This article originally appeared in Chinese on Momentum Works’s WeChat account. Translated into English by the Momentum Works team.

Carsome recently announced its US$200 million acquisition of the publicly listed iCar Asia, which in effect makes Carsome Malaysia’s first unicorn. In fact, in our Used Car Platforms in Southeast Asia Report, we have analyzed the key players, current landscape, and the development of its ecosystem.

Carsome’s acquisition of iCar Asia fits with the predictions in our report since pure listing platforms needed to evolve their business model to remain competitive.

Carsome iCar Asia - C2C

This eye-catching deal also draws attention to the otherwise unassuming used car market in Southeast Asia. After all, the announcements of unicorns such as Kuaishou and Bukalapak for IPO, as well as daily Covid-19 numbers, are what catches our attention during the pandemic.

For most of last year, Carsome prioritized improving the core competencies of its product, channeling most of its resources towards R&D and talent acquisition. It has now moved towards consolidation, investing in or acquiring platforms that provide services related to used cars. For example, before its iCar acquisition, Carsome also acquired a stake in PT Universal Collection (an Indonesian-based offline car and motorcycle auction company) to strengthen its existing auction services.

Carsome iCar Asia - Carsome

Who is iCar Asia? 

While iCar Asia has ventured into dealer education, data analytics, and other services, we feel that it remains an online car listing platform first. It still depends on monetizing traffic to drive revenue, drawing on its status as Southeast Asia’s largest auto advertising network as its main selling point.

Because of its inefficiency in facilitating transactions, iCar Asia’s pure listing C2C model had also been under threat from transactional platforms such as Carsome and Carro.

Carsome iCar Asia - iCar Asia business

An online car listing company that began in Malaysia, iCar Asia went public in the Australian Exchange in 2012. Currently, it is the leading player in Indonesia, Malaysia, and Thailand, with multiple car listing portals under its umbrella in these countries.

Carsome iCar Asia - iCar Asia market

Based on our Used Car Platforms in Southeast Asia report, Indonesia, Thailand and Malaysia also generated the highest unit sales of used cars in 2019.

In iCar Asia’s 2020 Investor Presentation, the company described how it had recovered from the Covid-19 pandemic and stabilized its cash flow in these three countries during the second and third quarters.

Malaysia was iCar Asia’s largest source of revenue.

Carsome iCar Asia - Malaysia

The company’s EBITDA in Thailand had taken a hit in the first quarter, but it expected itself to bounce back with the help of the government’s fiscal stimulus. 

Carsome iCar Asia - Thailand

Meanwhile, in Indonesia, its EBITDA was approaching profitability in the second and third quarters.

Carsome iCar Asia - Indonesia iCar Asia

iCar Asia’s investor presentation also shows that its yearly revenue fell in 2020 (vis a vis 2019) while its EBITDA had also been on a steady decline in the past five years. These dwindling numbers reflect how C2C pure listing platforms were approaching a bottleneck in their growth or profitability.

Carsome iCar Asia - iCar Asia revenue

Ultimately, how iCar Asia had performed in these three markets also fits with our observation in the Used Car Platforms in Southeast Asia report. Compared to the sale of new cars, the used-car market has been more resilient to external shocks such as a pandemic

At the same time, the pandemic’s negative impact on consumer income has led to a preference for second hand cars, which is likely to drive this market’s recovery in the next five years– Carsome’s recent ascent to become Malaysia’s first unicorn reflects its growth potential.

Carsome iCar Asia - Market

In fact, it’s not just Malaysia– Mexico’s first unicorn, Kavak, was also a used car platform.  After raising US$485 million in a Series D funding, this Mexican start-up has recently soft launched in Brazil.

Financial Times even ran an article last week called “How used cars became the next ecommerce battleground”.

Who are the investors behind iCar Asia?

We cannot mention iCar Asia without mentioning its parent company, Catch Group. After Carsome had acquired iCar Asia’s shares, Catch Group will also become Carsome’s shareholder. 

An internet conglomerate founded by Patrick Grove in 2004, Catch Group was one of the first companies to ride on the opportunities that were opened up by an Internet-enabled economy. Besides setting up the car listing platform iCar Asia, it also set up the video streaming service iFlix (which Tencent later acquired the assets of), as well as the property listing platform iProperty. In total, Catch Group has overseen 6 IPOs since its inception, with most of these publicly listed companies based in Malaysia and Australia.

Under its umbrella is also a New York based blank check company Catcha Investment Corp, which mostly focuses on tech ventures in both Southeast Asia and Australia.

Patrick Grove was also one of special guests that One Championship invited in their The Apprentice series.

Carsome iCar Asia - Patrick Grove

(From left to right: Niharika Singh,Chatri Trisiripisal,Patrick Grove)

What is the future outlook for Carsome?

The market potential for the used car market in Southeast Asia is strong. We estimate that this regional market sold 6 million units amounting to a total value of US$55 billion– in 2019. Given that the car ownership rate in Southeast Asia remains relatively low, as well as the nascent used car ecosystem, this market holds much room for development.

Carsome iCar Asia - Southeast Asia

Besides launching its C2B online auction services in 2020, Carsome also tapped into its mature market systems, strong brand image, consistent inspection standards, and existing user data to branch into B2C

Carsome iCar Asia - Carsome experience centre

(Carsome Experience Centre)

As Carsome moves towards integrating its C2B and B2C businesses into a hybrid C2B2C model, it is necessary for it to consolidate because it will allow this large scale platform to more efficiently use their capital for expansion.

Additionally, the multiple car listing portals managed by iCar Asia can also generate traffic for Carsome, which complements the used car retail services that Carsome is moving to provide. At the same time, it can also strengthen Carsome’s position in the markets of Indonesia, Malaysia, and Thailand.

Carsome iCar Asia - C2B2C

As for its future outlook, the US-based second hand car platform Carvana, as well as a few players in China, can provide a few reflections for Southeast Asia’s used car market.

Most of the used car platforms in China (Guazi) burnt most of its money on massive advertising campaigns, leaving it with a confused business model and an ambiguous value proposition. To some extent, it provides a valuable lesson for transactional platforms such as Carro and Carsome to avoid.

On the other hand, Carvana focused on reducing transaction costs, setting up quality standards in inspection centres, and attempting to improve its market pricing information. In other words, it wanted to improve its core business by adding value in each evolution stage

This four-year-long investment eventually paid dividends, as its share prices have increased by nearly 30 times. 

Carsome iCar Asia - Carvana

In June this year, the Singapore-based used car platform Carro also completed a US$360 million funding round led by Softbank Vision Fund, and plans to go public in one to two years.

As such, the used car market in Southeast Asia may not be as crowded as we might have imagined. The market is big enough, and there will be room for players to develop their business and grow their market share. As more of these big companies such as Carsome move towards going public, we expect integrations to be more frequent in different industries.


Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].