Indonesia is home to an increasingly vibrant used car sector, with the market becoming more efficient and structured. Progress to date is owed to the growing number of flexible financing options, standardized and authorized dealership channels, and more transparent vehicle history. Headway happens when startups disrupt the market. One such local player is Broom.
Broom is a tech platform that is helping the nation’s roughly 50 million used car dealers access short-term loans by putting their car inventories up as collateral. The firm’s tech also helps dealers manage their inventories and go digital on the sell-side. The startup raised a US$3 million pre-seed funding round led by AC Ventures earlier this year.
On a recent episode of the Indo Tekno Podcast hosted by AC Ventures’ special advisor and venture partner Alan Hellawell, Broom founder and CEO Pandu Adi Laras explained how understanding the local car dealer’s personality has been key to the startup’s growth so far.
Who is Indonesia’s used car dealer?
Understanding the persona of the used car dealer is key to unlocking how this particular type of SME operates in the archipelago. For comparison, it’s useful to look at Indonesia’s warungs; small, family-owned businesses that often take the shape of make-shift convenience stands, informal coffee bars, or open-air food stalls.
Pandu explained, “Car dealers in Indonesia are very similar to warungs. The only difference is that warungs sell cigarettes and mineral water while car dealers, of course, sell high-ticket items – used cars.”
The founder went on to mention that when it comes to operations, there’s also not much of a difference between a warung owner and a used auto dealer. They both operate in an extremely informal way. They both are responsible for sourcing their own inventories, selling the stock that they have, replenishing said inventories, rinse, repeat.
But while warung owners typically get to enjoy daily income, a used car dealer in Indonesia must cope with a 15- to 30-day turnover on average. In many cases, this can equate to a shortage of working capital.
Are they ready for a platform like Broom?
Pandu shared that when he started Broom in 2021, he visited a variety of used car dealerships and observed that they rarely had a PC or laptop in their back offices. But if they did have one, it was always the best and newest model.
“This gave me a unique insight that while they do not necessarily incorporate technology in day-to-day business, they are curious and want to stay abreast of the changes going on in the business landscape, with digitization being one of the biggest waves,” he said.
From his groundwork and research, Pandu concluded that while auto dealers in Indonesia might not be super tech-savvy today, they are ready to learn and embrace an online platform if it can help with business growth.
He added, “They would always have the latest smartphones in their hands. They may be only using those devices to chat on WhatsApp and maybe check the news once a day, but they are keen on keeping up with the rest of the world. This was not only a sign but an opportunity to educate the dealers and bring innovation to the used car market space.”
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AC Ventures is a leading venture capital firm investing in early-stage startups focused on Southeast Asia. We are a generational partner to founders driving positive societal change and economic impact in Indonesia and beyond.