and Cost Efficiency

“As a technology company, our priority is to automate as much as possible,” explained Tan. “This will lead to improved cost structures and revenue generation over time, resulting in greater margin improvement and cost reduction.”

Pricing and Guarantees

Carro employs fixed pricing, eliminating the need for negotiation. Prices are determined using machine-learning models that analyze vehicle details, transaction data, and current market conditions. Carro’s pricing generally falls within the mid-range of the market.

Purchases are backed by a three or seven-day money-back guarantee and a 30-day warranty. Customers can also apply for loans and insurance through Carro’s integrated fintech platform.

Data-Driven Insurance

Carro’s loan portfolio is approximately five years old and currently valued at around $200 million. Insurance pricing is based on driving behavior, monitored through sensors installed in vehicles. This allows Carro to assess driving habits and predict the likelihood of accidents.

“This approach, while seemingly futuristic, has been successfully implemented in the United States by companies like GEICO and Root Insurance,” Tan noted.

Strategic Partnership with MSIG

MSIG’s investment in Carro signifies a commitment to expanding insurance capabilities, leveraging data-driven insights. Tan emphasized the alignment between Carro and MSIG’s belief in the power of data and “new age” insurance.

Expanding After-Sale Services

Carro is also extending its after-sale services, including Carro Care, across all four of its markets. These services encompass the entire vehicle lifecycle, serving workshops globally. For instance, a usable engine from a decommissioned Toyota Corolla in Singapore might be shipped to a repair shop in Nairobi, with the remaining parts recycled.

Vision for the Future

“I consistently inquire during management meetings about the final destination of cars in Indonesia and Thailand. We are determined to establish a solution, and if one doesn’t exist, we will create it,” said Tan.

SoftBank’s Perspective

Greg Moon, Managing Partner at SoftBank Investment Advisers, stated, “Carro’s AI-powered platform delivers transparency and full-stack services throughout the car ownership journey. We are pleased to partner with Aaron and the Carro team to support their expansion plans and their use of AI to simplify and enhance the car buying experience.”