In Singapore today, the cost of a new car starts at at least S$120,000, which includes its car value, a Certificate Of Entitlement (COE), and an Additional Registration Fee (ARF), which ranges between 100% and 320% of the car’s Open Market Value (OMV), among other related charges.
Alternatively, the used car market presents more affordable options, which can be as low as half the entry price of a new car, depending on the vehicle’s age. However, for consumers, navigating the highly fragmented used car market, which suffers from a low Net Promoter Score (NPS), may not only be challenging to find price transparency but also time-consuming to deal with the necessary paperwork.
This is what Malaysia-based Carsome intends to revolutionise as Southeast Asia’s largest integrated car e-commerce platform and Malaysia’s first tech unicorn, boasting a valuation of over US$1 billion. With the aim of digitalising the used car market, Carsome provides a convenient way for users to browse a wide range of refurbished cars.
In its 7 years of operation, it has grown to sell over 18,000 Carsome Certified cars every month, achieving US$1.5 billion in revenue in 2022. The platform, which receives 15 million average monthly unique visitors, ensures quality assurance by offering fixed prices (with no hidden fees), a 1-year warranty, and a 5-day money-back guarantee.
We visited Carsome’s Certified Lab in Petaling Jaya, Kuala Lumpur, Malaysia, to understand what it means to buy and sell a used car from Carsome.
Who Is Carsome
Inspired to solve some of the biggest issues in the used car market, such as lack of transparency and distrust, using technology and data, Eric Cheng and his co-founder, Jiun Ee Teoh, founded Carsome in 2015 with a seed capital of US$350,000.
From its initial beginning as a car comparison website, Carsome pivoted to a car-selling business using a consumer-to-business (C2B) model the same year upon request from customers. Compared to the slow and tedious traditional process, it offered a fast and seamless solution for consumers to sell their cars—often within 24 hours with minimum on-site visits and less worry over the paperwork. This laid the foundation for its growth as it expanded within its local market and regionally to key Southeast Asian markets like Singapore, Indonesia, and Thailand.
In 2020, Carsome launched “The New Way of Buying Cars,” a car-buying service using a business-to-consumer (B2C) model. Each used car that it sold on its platform was sold under the moniker Carsome Certified to represent its promise of quality through its 175-point inspection and other guarantees, giving consumers assurance and trust.
What Does A Carsome Certified Car Mean
90% of Carsome’s car inventory is sourced directly from consumers. When a customer sells their car to Carsome, it will make an offer using its proprietary pricing. Carsome takes into consideration the car’s make and condition after carrying out an initial 175-point inspection at any of its 50+ inspection centres across 50+ cities.
At this stage, a consumer could choose to either sell to Carsome and get paid within 24 hours or opt for bidding with its network of over 20,000 used car dealers. If the car is sold to Carsome, it would be sent to its Certified Lab for further checks to determine whether to refurbish and sell to the retail market or instead sell directly to the wholesale market.
Here’s a look at a car’s journey as it goes through the Certified Lab to be qualified as a Carsome Certified car.
Step 1: Arrival & Inspection
Cars that have been initially assessed at one of Carsome’s inspection centres would arrive for refurbishment at the 185,856 sq ft Carsome certified lab – dubbed Southeast Asia’s largest state-of-the-art car refurbishment facility. Here, up to 2,000 cars from 30 car brands, including Malaysian, Japanese, Korean, and continental brands, are refurbished monthly.
It starts with the consultants performing a pre-inspection to assess the vehicle’s condition and plan refurbishment jobs.
Step 2: Mechanical & General Repair
At the second stage, Carsome’s specialist would perform a detailed and technical 175-point inspection and generate a report. The specialists use a proprietary onboard diagnostic scanner to detect, diagnose, and service all electronic and electrical issues to ensure key safety features such as the engine, ABS, airbags, and EPS function at an optimum level.
Any repairs that are needed will be carried out at this stage using the parts it carries.
Additional repair work includes lubricant services, where the lubricant oil is replaced; tyre services such as wheel alignment and balancing; air conditioning services, where the gas is filled and filters cleaned to ensure comfort for customers; and brake pad checking, where it is ensured that the thickness is at 4mm.
Step 3: Body & Paint
Once the car has undergone general repairs, attention is then given to the exterior of the car, starting off with the body panel repair to fix any dings and dents on the car.
Next, the car goes through surface preparation in one of the 16 booths available at the Certified Lab, which includes putty, sanding, and masking, before it is ready for body respray. Carsome, which has its own paint mixing room, uses OEM-manufactured paint to get close to the original car body colour.
Once the car is done with the spray painting, it will be polished by undergoing a three-step high performance paint correction and layering with protection wax. The end result is a smooth and mirror-like surface – just like a brand-new car.
Step 4: Car Detailing
Once the car is spray painted and polished, any existing tinting films will be removed in preparation for the Puspakom inspection (a vehicle inspection required by the Malaysian government).
It will then be followed by a detailed car wash, from interior cleaning and sanitization to the exterior, which includes the engine compartment.
Step 5: Final Quality Control
Once done, consultants would perform a final quality control (QC) check and carry out a test drive. They assess each car on 3 most important factors: safety beyond standard, complete comfort, and refurbished aesthetics. In short, they ensure Carsome’s Certified Standards are fulfilled and verified.
Any issues identified would be sent for rectification; otherwise, the car would be finalised for a photoshoot.
Car Is Ready For Photoshoot
Carsome has two photo booths to capture a 360-degree view of the car’s exterior and interior, which would be uploaded to its platform so that customers can view the car from all angles.
Get Offline Used Car Buying Experience At Carsome PJ Automall
On top of the online platform, customers can also get a physical experience at the Carsome Petaling Jaya Automall – an indoor showroom that operates daily except on major festive holidays. The Automall is able to store up to 220 Carsome Certified cars at any one time that customers can test drive on the spot.
Even though Carsome offers the option to deliver each car to the customer’s doorstep, around half choose to collect it on site from the Automall. To complete the used car buying experience for these customers, Carsome offers what is typically associated with new cars: a ribbon decoration and photoshoot.
Similar to buying a new car, customers can pose for an exclusive photoshoot next to their refurbished car decked out with LED lights before driving off.
Carsome’s Unique Selling Proposition
Carsome controls the quality of the used cars that it sells on its platform by buying only good condition cars (that have no have major accidents or flood damage) that require minor refurbishment work. According to a Carsome spokesperson, more than 50% of cars are rejected after an initial round of inspection.
It then leverages its supply chain strength with its refurbishment facility to gain economies of scale in sourcing spare parts and OEM paint to keep repair and refurbishment costs lower than the industry average and achieve better margins.
While most used car dealers invest in the aesthetics of the car, Carsome goes beyond by investing in the car mechanics as well to ensure customers receive the best reconditioned used car. This enables it to fulfil its Carsome Promise in providing a convenient and trusted used car buying experience.
While taking direct control of the inventory may be cash intensive for the business, CEO Cheng mentioned they are able to optimise their cash cycle as the inventory turnover for the retail and wholesale segments is around 20 and 7 days, respectively. In contrast, the industry’s typical turnover cycle is more than 30 days.
Furthermore, with Carsome’s strong emphasis on leveraging data-powered solutions, such as automated pricing, Machine Learning-enabled personalised recommendations, depreciation prediction, and demand & supply scoring, it allows it to not only offer competitive rates for buying and selling used cars but also deliver an elevated and enhanced user experience compared to traditional used car dealers.
What Other Businesses Does Carsome Have
Media Businesses
In addition to its automotive businesses, Carsome recently invested in acquiring iCar Asia as part of its collection of automotive content brands such as WapCar, Autofun, Autospinn, Carmudi, and Mobil123 across the regional markets that it operates. These media platforms help to bolster the brand’s outreach efforts and serve as lead generators in its key markets.
Financing & Aftersales Services
Carsome Capital was established in 2018 to complement the group’s ancillary solutions. It offers financing options that are tailored for both retail and wholesale (used car dealers) customers, resulting in a total loan disbursement of US$240 million since its inception.
As of May 2023, Carsome Capital’s total financing book stood at around US$90 million, boasting a remarkable track record of 0% non-performing loans for its wholesale customers and less than 1% for its retail customers. It was also awarded a digital banking licence in Malaysia in 2022, which will further allow it to source for cheaper internal financing and expand its offerings to a wider underserved and unserved market.
Carsome also ventured into the aftersales service market in 2023 with the launch of two Carsome Service Centres at Petaling Jaya and Ampang. These service centres will not only serve pre-owned car buyers but also anyone looking for worry-free car maintenance and repair services. Consumers can expect the same digital experience with a transparent digital booking platform that is backed by Carsome standards.
Carsome Academy
Leveraging its experience in the used car market, the Carsome Academy was started in 2021 to build up the future workforce. The Academy conducts a 12-month Technical and Vocational Education and Training (TVET) program that allows students to pursue one of three career tracks: general repair technician, vehicle technical inspector, and vehicle body and paint specialist. Furthermore, graduates of the course could also apply for any vacancy role at Carsome or related industry partners. This is a win-win outcome, as it ensures guaranteed employment for graduates and a readily trained pool of workers for Carsome.
Future Plans For Carsome
Carsome’s goal is to build the world’s first integrated car ownership ecosystem by encompassing the entire car ownership lifecycle, from buying, providing Aftersales and ancillary services, and selling the car. It does this with the Carsome mobile application app, which serves as the gateway for everything car related, streamlining the process across various stages within the ecosystem.
While the non-listed company still harbours hope of a dual listing on the US-based Nasdaq and the Singapore Exchange, CEO Cheng mentioned that the group is waiting for the “right timing”. In the meantime, it is looking to scale up its service centres both in Malaysia and regionally.
Additionally, Carsome has also developed Electric Vehicle (EV) distribution and servicing capabilities as it looks to venture into the sale of new EVs. CEO Cheng said the group is in talks with a few car companies and may look to launch in a few months’ time.
It looks like exciting times ahead for Carsome as it seeks to carve a bigger share of the US$131 billion used car market, which is expected to grow at 10.6% over 2023E – 2025E. Furthermore, with governments pushing their populations towards EV adoption, the sale of new EV cars could be another potential growth segment that may differentiate Carsome from its competitors.
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