Malaysia’s peer-to-peer car-sharing marketplace Moovby has put its regional expansion plans on hold with the COVID-19 outbreak casting a shadow on tourism and allied activities, dragging car rental demand.
Moovby founder and CEO Nik Muhammad Amin told DealStreetAsia, in an interview, the COVID-19 outbreak is impacting the group’s businesses in Malaysia and Indonesia, which saw 30 per cent month-on-month decrease in the first two weeks of March, compared to a 20 per cent month-on-month booking growth during the pre-COVID-19 period.
“We are evaluating the appropriate measures to manage this unprecedented event. With our plans postponed because of this pandemic, we anticipate the delay to occur until May or June this year,” he said, adding that the management has had to re-look at its plans for regional expansions due to this pandemic crisis.
However, all related efforts for regional expansion to Singapore are still ongoing, according to Nik. The home-grown platform said in February that it was looking to expand its operations in the domestic market while foraying into new countries such as Thailand and Singapore this year.
“We don’t expect tremendous growth during this difficult time. We will focus more on strengthening the unit economics and tightening cost structures across our company,” he said, adding that the firm is cutting the marketing budget at the cost of growth.
Kickstarted by initial grants and funding from Malaysia’s early stage start-up influencer Cradle and Malaysian government’s Bumiputera Agenda Steering Unit TERAJU, the homegrown startup in January received $74,000 in funding from the Singapore-based early-stage venture capital firm and startup accelerator, Accelerating Asia. This has brought its total funding from the seed stage to date to $500,000.
Although Nik did not expect investors to pull back their funding from the firm, he believed the condition for a startup would be challenging amid the pandemic, which is likely to continue for a period of time.
“For the next round of funding, we’ve been talking to a few prominent venture capitalists in Singapore and Indonesia. While some venture capital firms are still active, the impact of COVID-19 has slowed down the pace of investment for others and thus, there will be fewer doors for us to knock on,” he said, adding that it would take more work to secure investments.
Despite the disruption in plans, he expects Moovby to breakeven by December 2020 and be profitable by the second quarter in 2021, on the back of business travel and transportation that is expected to pick up once the effect of the pandemic wears off and the movement control order in Malaysia is lifted.
“Disruption and new ideas often arise in tough times such as the current pandemic. It’s actually an opportunity for us. In the meantime, we are preparing for this long ‘winter’ by building relationships with our users,” said Nik.
The group is currently working on improving its platform to make it easier and safer to rent and share cars, while doubling down its efforts to engage with more businesses (B2B) – working closely with online travel agencies such as Traveloka and Klook while looking to partner with airlines, hotels and corporations.
On the business sustainability issue, he highlighted as a peer-to-peer car-sharing operator, the group is able to avoid the operational overhead of fleet-based businesses such as renting parking spaces and buying cars in bulk.
Despite challenges, Nik believes the potential for the car rental market in ASEAN remains strong, as projected revenue for 2020 is around $2 billion across ASEAN countries (in the absence of COVID-19).
Citing Malaysia as an example, he explained, “about 13 million passenger vehicles are stationary for more than 20 hours a day. These idle cars have unlocked the recent phenomenon of car-sharing in Malaysia.”
Peer-to-peer car-sharing is catching on especially among millennials as they cannot afford to own a car due to the rising cost of living, difficulty in securing loans and environmental reasons, he reasoned.