Southeast Asian used car marketplace Carro is in talks with the Bank of Thailand to secure a lending licence in the country, an executive said.
The Singapore-headquartered firm plans to venture into retail and inventory financing for the Thai automotive sector and expects to secure the personal lending licence by 2020, Carro Thailand’s chief Manit Ghogar said.
The licence approval process is expected to take about three months.
Ghogar did not disclose how much Thailand contributes to Carro’s revenues, but noted that the Southeast Asian market is sizeable with about 2 million used cars sold every year. This is roughly the same as Indonesia, according to four industry sources.
Ghogar explained that car financing is a natural progression for Carro to add further value to dealers, agents and consumers – many of whom may want to pick up a loan or insurance plan for their vehicles.
The SoftBank Ventures Asia-backed company has been facilitating online auctions for used car buyers and sellers for a few years now, allowing it to accumulate a trove of sector data.
This covers a wide scope – including market prices, time taken to flip a car, and market trends around the buying and selling of vehicles across various parts of Thailand.
“Although inventory financing for automotives currently comprises less than 2 per cent of a typical bank’s automotive lending portfolio, this is an area we have developed a lot of insight into because of the data and expertise that we have,” said Ghogar.
“We can help aggregate what looks like alternative data and bring a greater level of transparency and value to car financing in the market,” he added.
Carro nursing ambitions to be more than a used car marketplace?
Carro’s advances in financing may not stop at the auto sector though.
“Today, we largely deal with companies involved in the auto trade; however, we do not see any barriers for us to move beyond that sector and into SME loans,” said Carro’s co-founder and chief executive Aaron Tan.
Just last week, Carro announced it was applying for a digital banking licence in Singapore to offer financial services to small and medium enterprises (SMEs) in the city-state.
This comes in addition to existing loans and insurance services it already offers to car dealers and buyers via Genie Financial Services, a wholly-owned subsidiary.
Tan shared: “Genie initially dealt with working capital loans and over the years, it perfected auto valuation and was able to raise debt to fund its asset-backed book. We have not seen a more profitable asset-backed loan book in the region.”
Tan noted that owning a digital bank licence in Singapore will also allow Carro to create differentiated products and help serve underserved SMEs.
“We think that the incumbent banks are doing a great job serving the segments of the market but we are mostly interested in being a platform that enables SMEs,” explained Tan.
According to Carro, Genie has underwritten loans worth over $200 million and facilitated more than 20,000 transactions during its two years of operations.
Carro last raised a $90 million Series B round in August from a raft of investors such as SoftBank Ventures Asia, EDBI, B Capital Group, Hanwha Asset Management, Golden Gate Ventures, Insignia Ventures and Alpha JWC.
The company has also made a number of overseas acquisitions to scale its operations of late – including Jualo.com, an Indonesian C2C marketplace, and myTukar, a Malaysian car bidding platform.
Founded in 2015, Carro offers a range of services including the buying and selling, financing, subscription, insurance, workshop and roadside assistance for cars. It claims to be Southeast Asia’s largest automotive marketplace with over $500 million worth of transactions made on its platform in 2018.