Aaron Tan, Co-Founder and CEO of Carro, was studying in the US when he saw how buying a car can be transparent and easy without a middleman.
Understanding the history of a car in the US was easy. There was Carfax, which provides a vehicle history report "which is close to the vehicle's birth certificate," said Aaron.
"The haggling was efficient as there is a blue book that tells you exactly how much your car is worth in just a few clicks," he added.
When he got home, he realized that Southeast Asia (SEA) lacks the same transparency.
He set out to establish SEA's largest automotive market, Carro, and revolutionized the way people buy and sell cars in the region.
Made his first "bucket of gold" in his teens
Aaron is no stranger to the startup scene before Carro.
Aaron is a trained programmer and a venture capitalist by profession. He founded his first startup at the age of 13 and had already sold two companies before he turned 21.
He made his first "bucket of gold" when he was a teenager. He started building websites professionally when he was 13, and when the dot-com boom hit in the late 1990s, a lot of people looked at websites.
He made his first tens of thousands of dollars easy. A single page could cost at least S $ 5,000, and this only applies to one day's work.
Photo credit: Bangkok Post
He also represented Singapore in international programming competitions and was named IT Youth of the Year in 2005.
The graduate of Ngee Ann Polytechnic studied at the School of Information Systems at Singapore Management University, where he was awarded a Summa Cum Laude.
He then accepted a scholarship from the Infocomm Development Authority of Singapore (IMDA) to study computer science at Carnegie Mellon University from 2008 to 2010, where he obtained a master’s degree.
On the university's fast-track program, he met his Carro co-founders Aditya Lesmana and Kelvin Chng.
Aditya Lesmana, Aaron Tan, and Kelvin Chng / Photo credit: Carro
Prior to Carro, Aaron was with Singtel Innov8 Ventures, SEA's leading venture fund, for nearly five years. While at Innov8, Aaron oversaw the fund's investments in SEA.
Aaron also helped launch Block71, Singapore's largest startup ecosystem. He then moved to the USA and started operations at Block71 in San Francisco before returning to Singapore in 2015.
In the same year he started Carro with Aditya and Kelvin and took on the role of CEO.
The only technology-driven car market in SEA
In Southeast Asia, the typical customer journey hasn't really changed over the years, Aaron said.
It consists of "Discover, followed by Financing, Buying, Insurance, After Sales and Sales".
We're the only tech marketplace in SEA that really plays end-to-end, every single step of the way – with technology as much as possible.
– Aaron Tan, Co-Founder and CEO of Carro
They write their own modules for customer relationship, inventory and dealer management systems in-house to better serve customers.
"Our recommendation engines, pricing engines, and credit and underwriting systems use obfuscated proprietary historical bid information and public information to determine relevant matches or more accurate prices for consumers," said Aaron.
Image Credit: Techcrunch
Carro expanded to Thailand and Indonesia in 2017.
“It made sense for us to expand into these two markets first, as my co-founders came from there. We knew the markets very well and they are by far the two largest auto markets in Southeast Asia, ”he added.
They recorded 100 percent growth via e-commerce channels in both markets in 2018.
Its month-over-month growth doubled in 2019 in terms of gross merchandise value, and more than 5,000 vehicles were traded on the platform in both countries.
They have also added tens of thousands of dealers to their wholesale network.
Singapore's first car subscription service
In Singapore, cost and maintenance are the two biggest hurdles to car ownership.
Buying a car is an important decision for many, and they found that high maintenance costs and depreciation made people increasingly reluctant to commit.
It takes the average person about six years to repay their car loan, and two-thirds of those people are trading their cars before they pay off their debts and get a new car that creates additional debt.
– Aaron Tan, Co-Founder and CEO of Carro
At the same time, they found that the subscription model adopted by streaming services like Netflix and Spotify was growing in popularity with customers.
This led them to do the same and "roll out Netflix for Cars," said Aaron.
In 2019, Carro launched the first car subscription in Singapore.
"We wanted to create a one-stop solution that made car ownership easy and all the important details covered with one affordable flat monthly fee," said Aaron.
Customers can choose cars that suit their lifestyle and needs with three subscriptions – Daily, Roomy and Fancy.
Other costs like road tax, warranty, 24 hour support, maintenance and more are included in the monthly fee.
"Our subscription prices are the same as traditional rental car prices, but we offer a lot more flexibility," he added.
Customers can pause their subscriptions, swap cars for different occasions, and choose the length of their subscription, all while relieving the pressure of having to resell the call later.
Image credit: Carro
They have also introduced usage-based insurance that charges you the distance traveled instead of a flat rate premium that can save customers up to S $ 800 a year.
In March this year, they also partnered with NTUC Income to launch Singapore's first usage-based auto insurance.
“This model helps our car subscription users achieve savings, convenience and a hassle-free experience as they only pay for insurance based on how much they drive: the less they drive; The less they pay, ”said Aaron.
Their goal is to offer a comprehensive, innovative and technology-driven service for all aspects of car ownership.
SEA's first contactless car purchase service
A few days before the implementation of the circuit breaker measures in April, Carro saw increased demand for car purchases due to an increase in sales inquiries.
People were concerned about their safety on public transport.
However, traditional car purchase processes such as face-to-face meetings and test drives could not take place during the pandemic.
Despite the increased interest, people were not confident enough to buy because they lacked the information and assurance they would normally get from a personal review.
Carro transformed the traditional walk-in sales process into a completely digital one. Customers can test and buy a car without meeting a salesperson, protecting their health and safety.
You select your vehicle on the website and enter your details. Carro then sets up a tour or test drive for them.
Image credit: Carro
As soon as this is confirmed, you will receive a unique PIN code with which you can retrieve the car keys at the specified location.
There is no local salesperson, but the agent is on standby to provide assistance via video call if necessary.
All of their cars undergo a 150 point inspection process and a thorough overhaul before handing over to their new owners.
Buyers also receive a full inspection report to ensure the quality of the vehicle.
“We strive to be flexible and we want customers to trust the quality of our product. That's why we also offer a three-day test drive policy. If you decide the car is not for you, you can return it with no questions asked, ”said Aaron.
In addition, they come with a 30-day wear guarantee to keep you calm.
“We applied the same concept with the introduction of our Automall in Indonesia, where we also saw an increase in demand for used cars.
Carro recorded transactions valued at over USD 100 million (S $ 136 million) in 2016, with the numbers doubling to over USD 250 million in 2017 and again to USD 500 million in 2018.
In 2019, they handled a vehicle value totaling S $ 1 billion in SEA, cementing their place as the largest automotive market in the region.
Almost S $ 120 million raised
They started with an S $ 1 million starting round from angel investors in 2015.
In 2016, they raised $ 5.3 million in a Series A funding round to expand their services to more Southeast Asian markets.
The round was led by Venturra Capital from Indonesia with the participation of Singtel Innov8, Golden Gate Ventures, Alpha JWC Ventures, Skystar Capital and GMO Venture Partners.
Shortly after, they raised another $ 12 million in 2017.
Photo credit: China Money Network
An additional $ 60 million was raised in a Series B funding round in 2018, jointly led by SoftBank Ventures Korea, Insignia Ventures, and B Capital Group.
IDG Ventures India founder Manik Arora and existing supporters such as Venturra Capital, Singtel Innov8, Golden Gate Ventures and Alpha JWC Ventures also attended.
The round was extended and closed in 2019 after an additional $ 30 million was raised due to strong investor interest.
Their last funding was raised in August of this year for an undisclosed amount, bringing the total funding to over $ 120 million.
Backlash from traders in the early days
Startups are disruptors by nature, but Aaron said that maybe they were too enthusiastic about the "Disruptor" part in their early days.
"Positioning as an 'anti-dealer' brand has generated a lot of backlash from dealers and they have tried to stifle our growth," he said.
They realized that it would be better for them to work with them than against them. They started building relationships with them and developing products and services for their needs.
That change in strategy opened up new markets and audiences for them when we discovered that this was an underserved niche – businesses and dealerships had a harder time selling used cars than regular consumers.
"We created the marketplace that brought all of these salespeople together and connected them to customers," confirmed Aaron.
Set ambitions high
Carro's first acquisition will be through Jualo.com, an Indonesian consumer-to-consumer marketplace in 2019.
Jualo is one of the fastest growing marketplaces in Indonesia. The platform attracts over four million users monthly and enabled transactions valued at over $ 1 billion in 2018.
It helps sellers trade new and used goods in over 300 categories including automobiles, motorcycles, real estate, fashion, and electronics.
Carro plans to grow its business with a strong focus on the automotive sector.
That same year, they invested $ 30 million in myTukar, a Malaysia-based auto-bidding platform. "We are the largest single shareholder in this company," said Aaron.
Through them, they plan to work with thousands of dealers across Malaysia to expand the used car market that has been under the radar in the country and is full of potential.
"Our goal is to triple existing retailer transactions to over $ 500 million over the next few years," said Aaron.
In addition, Carro is aiming for a digital banking license in Singapore to expand financing for small and medium-sized enterprises (SMEs).
The company currently provides credit and insurance services to auto dealers and buyers through its wholly owned subsidiary, Genie Financial Services.
Genie claims to have subscribed to over S $ 200 million in loans and to have enabled more than 20,000 transactions in its two years of operation.
Driving for digital push
There seems to be less demand for in-person visits and price negotiations among the younger generation, which is why the new digital retail experience is gaining momentum, Aaron said.
He assumes that we will soon see fewer large exhibition rooms due to the cost and the lower number of visitors.
Instead, smaller, more nimble retailers will emerge that focus on social media marketing and go straight to consumers.
"All of this suggests that retailers are using more technology and less emphasis on a physical office, some of which we are already starting to see in China," he said.
For this reason, they want to expand further in the region and gain a foothold in newer markets such as Vietnam, the Philippines, Taiwan and Cambodia, which “can benefit from the digitization of the used car sector”.
They also want to grow in the countries where they are already located. In Indonesia, for example, they want to bring ten more mega automalls onto the market by 2022.
They were the first players in the region in technology and data analysis, inventory, and end-to-end full-stack service for all aspects of car ownership
"Still, we can't rest on our laurels," said Aaron.
Selected image source: Carro