Many people’s lifestyles have relied considerably on their mobility by car. But not all of them can afford brand-new cars, so they turn to the second-hand market.
It is not easy to get a bank loan for the purchase and to find a dealer of quality second-hand cars with reasonable prices.
CarTrust is filling the gap and helping consumers to buy quality second-hand cars from trustworthy dealers.
“We want to create space for people looking for second-hand cars with good quality, particularly women, so that they can rest assured when making their purchase. This is something new for Thailand, in terms of information, protective legislation, and services,” said Sopon Asawanuchit, co-founder & CEO of CarTrust.
A former assistant executive manager of Siam Commercial Bank, Sopon told The Story Thailand as to why he left the executive post to found CarTrust with his friends in 2014.
In his view, cars are a tool that helps its owner tackle their financial problem and reach their life goal.
“We want cars to be something you can trust and be a good financial tool,” Sopon said. “This is the reason why CarTrust was created. We want the [second-hand car] market to be efficient, reliable and fair to the buyers.”
The company offers car checkup services by professional mechanics in order to supply its customers with information useful for those seeking to buy or sell second-hand cars, he said.
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The information covers car details based on thorough checkups and analyses, as well as suggested prices.
From car checkup to refinancing
CarTrust has adapted its business model from mainly financing to providing credit and refinancing for buyers of second-hand cars. Its major business involves lending to car hire-purchase customers looking to repay their remaining debts so that they get the vehicle registration to be used in their application for refinancing.
“The business is growing fast. It’s because Thai financial institutions do not cater to some groups of people. Cars help them to access a source of fund,” Sopon said.
Many people find it difficult to get the green light for their refinancing applications. Several customers are unaware they can seek a new loan while their hire-purchase are still not fully paid, he said. Car refinancing is a good choice for them to find a new fund source with lower costs than credit card or personal loan.
Thailand has the largest second-hand market in Southeast Asia, with average sales of 1.2 million cars a year, or about 100,000 a month. However, only about 5,000 people apply for refinancing a month.
The car refinancing market is relatively new and has the big potential for further growth.
At present, many banks and financial institutions are offering products that cater to Thailand’s second-hand car market. But most customers are unable to secure loans for refinancing their hire-purchase cars, as banks often require that they first hand over their vehicle registration document. Customers often are unable to meet the requirement as they have no money to repay the remaining debt.
This is a large group of potential customers looking for funds to repay their remaining debt and get the car registration before their refinancing application is approved. However, the market for this business is still limited to local areas dominated by small second-hand car dealerships and local money lenders. These service providers tens to lack service standard, charge high service fees and have no nationwide coverage of services.
Those are reasons why CarTrust becomes a provider of one-stop car financing services available across the country with more ease, comfort and speed.
Sopon voiced confidence that upgraded services with reasonable fees will earn CarTrust more customers while it is increasingly gaining greater market share.
“We want to make CarTrust ‘the most trusted brand’ that customers think of when they look to buy or sell second-hand cars. We can offer them advice and help them with this matter,” he said.
“More importantly, we offer advice free of charge.”
Adopting technology to upgrade services
CarTrust’s business goal is to create a brand that is widely well known and to expand its growth to become the top player in the car refinancing market.
In addition to expanding its network of business allies to cover leading banks, CarTrust also adopts an electronic platform to improve the quality of its services and retain its leading position in the market.
The electronic platform is also used to expand into related businesses based on the current customer database. For instance, CarTrust is expanding into the customer-to-customer (C2C) second-hand car business, in which there are no go-betweens.
“We are entering the business of financing for the C2C market. We find the source of loans to customers who buy or sell their cars directly online,” Sopon said.
CarTrust aims to see a more efficient C2C market for second-hand cars and a profit margin of between 5 and 10 per cent, compared to 15-20 per cent currently charged by second-hand car dealers. With CarTrust tools, every one can be a second-hand car dealer.
For those seeking to sell their second-hand cars, CarTrust can help with checking up, cleaning and reconditioning, as well as car consignment. Also, CarTrust offers partial advance payments if requested by customers or financing their final debt repayment to the original creditors in exchange for the vehicle registration document.
Maintaining leadership through network of allies
CarTrust is now Thailand’s largest provider of car financing for the final debt repayment, with a market share of about 10 per cent and involving more than 6,000 cars a year. Also, it is the main ally of leading Thai commercial banks, including Kasikornbank, Bank of Ayudhya, TTB Bank, and Kiatnakin Phatra Bank, regarding the service of helping customers secure their vehicle registration document before refinancing.
Within the next three years, CarTrust aims to expand its market share by about 20 per cent, through increase of its alliance with financial institutions, expansion of the customer network through online channels, and addition of service points in the provinces to boost the brand recognition.
According to Sopon, CarTrust has identified multiple groups of competition, mainly the businesses providing advice for refinancing and securing the vehicle registration document. However, banks are CarTrust’s allies rather than competitors.
Among the competitions are Carfinn and Carmana although they are still much smaller than CarTrust.
What makes CarTrust stand out are: 1) Professionalism for customer satisfaction, 2) Better and more services, 3) Reasonable prices, 4) Nationwide coverage, 5) Electronic platform.
Bright business outlook
Thailand’s car market has taken a downturn due to the COVID-19 pandemic. However, Sopon voiced confidence that there is still room for further growth in the domestic second-hand market, as there remains demand for cars, whether they are powered by petrol, diesel, hybrid engine, or electricity.
More than seven years of its existence, CarTrust has retained it constant growth. Pre-COVID, the company helped its customers secure an average Bt100-200 million a month for their car refinancing. It has made profits for five consecutive years.
Expansion of branches and diversification into related businesses has made it necessary for CarTrust to raise funds.
“In two years, CarTrust intends to be listed on the stock exchange. We are making our platform ready. Fund raising will help us expand the business faster,” Sopon said.
“There may be moves for a business merger and expansion of the platform to related businesses, such as online car trade, car care, document delivery, or anything that brings synergy. We aims for more revenue, improved services, and decreased cost of operation.”
After being listed on the stock exchange, CarTrust has plans to expand into other countries in the region, according to Sopon. However, the company is setting its sights on becoming Thailand’s number one in the business before expanding beyond the borders.
“We are unsure if other countries have a platform similar to what we have in Thailand. But we believe that our system for car financing and securing the car registration could prove beneficial to many other countries with a similar structure,” Sopon said.
“Our plan to expand overseas will first focus on the markets with the character similar to that of Thailand and the areas where CarTrust has expertise. We will first look at Southeast Asian countries with a rapid expansion of mature car financing markets. These include Indonesia, Philippines and Vietnam,” he added.
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Regarding its projected growth this year, Sopon said CarTrust is recovering from a decline in business due to COVID-19.
In 2019, the company lent almost Bt1.1 billion to customers seeking funds for refinancing. 2020 saw the amount decline to Bt600 million. The business was slow in early 2021 but a rapid recovery that began in April has continued, sending the company to its all time high in August.
“We should be able to get back to the [pre-COVID] point of Bt1.2 billion this year. Next year, it’s not too difficult to reach Bt2 billion,” Sopon concludes.