SINGAPORE -- Malaysian used car marketplace Carsome wants to enter the Philippines next year, says CEO and co-founder, Eric Cheng. The Gobi Partners-backed company currently operates in four Southeast Asian markets: Indonesia, Singapore, Thailand and Malaysia.
According to Cheng, Carsome is likely to enter the Philippines via joint ventures with local partners. The Philippines is the fourth largest used car market in the region, racking up between 400,000 and 500,000 used car orders per year -- volumes similar to its home market of Malaysia.
Competition is rising fast in Carsome's backyard. Last week, its Singapore-based competitor Carro announced its entry into Malaysia with a $30-million investment in myTukar, a local car bidding platform.
This is just one of two more Malaysian acquisitions Carro is expected to make by the end of 2019, as the company seeks overseas targets to drive its operations abroad.
It has the money to back it up too. In August, Carro closed a $90 million series B funding round backed by a string of high-profile investors including EDBI, B Capital and SoftBank Ventures Asia.
But Carsome is unfazed. "Whatever it is, we continue to prove ourselves right in terms of the way we run the business at Carsome," said Cheng. "Money is not everything, execution is key. Knowing the market is also very important, and we know our markets very well."
Carsome was last reported by DealStreetAsia to be raising $40 million for its series C round by the end of this year. Cheng declined to comment on future fundraising plans but did say that the company closed an $8-million extension round led by Japanese investor Joe Hirao at the end of 2018. Its shareholders include Gobi Partners, Burda Principal Investments and Spiral Ventures.
The Kuala Lumpur-based company is also lining up merger and acquisition targets to strengthen its technical, product and service capabilities in the coming months.
Carsome, like many of its regional competitors Carro, BeliMobileGue and iCarAsia, aims to be an "end-to-end" used car marketplace facilitating the buying and selling of cars, vehicle inspections and car financing on a single platform.
The company currently clocks up transactions worth between $300 million and $400 million per year across its four Southeast Asian markets, with Malaysia contributing half of this. However, Indonesia is proving to be a fast-growing market for Carsome and is likely to contribute revenues equal to that of Malaysia in the next 12 months.
Moving forward, Carsome hopes to add artificial intelligence and machine learning capabilities to the pricing of vehicles and assessment of their condition. These are areas that are already being applied by similar startups in advanced markets like China.
"In China, I really like Chehaoduo. I like them because of how they think about the space, which is very similar to ours. They have operations across C2C, B2C, C2B, financing, leasing, insurance -- it completely covers the entire business and this is very ambitious," said Cheng.
"We believe this is something that can be executed in this region. We want to be the biggest used car trading platform in Southeast Asia."
Cheng added that he was also exploring the idea of moving the company's headquarters to Singapore. He noted that the Southeast Asian city-state has a larger pool of tech talent and is more conveniently situated for capital raising, given the number of investors based out of that country.
Malaysian-born startups have tended to gravitate to Singapore for fundraising, with some moving completely to further scale their growth.
The most notable of these is Grab, which moved its headquarters from Kuala Lumpur to Singapore under the persuasion of Vertex Ventures' Chua Kee Lock, as reported by Finance Asia in 2017.
DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.