Carro simplifies car buying, selling
Among the tools of the homegrown car portal are a proprietary machine-learning algorithm and a 120-point inspection process.
SINGAPORE, 29 AUGUST 2016 – BUYING and selling pre-owned cars can be a real hassle. From dealing with unidentified scratches on the trunk – “Is the car really accident-free?” – to negotiating pricing with glib salesmen – “Today is your lucky day, because I have a special deal just for you!” – takes some getting used to.
Yet, in an industry traditionally dominated by dealerships, the advent of Internet classifieds has seen consumer-to-consumer sales become increasingly popular.
Carro, a homegrown car portal that has raised more than US$6 million in less than a year, is gunning to accelerate that process.
“If you were to go to a traditional classified site, you basically post your car online. But look, nobody is going to help you with the full transaction – the loan, the insurance, the warranty,” the firm’s co-founder and chief executive Aaron Tan tells The Business Times. “Walking through that process is not like going to a market and buying a vegetable – it’s a big ticket item.”
The startup, which Mr Tan describes as an “Airbnb for cars”, looks to simplify that experience. To do so, it relies on a few toys under the hood.
One of them is a proprietary machine-learning algorithm, which the firm uses to determine the most favourable prices for sellers. The algorithm crunches a combination of numbers (including past transaction data, real-time information such as current Certificate of Entitlement prices and user-input data such as mileage) to derive at two figures: a base price, and a direct-owner sale price.
The entire process takes place online.
“We promise the users a base price, and that base price is basically the price you get if you sell the car to a dealer,” says Mr Tan. “If you can’t sell it at the end of 30 days, we (will) offer to buy it from you at that dealer price – it’s an extremely straightforward trade.”
He adds: “The direct-owner price is what we think the car will sell for if you don’t go through a middleman, like dealers.”
To quash concerns that buyers may have about a car’s accident history, the firm has in-house mechanics on hand to carry out a 120-point inspection process. A six-to-12-month warranty is provided for selected vehicles.
Buyers can contact sellers through the firm’s listing platform, and financing options can be arranged through the portal as well.
Carro charges a fee of S$250 if a sale goes through, or 0.5 per cent of the transacted price – whichever is higher. It also receives a commission if a buyer applies for a loan through its platform.
The firm has more than S$100 million in run-rate gross merchandise value on an annualised basis, and has grown 30 per cent month-on-month since the platform’s launch in November last year, Mr Tan says.
It expects to be profitable by the end of the year.
He adds: “What we are trying to do is to recreate this in-person experience of buying a car, so that you don’t actually have to get out of your house. Everything is taken care of; the entire inspection report is made available.”
A self-professed car enthusiast, the former Infocomm Development Authority of Singapore (IDA) scholar’s story is, by his own admission, a “boring one”.
A former IT Youth of the Year (an annual award given out by the Singapore Computer Society), Mr Tan represented Singapore in various overseas programming competitions, and secured an IDA scholarship to pursue computer science at Carnegie Mellon University.
“I served my bond at Singtel’s venture capital (VC) fund, Singtel Innov8. I was a fund manager, so to speak,” he tells BT. “When my bond ended, I just thought that it would be more fun to be on the other side of the fence, which is the operating side of stuff.”
While he was a born entrepreneur – he started his first company, a pay-per-click search engine in the advertising space at 13, and sold two by 20 – he notes that his time at Singtel taught him about “proper corporate governance”.
“I always knew what it was like to run a startup. But what I didn’t know was how the real companies were run internally – the Microsofts, the Singtels of the world,” he says. “So I brought that kind of governance learning to Carro.”
Auditing, for instance, “was a breeze”, as it was done to Singtel’s standards. “If it passes Singtel, one of the largest listed companies in Singapore, it should pass any auditor here,” he laughs.
But the most tangible benefit from Mr Tan’s time at Singtel was the contacts he cultivated. He readily admits that he knows “most, if not all, of the venture investors here”, which gave his startup a leg up, as he “had no issues getting through the door”.
Together with four former IDA scholars, three of whom were his college housemates, he started Carro (a play on “car hero”) in June last year.
In November, the startup raised approximately US$716,000 in seed funding from undisclosed angel investors. Two months ago, it raised a further US$5.3 million in Series A, led by Indonesia-based Venturra Capital, which is backed by the country’s Lippo group of companies.
Carro, which is active in Singapore and Indonesia at present, hopes to move into Malaysia and Thailand by the end of the year.
But driving out of home ground presents a new set of challenges, and Mr Tan acknowledges that the firm has “teething issues”.
“In Singapore, I don’t run a licence plate before I sell a car, because what are the odds of a car being stolen here? Almost zero. But in Indonesia, it’s different,” he says. “The car you sell may or may not have been stolen. What happens when you are selling a stolen car? You’re liable.”
To combat the issue, Carro has relied on local know-how from the Indonesian natives it recruits, Mr Tan adds. The firm “builds ahead” by hiring employees from countries it plans to expand to, “trains them up” in Singapore before letting them “run the show” in their home countries.
When asked if Carro was planning to expand its offerings to other vehicles (such as motorbikes, which are more prevalent in the region), Mr Tan says: “We will likely do it, just to try it out; we don’t go in with a preconceived notion of what works, or what doesn’t work.”
But if there is one thing he has a preconceived notion of, it’s that Carro “beats the dealers”.
“At the end of the day, if you go to a dealer, he’s going to tell you that the best **** that’s going to happen to you today is the car he’s selling. We are different.”
Source: The Business Times