Carsome Eyes Profitability in 2024: Southeast Asian Used-Car Market Takes Off

Carsome Eyes Profitability in 2024: Southeast Asian Used-Car Market Takes Off

  • Carsome, led by CEO Eric Cheng, shifts focus to profitability amid economic uncertainties.
  • The company’s retail business, offering refurbished cars and related services, is a key driver, contributing 35% of its 2022 revenue.
  • Despite competition, Carsome aims for steady growth while maintaining profitability, backed by strong valuations and recent investments.

Oct.5:Eric Cheng, the driving force behind Carsome’s rise to Malaysia’s first tech unicorn in 2021, is now steering the company towards profitability in the face of higher interest rates and economic concerns. After eight years of rapid growth, Carsome is shifting gears to focus on profitability.

Cheng aims for Carsome to break even by year-end and achieve full-year profitability by 2024. He stated, “We are sacrificing the growth pace of two times every other year now to focus on our [profit] margin.” This strategy involves optimizing pricing, workforce, and leveraging their marketing efforts.

Carsome’s retail business, launched three years ago, contributes significantly to its profitability goals. This segment offers refurbished cars, auto financing, insurance, and after-sale services. In 2022, it accounted for 35% of Carsome’s $1.5 billion revenue, with a trade margin of about 13%, double that of the core wholesale business.

This shift towards profitability comes amid fierce competition in Southeast Asia’s auto e-commerce industry. Carsome, operating in multiple countries, claims to be the region’s largest online used-car platform by revenue and transaction volume.

Competing with Carsome is SoftBank Vision Fund 2-backed Carro, which also operates across Southeast Asia and Japan. Carro reported revenue exceeding $800 million in the last fiscal year, emphasizing its profitability.

While focusing on profitability, Carsome remains committed to expanding market share. Recent investments and a debt facility have strengthened its position, allowing for initiatives like expanding auto financing, insurance, and after-sale services in other markets.

Eric Cheng’s vision is clear: maintain profitability while capturing a larger market share, with aspirations to reach 10% market share in the coming years. Carsome’s valuation remains strong at $1.7 billion, and the company is well-positioned to pursue growth opportunities in its quest for both stability and expansion.

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