Buying or selling a used car can be a fraught process for the consumer. How do you know you're getting a good price? Is the car itself in good shape, or have you bought yourself a lemon that will cause you untold grief?
The folks at Carma Ltd (ASX: CMA), which listed on the ASX this week after raising $100 million, reckon they've got the solution with their online marketplace, which is combined with a behind-the-scenes service that vets and reconditions vehicles.
The company was founded only four years ago and expects to reach $127.6 million in revenue this year, more than doubling its revenue since 2023.
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New approach to sales
So what's so different about the Carma approach compared with, say, selling your car through Carsales.com.au, which is owned by Car Group Ltd (ASX: CAR)?
The company's cofounders, Yosuke Hall and Lachlan MacGregor, say in the prospectus that their vision was to "create a pre-owned car experience that's beautiful from every angle''.
They believe they can do this by removing the key risk in buying a used car, which is reliability.
As they explain:
The quality of Carma cars provides our customers with the peace of mind that they will be able to rely on their vehicle in a way that they haven't been able to before. Due to the fragmentation in the industry, the onus on identifying whether a car is in good condition or a lemon has historically been on the consumer. Carma's 35,000 square metre St Peters Inspection and Reconditioning Centre facility flips this entirely as every vehicle goes through an intensive inspection and reconditioning process that is built on top of lean manufacturing principles.
The company also believes its technology is unique, with an artificial intelligence-driven pricing model able to "accurately and fairly price vehicles of any make and model''.
The company employs more than 185 people and has sold more than 6000 retail cars, and is the exclusive, preferred used car dealership of the NRMA.
As well as selling cars to retail customers, the platform also conducts wholesale auctions.
The company said the $100 million raised would be used to fund growth, including by acquiring vehicle stocks.
Making a loss while in growth mode
Carma's prospectus shows it generated $45.4 million in retail revenue in FY23, and expects to have more than doubled this to $107.6 million this financial year, on the basis of selling 3346 vehicles.
The company's wholesale revenue is much lower, increasing from $2.2 million in FY23 to an expected $17.9 million this year.
Carma's net loss is expected to come in at $42.5 million this year, compared with a loss of $35.9 million in FY25.
Carma does not intend to pay dividends at this time. The prospectus indicated the company would have net cash of $69 million on listing.
