Indonesian used car market on the way to growth It is fueled by a number of directions: the increasing digitization of used car sales; a greater range of financing options; and the Covid-19 pandemic, which prompted the idea of private car ownership.
broomAn Indonesia-based auto-finance startup that wants to help used car dealers operate more efficiently by applying an asset-backed lending model to their business — introducing in-app trading between dealers and providing fresh financing to do so — said on Tuesday it had closed a $10 million funding round. dollars for pre-series “a” led OpenSpace Ventures.
Other investors, incl Also participating in the latest round were MUFG innovation partner BRI Ventures and its former backers AC Venture and Quona Capital. (Brum declined to comment on whether he or his investors were affected by the crash Silicon Valley Bank calamity.)
The startup was founded when Pandu Adi Laras, CEO (CEO) and co-founder of Broom, wanted to sell his car a few years ago, which he was doing because he needed cash to renovate his house. However, used car dealers that Laras visited told him that they could not buy back Lars’ car due to limited available funds and working capital, offering only exchanges instead.
“The traditional approach is much like opening mom-and-pop stores, where sellers need to wait for their inventory to sell out [to end customers]and then they can use the money to get new stock to sell,” Lars said.
The problem was very common among used car dealers in Indonesia, according to Laras, and that was how he came up with the idea for Broom.
Co-founder and chief financial officer (CFO) Andreas Sutanto and Laras started Broom in 2021. The following year, it launched its flagship service, Buyback, to help used car dealers in Indonesia, many of whom lack capital.
With the repurchase, [car dealers] They can improve their inventory and speed up their turnover, thus increasing their revenues; Our app allows them to easily manage entry and exit flow and trade with other merchants in our ecosystem.”
Buyback provides dealers with “short-term working capital through a temporary car sale service with a buy-back option” and dealer-to-dealer trading, making inventory management more efficient. The startup explained that Buyback “is not a loan in itself, but more of a temporary sale, which involves a change of ownership. Merchants can then buy back their goods at a slightly higher price.”
(L to R) Andreas Sutanto, Co-Founder and Chief Financial Officer; Pandu Adi Laras, Co-Founder and CEO; Clausen Sindhuinata, Operations Manager. Image credits: broom
The latest financing, which brings total equity to $13 million, will enable Broom to diversify its product offering and accelerate inventory turnover for Broom and its dealers. The company recently launched its first offline showroom where its merchant partners can display their inventory to more end customers. Besides equity financing, Prom secured a $12 million loan from DBS Indonesia and BRI last year. The startup aims to double its credit facility from external lenders to handle more transactions.
Broome says more than 5,000 used car dealers, its main target customers, now use its platform in Indonesia, where they contribute about 30.6% of new car sales in Southeast Asia. On average, using the Buyback platform enabled merchants to increase inventory volume, sales, and profitability by 3x, according to Broom. The company is focusing on Indonesia, where the used car market is estimated at $65 million and is It is expected to reach $70.3 billion by 2027. Broom has the opportunity to offer its solution to merchants and direct customers later.
Some car markets, eg CaroAnd Karsum and OLX Indonesia, covering direct-to-customer trade and financing. Broom has tried to differentiate itself by targeting the empowerment of existing merchants, who number more than 50,000 in Indonesia.
Broom’s technology plans include building an intelligence model to assess vehicle quality.
The outfit employs 120 people.
“The used car market in Indonesia is huge but fragmented and unregulated,” said Nobutaki Suzuki, President and CEO of MUFG Innovation Partners. “Broom is taking a fresh approach to develop asset-backed lending solutions that are more flexible, affordable and accessible, helping to empower the small dealers who dominate used car transactions in Indonesia.”
