Singapore-based used car marketplace Carro has raised $11 million from Mitsubishi Corporation, MS&AD Ventures and two existing investors, according to financial filings submitted at the beginning of 2020.
Existing investors SoftBank Ventures Asia and Golden Gate Ventures topped up in the round. SoftBank Ventures Asia invested in the firm through its Growth Acceleration Fund while Golden Gate did so via GXH Investments, a co-GP fund with South Korea’s Hanwha Asset Management.
A senior executive from Mitsubishi was also appointed to Carro’s leadership team as part of the deal. Kenji Narushima, a long-time business development manager at the Japanese manufacturing giant, joined Carro as chief strategy officer in July this year.
Carro’s founder and chief executive officer Aaron Tan declined to share specifics on the firm’s capital raise but said the company’s valuation had risen 50 per cent as a result of the round raised in February.
Carro’s last fundraise was a $90 million Series B round closed in August 2019, which was backed by investors such as SoftBank Ventures Asia, EDBI, Dietrich Foundation, B Capital Group, Insignia Ventures and Alpha JWC Ventures.
Carro, which offers a range of services such as car trading, financing and insurance, subscription and workshop and roadside assistance, is currently benefitting from a burst of pent-up demand following the ease of COVID-related travel restrictions, according to Tan. Its Q2 numbers across Southeast Asia jumped 300-400 per cent from the previous quarter.
Tan, however, expressed concerns about the sustainability of this growth. “I do honestly worry a little bit because I feel that the economic (growth) itself is not sustainable,” he said.
“For companies like Carro, a lot of marketplace activity is dependent on wholesale transactions. So if the Hondas and Toyotas of the world are suffering today, that means fewer new cars for trade-ins, which invariably means that used car prices will go up. This isn’t a long term view. This can happen within just one quarter,” Tan explained.
Tan further added that Carro’s business turned EBITDA positive in June, but declined to share exact figures. It was last reported to have transacted over $500 million worth of cars in 2018.
Carro currently runs operations across five Southeast Asian markets. It most recently expanded into Vietnam early this year in Ho Chi Minh and Hanoi. The firm is also present in Singapore, Indonesia, Thailand and Malaysia.
Southeast Asia’s car marketplace and classifieds sector is dominated by two major players at the moment – Carro and Carsome, both of which operate across multiple markets in the region.
The industry has seen some consolidation activity in recent months, with Thailand’s Kaidee getting acquired by EMPG in April and Indonesia’s Belimobilgue by OLX Indonesia. In July 2020, Belimobilgue re-branded itself as OLX Autos to reflect its new ownership. New players have also joined the fray with Indonesia’s Tiin Tiin raising a $2.5 million seed round last month.
Leslie Shaffer contributed to this story.