It has tripled its staff levels and is building its infrastructure of vehicle reconditioning, finance and logistics.

Its model is close to the US Carvana business with the buying process taken from the keyboard through to driveway delivery and almost everything in between done in-house by Carma employees.

Like Carvana, it also faces an environment of burgeoning demand and dwindling vehicle stock along with soaring prices of used cars.

Carma co-founder and CEO Lachlan MacGregor is unfazed. He told GoAutoNews Premium after his latest $75 million off-market capital raising that the funds will be used to grow the used-car inventory and establish reconditioning operations in Melbourne and Brisbane.

“We have big plans in terms of scaling up the vehicle operations, the customer service and also the infrastructure around logistics,” he said.

“We are also growing the vehicle inventory in Sydney and plan for well over a thousand cars. We already have space and capacity for that number.

“And then we’re working on launching next in Melbourne.”

Mr MacGregor said the timing on Melbourne depended on site availability but that it was expected to be “sometime this year.”

Carma founders Yosuke Hall and Lachlan MacGregor

In an industry yet to replicate the busy US online used-car businesses – including Carvana, Carmax, Autotrader, Truecar and Tred – Carma has the Australian market pretty much to itself.

He said the business is not like bricks-and-mortar used-car outlets, such as Eagers Automotive’s easyauto123, with which it can be compared in terms of potential reach.

“Easyauto123 is more like a Carmax-style business with large showrooms and a lot of cars for consumers to walk around and purchase,” he said.

Like Easyauto123, Carma also has a fixed-price model where Carma buyers start off “with what is already a fair price”.

Mr MacGregor defined Carma as a fully online used-car dealership that focuses on the customer experience, citing the buyer reassurance of transparent vehicle details backed by images and videos, door-to-door delivery and a seven-day money-back return promise.

“We have to start off with the highest quality cars, do all the checks and work on those cars,” he said.

“Our reputation with consumers is extremely important. We will live and die by our reputation on the internet. 

“There’s a lot of work to get the quality right for the buyer. So we fix the car before delivery. The consumer won’t see the car they’ve chosen until it turns up in their driveway.

“So it’s much, much more a customer-focused model.”

Carma co-founder and COO, Yosuke Hall, said the business uses technology to make the consumer experience easier and more frictionless than traditional ways to buy a used car.

“It means that they can do everything from their home. They can inspect the vehicle, so obviously we invested heavily in terms of our production facility and the photography that we take,” Mr Hall said.

“On our website, buyers can see interactive 360-degree views of the vehicle, open and close the doors, and jump inside the car. So, without physically being inside the car, you really get a feeling of what that car is like.

“We’re fully transparent with any of the imperfections on the vehicles. Obviously used vehicles do have some wear and tear so we’ll call out anything that’s remaining on the vehicle, and then we’ll deliver it to that customer’s home. 

“Our process saves significant time, effort and cost in terms of travelling to different dealerships or different private sellers, and paying fuel and toll fees for those trips back and forth. And often seeing a car that doesn’t match the description.

“So sometimes if you go through a car that’s listed on a classified site, you might only see three or four pictures of the vehicle. And then you get there and realise it’s quite different from how it was described online. 

“These are all the things that we’re trying to provide value back to the customer. On top of that, we understand that most people aren’t car people at heart. 

“So we want to make sure that we do all the work in-house to deliver a high-quality vehicle that the consumer can then trust us to get the one that they want.”

The issue at the moment is the global demand for used cars and the weak flow of stock. Carma has about 250 cars listed on its site now and said it has more than 500 in stock.

Mr MacGregor said Carma has a buying team to source stock, with the majority coming from private sellers. 

“We also buy from dealers – which are trade-ins that come to dealers on the wholesale side – and also a very small portion from auctions.”

Mr MacGregor said the other focal point of the business was finance.

“We have partnered with three fintech lenders who have a lot of great products in the automotive space and we’re integrating those into the digital experience,” he said.

“It is also a key part of friction for most people buying a car and it is an area, we think, that also will have an excellent customer experience.”

He said that the fintech companies linked to Carma are Allied Credit, Plenti and Wiser.

Mr MacGregor said there was no intention, at least in the medium term, to become a public-listed company.

“We have just raised funds through venture funding and we are happy with using this funding method,” he said.

“A public listing is maybe something we could look at in the future but it’s most likely a number of years away. It’s not the likely path in the short term.

“So we look at more venture funding as a next step. We’re very well funded with $100 million in the bank after four months of existence.”

Asked when the business was expected to become profitable, Mr MacGegor said it would be hard to predict.

“We are working very carefully on how we build this business. We want to build it to be a sustainable business, sustainable in the long run and working towards being efficient on the way through,” he said.

“Because we’re aiming to grow quickly, the growth in technology will obviously require investment along the way. So there are choices we have to consider about when we want to hit profitability.”

Mr MacGregor said Carma now has more than 70 people on staff and additional people as contractors.

“The production centre has mechanics and detailers and people doing refurbishment on the vehicles,” he said.

“Then we have the technology team which allows us to do all the technology in-house. They are software developers, product managers and the like, working on building up our technology for the website and all the back end infrastructure that supports it.”

Mr Hall said his background was in e-commerce and so Carma was building up its e-commerce knowledge and the marketing functions within the business to focus on leveraging digital marketing channels to expand the enterprise. 

“The customer service and customer finance operations teams are growing fairly quickly as well,” he said.

“The number of leads and inbound calls are growing significantly every day. 

“Our process for those customer-service operations are quite different to a traditional dealership. We’re not really using sales tactics to pressure people to buy a vehicle. We genuinely want to support people to find the right car for them.”

Mr MacGregor said the labour market made it difficult to find trades people but Cama was fortunate to be a company that attracted employees.

“We would love to have more apprentices and that, along with implementing training programs, is something that we plan to look at in the future,” he said.

“The people (we have taken on so far) come with real and relevant experience. The head of our production facility has come from Hyundai with 27 years experience. Our workshop manager came from BMW and has 15 years experience and the lead master technician has come from Audi with more than 10 years experience.

“We’re at the point where we can bring in more younger staff to learn on the job with us as well.”

By Neil Dowling