Indonesian used car market large enough for over 2 leaders: BeliMobilGue new CEO

As part of the founding team of Indonesian e-payment startup OVO, Johnny Widodo has played an integral part in the rise of the company to become the top two leading players in the market.

Now, in his new role as CEO of used car marketplace BeliMobilGue, Widodo says he is setting his bar just as high but does not believe the new industry will develop into a cut-throat game like that of payments.

“If I look at other countries like China and India where used car sales industry is more mature, there is room for more than two big players. This is possible, depending on the nature of the industry,” says Widodo who left OVO after a four-year stint last month as director of sales and partnerships.

Indonesia’s used car industry is currently seeing digital disruption from several local and regional players including  BeliMobilGue and Rocket Internet-backed Carmudi and regional players, Malaysia’s Carsome, and Singapore’s Carro, which recently closed a $90 million Series B round from a number of investors including SoftBank Ventures Asia.

While competition is already fairly heated, Widodo said the size and opportunity in the market, which averages 3.5 million used cars per year, will inevitably invite interest from those beyond the region.

“Will Chinese players come? I would think yes. Would they be the only one? No. India will come, and others too because it’s simply just a very lucrative industry,” he said.

BeliMobilGue itself is a joint venture between founder Rolf Monteiro, Berlin-based Frontier Car Group, which is backed by Naspers/OLX, Balderton Capital, TPG Growth and Partech Ventures, and Indonesia-only independent venture capital firm Intudo Ventures.

Additional backers include local automotive giant PT Tunas Ridean Tbk, Amand Ventures, Tasman Fund, Digital Garage and Gojek co-founder Michaelangelo Moran.

Through its platform, Jakarta-based BeliMobilGue.co.id enables consumers to sell their cars to a large private network of over 1,000 qualified buyers. It claims to conduct a 300-point inspection on each used car and then uploads the inspection report onto its partner app, which allows buyers around Indonesia to make an offer on the car while viewing competing offers.

Last month, the company raised a $30-million investment from parent company Frontier Car Group, just six months after it secured a $10-million Series A round.

With the fresh capital at its disposal, Widodo said the company will start to look into offering several financial services on its platform. At the moment, the company has teamed up with banking institutions to launch a pilot financing service to help partner dealers with their cashflow.

The next possible move for the company is expanding beyond Indonesia. Widodo, who has also been appointed as Frontier Car Group’s Southeast Asia CEO, said expansion to other countries is a likely move as it is part of the DNA of FCG, which operates in 10 countries under 10 different brands.

However, any initiative to start tapping into new markets will not be done soon, as Widodo has vowed to spend his first 12-24 months focusing on doubling down and focusing on the Indonesian market.

“I need to get this right. I need to make sure we grow and we dominate. What is the point of expanding outside when you haven’t dominated the biggest market?” he said.

Edited excerpts of the interview:-

Tell us about the decision to move from OVO to BeliMobilGue (BMG)?

I have never moved to companies in the same industries. I have an engineering background, and my first job was an R&D engineer, then I moved to AT Kearney as a consultant, after that I moved to Central Proteina Prima, under the group of Charoen Pokphand in the aquaculture business. That was when I joined OVO in late 2015 when it was not yet OVO, but was still called Lippo Digital. I was the third person to join OVO, so part of the founding team. At the time, I knew nothing about technical jargons of finance, banking, and retail. I learned it all from zero.

BMG is a very different industry, and also it’s a different position for me. Before I handled only operational matters, now non-operational things are also under my responsibility. It’s about doing something that is challenging.

What attracted you to join BMG?

The business opportunity of the used car market in Indonesia is incredibly huge, and there is no player at the moment that is number one. Secondly, I feel BMG, having Frontier Car Group as a backer, has the right expertise and product and business model to come in and disrupt the market and become number one.

At the moment, FCG is present only in Indonesia in Southeast Asia, but we have plans to grow to other countries.  But, at the moment, FCG only operates in Indonesia under the BMG brand.

How far off is BMG to becoming number one with the current competition?

Today the universe of the used car market is around 3.5 million such vehicles per year. It’s so huge that if I asked you which digital automotive trade platform is most popular, you would have a hard time answering it.

The share of each player is still negligible in relation to that 3.5 million. This is because the market is very much still dominated by dealers spread across the country. No one knows the exact number but, according to my estimation, there are probably around 25,000-30,000 dealers in the big cities.

For me, it’s not important where we currently stand in the race, because we are all still very small. To capture the market, you don’t really need to worry about your competitors for now because the market is so huge. Even if all the players grow ten times, there is still a lot of room to grow in the market.

Is it because it is still early days or because it’s just difficult to crack the market?

Disrupting an industry is always a challenge in any sectors, including used car commerce. People have done it a certain way for so long. To sell a car you either meet up with the person that wants to buy it or you take the car to a dealer to negotiate a price. So the idea that now you can sell your car by just inputting data, making an appointment, have it inspected and have it sold to our partners in less than an hour, is not an easy idea to follow by both sellers and dealers, who are so used to touching and feeling the car versus seeing it on a phone and in a report.

So to come back to your question, I am not saying the businesses are small, but they are still far off from the size of the actual market. But the reason for this is because there still needs to be a lot of educating to do for both sellers and dealers. And secondly, the fact is that this universe of digital business is only around ten years old. And disruption happens in different industries at different times. For us in the used car sales space, it has only been two and a half years.

What does BMG offer on its platform?

We have an app for dealers, but customers or sellers don’t use an app because people don’t sell cars often, so it doesn’t make sense to have them download an app, so access our website.

Our dealers can see the price and all the specification and description of the car along with pictures. So we basically educate them that they can trust the information provided in the app in making a decision.

How do you monetize your service?

There is an administration fee. At the moment that is the only revenue model.

You have also started offering financial services. Can you tell us more about this?

It is still a pilot. We are exploring how we can work together with our partners to help their cash flow. And we work with banks for this service to provide financing, but it’s still very small as it is still in the pilot phase.

What is BMG’s market share among other digital marketplace players?

Based on our internal data and my understanding, we are number one, but not very far ahead. Their gap is not big. But for me, we are all still small, we should be thinking about how we can educate this huge market together. How can we make these dealers actually come into our platform and ecosystem? It doesn’t matter whether they choose ours or our competitor’s. People generally use more than one platform anyway. So it’s not a problem.

What is it that you do differently compared to competitors?

I’m not going to talk too much about the others, but for us, we try to give a convenient, safe and transparent transaction for our consumers and dealers. Secondly, we try to help people to sell their cars quickly – in as fast as 1 hour’s time. If you don’t need to sell fast then you sell it C2C, which can take a long time to find the right buyer. But the problem with that is the price of a car depreciates every day that goes by, and in general, a car can depreciate by Rp 100,000 a day, roughly. So a month, it accumulates to Rp 3 million – a year its Rp 36 million. This is what many people don’t realize. So sometimes you just need to sell fast.

Recently Carro announced that it acquired Jualo. For BMG, could acquisition be a growth strategy you may also take up?

I will not say I am closing the door for that, but at the moment we are focusing on our business of car sales. We are good at it and that’s what we specialize in. Even from this current business, there are many things that we can do. There is C2C, C2B, B2C, and this is still the movement of cars. Then there are things around it, like financing, insurance, workshops.  For now, we think we are good at this and we should focus on this. But if we see something interesting along the way, why not? Especially if we have internal expertise in it.

You look at the opportunity but also look at yourself internally. Do you have the internal capability to run the business? If there is an opportunity but you don’t have the capability to run it then it’s likely to fail.

If somebody suddenly in our business has the expertise and the opportunity is there, it would make a lot of sense with regard to any type of businesses.

What about expansion in the region. Is that in the cards for BMG?

Southeast Asia market is 10 million cars. Indonesia is 3.5 million cars. We contribute 35 per cent of the whole Southeast Asian market – the largest. I need to get this right. I need to make sure we grow and we dominate. What is the point of expanding outside when you haven’t dominated the biggest market?

On the time frame, I would say at least for the next six to twelve months I will still be focused here. After that, I don’t know. Maybe.

Will be under the same brand of BeliMobilGue?

When we go abroad it will be under a different brand. We need to use a local name. From the 10 brands of FCG, no two markets have the same name. They are all localized.

Of the $30-million BMG raised, what will the bulk of the fund be allocated for?

We want to grow the business big and to do this, you need the run rate for operation. Secondly, we try to go into different verticals. You need money to run that. Thirdly, you need money also to educate the market.

The investment will be made over two years, does that mean you will raise another funding before then?

If you ask me, that is actually a lot of money for two years. But do we close ourselves up from potential investment? No. Even today we have our partners, Intudo (Ventures), Toyota Tunas Indonesia, so we do not close our doors from them.

Can you disclose the company’s current valuation?

No.

We know that China’s used car industry is much more mature than Indonesia’s. Do you foresee Chinese players entering the market?

At the end of the day, all investors and businesses will look at where the most lucrative market is. Indonesia by 2030 will be the largest economy in Southeast Asia, because we have all the components for it. Will Chinese players come? I would think yes. Would they be the only one? No. India will come, and others too because it’s simply just a very lucrative industry. The business is going to grow. So yes I will say competitors will come, of course.

Will it happen soon?

I think so. At the current stage, there are no barriers. People will just come if they want to come. At the end of the day, they will grow the industry and it’s helping Indonesians, wherever they come from.

And it’s not really a problem because the market is so huge, so I welcome it. At the end of the day, it’s the consumers that would be benefited. They will have more to choose from.

Once there are more players and the market becomes more crowded, will consolidation be inevitable?

It will be a very normal industry cycle. When an industry is nascent, there will few players. As time goes on more players will arrive, a mix of both small and big companies. Later conglomerates will come in and then there will be consolidation. This is normal in any industry. This is just the nature of a market. When competition becomes stiff, only the strongest will survive.

Will that happen here? I think so. But will it happen soon? I don’t think so. Because the industry is still at an early stage.

Do you see the competition to eventually be reduced to only two players as we see in the payment space?

In the payment space, you’re very right. There is no room for number three. If I look at other countries where used car sales industry is more mature, like China, India and other countries, there is room for more than two big players. This is possible, depending on the nature of the industry. In the US for example, a lot of people like to go to a hypermarket of used cars, there are also some that like to buy from auctions, then there are people that go to classifieds to buy a car, some people go to small dealers. There are so many ways for you to buy or sell your car. So to me at the end of the day, the market is so huge that different business could potentially focus on different channels.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.