Carro Singapore’s CEO, Aaron Tan, on offering digital end-to-end car services in a traditionally-operated market

It’s about refocussing, says the CEO of a car portal that’s on track to earning $300 million

This data-driven start-up takes away the guesswork of car ownership

by : Justin Choo

Change is the only constant in life. This is something that Aaron Tan, co-founder and CEO of Carro, knows all too well. In his youth, he had more than his 15 minutes of fame as a young entrepreneur, having founded two tech start-ups. And that's long before start-ups became a buzzword. Despite his early success, he chose to pursue higher education, earning himself a scholarship and winding up at Innov8 as a venture capitalist.

It was then, during a fateful meeting with LinkedIn founder Reid Hoffman, who urged him to look at the up-and-coming Tesla, that Tan saw the potential of an impending change in the automotive industry. He decided to take a plunge into the deep end. “You know what, I can come back to doing venture capital anytime. Why don’t I go and start something new?” he reasoned. And the seeds for Carro were sown.

A one-stop service

Carro was founded to address fundamental issues that many people face when it comes to car ownership, such as the lack of transparency on the condition of resale vehicles and working out a fair value for a car that is in line with market prices. But the data-driven company is not a mere marketplace; Carro goes further with a full-stack approach, leveraging data analytics to offer a suite of key services that a driver will need through the course of his or her ownership.

"I saw the potential opportunity in the market for us to transform the way things are being done," says Tan. The automotive industry is huge – the marketplaces are a trillion-dollar industry, for example, with plenty of potential in the verticals like financing and insurance along with other after-sales services like workshops. Tan saw that they had one thing in common: they were traditionally operated.

Tan dislikes the word ‘disruption’, but his intention with Carro is similar: change the way things are done and fill the gaps that customers need. They can buy, sell or lease a car like a subscription service through Carro, and take up financial services offered like warranties, insurance and loans for pre-owned cars and COE renewal. It even provides after-sales services like general repairs and maintenance.

A market with potential

As it turns out, change seemed to be only constant for Carro. Though the company was addressing a public need when it started, it was akin to a middleman business in terms of structure, which was fraught with inefficiencies. There was also the issue of repeat business as a car is not something you replace frequently and on a whim. Tan explains that Carro shifted to a wholesale business model geared towards businesses like used-car dealerships. But COVID-19 hit and Carro found itself having to refocus again as people chose to drive rather than take public transport, shifting in the face of an emerging online dealership paradigm. "The market has shifted three times during our four or five short years as a company," he points out.

But the fact remains that the agile company is well-placed to make headway in a lucrative market. Carro is now in six markets, which include Thailand and Indonesia. Last year, it achieved about S$100 million in revenue and is on track to hit S$300 million this year. “It sounds like quite a bit, but actually, we are just like, say, one to two per cent of the overall Southeast Asian market. We’re barely scratching the surface and we have room to grow at least 50 times from where we are right now, and that’s assuming the market doesn’t grow. And the market is only going to grow,” Tan muses.

We’re barely scratching the surface and we have room to grow at least 50 times from where we are right now, and that’s assuming the market doesn’t grow. And the market is only going to grow.

The future is data

Tan thinks that the future of a complete end-to-end service, where someone can buy a car through an automated process and have the car delivered to their doorstep, is still some way off. But he feels that the unique data sets that they can create at the moment offers plenty of possibilities.

“We do things like, for instance, usage-based machines. What it tells me is the driver’s behaviour. How fast is the driver? Is he a good or a bad driver? Does he do sharp turns? Where does he go at night? All this data is fitted into a model that allows me to give him advice and, more importantly, reduce or increase insurance costs, which then reduces the risk of the insurer,” Tan explains.

In fact, Carro has already incorporated some of these data sets into its services. In Singapore, Carro has partnered with NTUC Income to provide usage-based car insurance for its car subscription customers. With the use of vehicular telematics, it is able to track user mileage and calculate the insurance premium according to how much a car is used. And through a partnership with Mitsui Sumitomo Insurance and Greater Than – a Swedish company that develops technology to measure driving performance – Carro is also able to factor driver behaviour into its risk assessment and pricing structure, starting with Indonesia. Regardless of any business strategy it adopts moving forward, it seems that data will always be at the core of every product and service that it offers.