Singapore-based used car marketplace Carro announced on Wednesday that it has raised S$1 million (US$716,000) in a seed funding round led by undisclosed angel investors.
It plans to expand into markets in the region in the coming months as well as grow its team of 15. Aaron Tan, Director of Carro, said that it will focus on building brand awareness.
Founded in July 2015 by former IDA scholars and car enthusiasts, Carro wants to solve a pain point plaguing the used car market in Singapore: transparency.
“Anyone who has ever tried to buy or sell a car would know how frustrating it is. In addition to parading around dealerships and dealing with thick stacks of paperwork, sellers often receive low-ball offers from dealerships, while buyers overpay or end up buying a lemon,” said Tan.
“We want to make buying and selling used cars more transparent, secure and honest with Carro,” he added.
Using a machine-learning algorithm, Carro analyses and informs sellers of the optimal selling price for their car. It then collects a S$250 (US$180) fee from the seller, which is waived if the prospective direct buyer takes a bank loan through Carro. According to Tan, this is a far cry from traditional used car dealerships that charge up to S$2,000 (US$1,430) for administrative fees that are only reflected after the sales has concluded.
Carro also promises to buy the car from sellers at the offer price if there are no buyers after listing for 30 days.
“Our customers are direct buyers and sellers. Our inventory is therefore curated and skewed towards direct car buyers and sellers. Since we are selling direct, our prices tend to be more reasonable vis-a-vis dealers,” said Tan.
The used cars that come to Carro are thoroughly vetted. It employs in-house mechanics to inspect the cars.
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“We use tools like paint meters and OBD (on-board diagnostics) diagnostics tools to help us determine if the vehicle has not been in an accident before. Only cars that have no structural damage and under the age of seven years old and a mileage of less than 120,000 kilometres are on-boarded as certified cars. Cars that are marked with Carro Certified have gone through a 120-point check by our mechanics on demand,” explained Tan.
To ensure transparency, the list of defects will be clearly highlighted for each car. The cars also come with a one-year warranty.
Since it started on-boarding cars in August this year, Carro has certified over 100 vehicles and is growing more than 20 per cent week-on-week. Tan believes that it will be on track to hit more than S$10 million (US$7.15 million) in run-rate gross merchandise value (GMV) within three months of its beta testing phase. Carro aims to grow its GMV tenfold by the end of 2016.
The Carro app is available on both the iOS, Android and on the web platform. Users will get a S$250 (US$179) rebate if they purchase a used car from Carro between today and November 15, 2015.