Buying a used car is not a simple process. You run the risk of paying too high a price for a product which may break down or need major repairs within months or even days of purchase.
It is also important to understand the transfer of ownership procedure and to get the required paperwork right. For most individuals, the entire exercise takes up a great deal of time and even after the transaction is concluded there is always a feeling that you could have got a better deal.
Aaron Tan, who graduated from Carnegie Mellon University, spotted a business opportunity in the discomfort that buying or selling a used car creates in most of us.
Carro got its start in 2015
Although the company is just about a year old, Aaron Tan is no stranger to entrepreneurship. Back in 1998, when he was just 13 years old, he decided to build a web portal that would be better than Yahoo! At that time he had identified areas that could be improved upon in both AltaVista and Yahoo!
This early experience has stood Carro in good stead. The year-old platform addresses the problems that Singaporeans face when buying or selling a used car.
In most instances, the deal goes through a middleman or broker, pushing up the cost of the transaction for the buyer and resulting in a lower price for the seller.
Carro provides an alternative by offering buyers and sellers the unique opportunity of interacting directly with each other.
Why Singaporeans love Carro
Aaron Tan’s Carro gives users of its service peace of mind. When a person who wants to sell a used car approaches the company, the car is put through a ‘120 point inspection’ by Carro’s in-house mechanics.
The selling price of the car is determined based on this detailed examination. In a demonstration of the conviction that the company has on its own estimate, Carro guarantees that it will buy the car at the pre-determined price if it remains unsold for 30 days. This ‘skin in the game’ is a major draw for customers.
Carro’s commitment to buy the car reassures sellers that they are getting a fair price while buyers are convinced that they are not paying too much.
The pre-screening procedures adopted are quite extensive. Paint meters and on-board diagnostic tools are used to determine whether the vehicle has ever been in an accident. The company also does not sell cars that are over seven years old or have run more than 120,000 kilometres.
Transparent procedure for both buyers and sellers
When a seller decides to offer a car for sale through Carro, the company uses a sophisticated algorithm to determine the most appropriate selling price.
At this point in time, the seller is required to pay a fee of $250. Even this sum is refunded if the person who buys the car opts to take a loan from a bank with which Carro has a tie-up.
A few months ago, Carro introduced graph.sg, a fair price evaluation tool that has proved to be very popular with buyers and sellers.
Prospective buyers can get an idea about the condition of a car by looking at its photographs on Carro’s website or mobile app. The report prepared at the company’s site is also very helpful to buyers.
Of course, Carro advises buyers to carry out a physical inspection of the car as well as an extensive test drive before taking a final decision.
Diversification into related areas
The core business of the company is growing rapidly. Carro is witnessing a 30% month-on-month growth in revenues from selling used cars. It is on track to achieve its target of a gross merchandise value of $100 million by year-end.
The business model includes collecting commissions from banks and insurance companies that source customers through Carro.
The company’s website now also offers customers the opportunity to buy car accessories. A recent initiative is Carro Workshop, a mobile app that indicates the best workshop for a customer on the basis of car model, the kind of work required, and the amount that is to be spent.
Potential for expansion
Aaron Tan is confident that his company has the ability to register exponential growth. He explains that in the last year, 70,000 car ownership transfers were done in Singapore. With the average price at $70,000, this presents a market of $4.9 billion.
In addition to this, there is the possibility of generating income by referring business to banks and insurance companies and by selling accessories. Carro’s plans to expand in the region are also gathering pace. It is expected that by the end of the year, operations will start in Malaysia, Indonesia, and Thailand.
But can Carro thrive in the crowded used car market?
The initial response to the company is highly positive. This is probably because Aaron Tan has identified the factor that is uppermost in the minds of any person who plans to either buy or sell a used car.
People want to deal with someone whom they can trust and Carro has succeeded in establishing itself as an organisation that can be relied upon to provide a fair deal.