myTukar’s parent company, Carro, reported record EBITDA (earnings before interest, tax, depreciation and amortization) for its latest fiscal year ending March 2023.
It achieved EBITDA of US$4 million for the 12 month period. Even more impressively, the ARR (annualized execution rate) reached US$35 million towards the end of the fiscal year. This means that based on monthly recurring profit rates towards the end of fiscal year 2023, Carro is expected to be able to reach $35 million in profit over the next 12 months. Indeed, according to Ernest Chew, Carro’s Chief Financial Officer, Carro expects to achieve 10x EBITDA growth in fiscal 2024, or US$40 million.
“Not only did we achieve record EBITDA in fiscal year 2023, but our annualized EBITDA is on track with an EBITDA margin of around 4%. We expect to achieve 10x EBITDA this year. if we didn’t sell any cars, we’d be super-EBITDA positive today. Almost 60% of our gross profit comes from recurring accessories,” said Ernest Chew, Chief Financial Officer of Carro.
“That’s the real benefit of a true ecosystem-driven, sustainable business model. We have almost no operational burn right now and EBITDA is positive in all of our major markets. We’ve also built a balance sheet stronghold and diversified our lending relationships with 17 financial institutions, which offered us a very competitive cost of funding,” he added.
How exactly does Carro make money and how much? Carro has sold and financed over 120,000 vehicles in Indonesia, Thailand, Malaysia and Singapore. Fiscal 2023 gross profit margin increased to 9%, with the final quarter ending on a high note with a GPM of 11%, more than double the FY2022 GPM.
This is supported by strong growth in ancillary revenue, which accounted for almost 60% of Carro’s gross profit last quarter. Genie, Carro’s fintech business, also saw strong growth in the region and kept non-performing loans (NPLs) at 0.2%.
Indeed, the rules of the auto industry apply even to tech unicorns. You know what they say about dealerships, that selling cars isn’t really their bread and butter, but the real money is made with all the support services like after-sales, insurance and car financing.
Carro has invested in building and promoting its aftermarket capabilities. For example, in Malaysia, myTukar is currently running a promotion where you can get 30% off their full car paint service at their body and paint centers. You can get your car painted in 4 days or you will be compensated with 50% off your bill if they are late.
Basically, even if you’re not at the point in your life where you want to buy a car or trade in/sell your car, Carro can still get you to be their customer, because everyone has to maintain their car, renew their insurance, And so on.
VIDEO: Happy Perodua Myvi owner gets her car painted by MyTukar
At present, Carro is highly liquid, with US$560 million in its highest budget comprised of cash, monetizable assets/investments, and funding receivables. He also has an additional $120 million in approved undrawn bank lines.
Carro uses bank lines for its Genie business. It borrows at a low fixed rate and then also lends through the Genie business at a high fixed rate, so it is unaffected by interest rate fluctuations. The profit margin is the difference between the two rates. Using AI and data, he is able to keep his NPL low.
Genie’s current loan portfolio currently stands at over US$350 million and earns interest on this loan portfolio. This means that Carro is not only an automotive technology company, it is also a fintech.
While Carro has plenty in the bank and its finances are doing well, its main competitor Carsome told BFM Radio in an interview that the company has yet to break even but plans to do so this year. Last year it was reported that Carsome had a layoff drill in September 2022.
Although you frequently see people from the yellow team in photo ops with government officials, Malaysia’s money is on the orange team. Malaysian government-linked fund Permodalan Nasional Berhad (PNB) participated in Carro’s latest Series C expansion in November 2021. Carro also secured investments from Sime Darby and DRB-Hicom.
PNB injected US$25m (RM115m at the current exchange rate) alongside Temasek’s US$30m in the US$100m round, which was an extension of a previous round C of US$360 million led by Softbank Vision Fund 2.
Since then, Carro has not needed to raise additional funds other than strategic investments, such as a recent investment in February 2023 from insurance technology company ZA Tech to transform the car insurance experience on markets in which Carro is present.
Aaron Tan, Co-Founder and CEO of Carro, says, “We are focused on improving unit profitability and economics while optimizing productivity and cost structure. It’s not about selling more cars; it’s about capturing more value and recurring revenue streams.
“While other companies continue to focus on growing GMV at all costs, we have strategically doubled down on our efforts to create a sustainable business model and leveraged our ecosystem to drive more recurring accessories throughout the product cycle. life of ownership and use.Our fintech and mobility businesses made significant progress in fiscal year 2023. We also laid the foundation for stronger growth of our insurtech business through strategic partnerships with ZA Tech and MSIG., as well as aftermarket,” he added.
After all, there’s no point being “number one” if you’re also the best at losing money, right?
