India’s used-vehicle marketplace CARS24 launched its Asean foothold in Thailand in November and plans to follow up by entering Indonesia in 2022, setting the stage for a three-way battle with Singapore’s Carro and Malaysia’s Carsome.

CARS24, a Softbank- and Tencent-backed unicorn, has earmarked over US$100 million for expansion into international markets.

In June, it announced it had begun operations in Australia and the UAE.

The company will make its debut in the Association of Southeast Asian Nations in two of the bloc’s largest markets, Thailand and Indonesia, before deciding its path into the rest of the region, Abhijeet Dabas, chief executive of CARS24 in Southeast Asia, told Nikkei Asia.

“In terms of market, Southeast Asia is similar to that of India – both are roughly US$50 billion to US$60 billion markets at this point,” he said.

“Southeast Asia is a combination of some very different countries. Every country has different dynamics, but across all those countries growth rates are high. There are clear tail winds for used-car purchase.”

Carro and Carsome, both billion-dollar unicorns in their own rights, have been capitalising on Asean’s used-vehicle market, and like CARS24 have been aggressively raising funds for further expansion.

In June, Carro announced Japan’s SoftBank Group had led its US$360 million Series C funding round, which included Indonesia-based fund EV Growth and other investors.

Three months later, Carsome announced the closure of its US$170 million Series D2 round of funding, bringing the company’s valuation to US$1.3 billion and prompting the start-up to proclaim itself Malaysia’s largest technology unicorn.

Also in September, CARS24, which bills itself as India’s largest online portal for used vehicles, with a stable of over 10,000 cars, announced the closing of a US$450 million Series F equity round, which included investors like SoftBank Vision Fund 2 and Chinese tech giant Tencent.

The flurry of interest from investors and start-ups looking to establish themselves in the used-vehicles segment comes amid a global chip shortage that has crimped automakers’ output and made it a challenge to meet consumer demand for new cars.

This, in turn, has promoted a surge in used-car demand, pushing up prices of pre-owned vehicles and delivering a windfall for dealerships specializing in the secondary market.

CARS24 is aiming to ride this wave, but so are its unicorn peers – and Carro and Carsome have a considerable head start in Southeast Asia.

All three platforms count Thailand and Indonesia in particular as key markets.

But Dabas says competition is not necessarily a zero-sum game, highlighting how in Thailand, for instance, 70% or more of used-car transactions take place at physical roadside dealerships, based on CARS24’s observation of the market.

“It’s the market creation role that we have to play. We are not taking share away from existing online players – the real market is offline,” he said.

“So if you ask me where is competition today, I think it is where the transactions are happening, and the transactions are happening all offline.”

Like Carro and Carsome, CARS24 positions itself as a technology-enabled online used car platform to smooth out the buying process for customers.

Dabas said his start-up taps a combination of artificial intelligence, machine learning and analytics to make the purchasing experience more efficient.

“We have a technology which can, through parsing images, figure out what kinds of defects the car has without a person to note them down physically,” he explained.

CARS24 uses its own inspection teams to photograph vehicles, then shows the pictures to software that identifies faults.

By targeting Southeast Asian markets where incumbents Carro and Carsome have already made significant inroads, Dabas acknowledged there is considerable work to do for his start-up to gain a foothold, particularly as it is a relative newcomer to the region.

“The strategy is very simple – it’s to enter every market and first just do research,” he said.

“Research can be in many elements. It can be about how do customers today even buy cars, what are the places they go to, what are their expectations?”

While its competitors have service centres where consumers can browse vehicles in person, CARS24 has eschewed showrooms, opting instead to operate “parking yards” where it keeps vehicles it has bought.

“We want to encourage customers to buy the cars completely online,” Dabas said.

“We even offer a seven-day money-back guarantee so people can buy a car, they can actually use it for seven days, and if they still don’t feel convinced, they can return it.”

CARS24 hopes to set itself apart with customer service.

Dabas said his outfit offers door-to-door options, where prospective buyers can wait in their homes while the company brings a vehicle to them to test drive.

The start-up is not yet profitable, and Dabas declined to give a projection of when CARS24 will turn into a moneymaking enterprise.

“Like most start-ups, at an overall level we are not (profitable) because we are in the growth phase right now,” he said.

“We’re dealing with a commodity, with cars, which require a lot of work that happens under the hood.

“Overall for the industry, I think (these are) very exciting times because a lot of disruption is still to happen, and the next few years will be, at least for customers, it will be a great time to experience this very differently.”