Broom on empowering Indonesia’s used car dealers beyond financing
Published on September 25, 2023
Automotive stakeholders in Indonesia will recognize the used car platform Broom as an innovator developing tech to help local car dealers make sales, secure financing, and optimize their operations.
On a recent episode of Indonesia Digital Deconstructed by AC Ventures, Broom Co-founder and CEO Pandu Adi Laras spoke with Leighton Cosseboom about the startup’s business model and how it addresses key challenges in the market.
Broom’s objective is to empower car dealers and help them expand within Indonesia’s fragmented used vehicle market, which primarily consists of individual sellers and small, family-owned operations. The platform helps users connect with potential buyers via a specialized database but it also offers working capital. In cases where a dealer is unable to repay a loan on time, Broom actively seeks buyers for the dealer’s inventory, allowing them to make a sale and settle the outstanding loan.
Pandu made it clear that Broom’s primary focus is assisting in the sale of vehicles rather than acquiring them as collateral, as the company has no intention of building its own inventory. Instead, the startup has developed a range of tools to establish long-lasting partnerships with car dealers. For instance, Broom is actively gathering data to assess the actual market value of vehicles on its platform.
Unlocking real value
Pandu pointed out that the automotive market in Indonesia is well-structured for new cars, encompassing everything from manufacturing to maintenance and insurance. However, this structure falters when cars are sold for the second or third time. This is when both sellers and buyers lose track of the vehicle’s journey and must grapple with limited access to data and information.
Indonesia stands as one of the largest passenger vehicle producers in Asia. But also, in recent years, it has transitioned from being primarily an export-oriented car production center into a significant domestic market. Pandu highlighted that dealers appreciate Broom’s platform because it enables them to view other dealers’ inventories and locate the vehicles and products they require to better do business.
Broom aims to replicate the data infrastructure that currently exists for new cars and create a similar network for used car dealers. He explained that while car manufacturers introduce new models every couple of years, a 15-year-old car can still be a good purchase if there is enough information available about it.
Broom’s ambitious plan comes at an interesting moment for the industry, as Indonesia’s used car market is experiencing double-digit percentage growth driven by favorable economic conditions, digitization across the board, and the increasing availability of financing options. By 2028, the nation’s used car market, currently valued at US$50.8 billion, is projected to exceed US$70.5 billion.
Broom tested, Broom approved
Broom’s business model is tailored to the Indonesian market, where dealers typically have no more than a handful of cars in their inventory at any given time and often face working capital shortages. As such, dealers can have their cars inspected by the company and listed for sale on the platform without incurring any fees; all they need to do is enter the data for their vehicles.
Pandu said that his long-term vision is for Broom to become a reference platform through which buyers can access information about a car’s history prior to purchase and learn about potential problems they may encounter. He said, “For example, I want to buy a car from a friend who claims it has low mileage. It looks and smells good, but I still want to know about any potential hidden issues.”