Toyota crashes Indonesia's used-car party with US$120 million bet

Business Times

5 days ago

[JAKARTA] It's an alliance everyone saw coming.
After decades of dominating Indonesia's automotive industry, Toyota and Astra are joining forces for the country's used-car market. The Japanese automaker shelled out US$120 million for a 40 per cent stake in Astra Digital Mobil, giving it part ownership of used-car marketplaces OLX and OLXmobbi.
The deal comes as Indonesia's economic struggles hit its new-car sales. It dropped 13.9 per cent in 2024 compared to 2023, according to data from the Indonesian Automotive Industry Association (Gaikindo).
Overall, roughly 800,000 new cars were sold last year – less than half of the 1.8 million used vehicles sold within the same period.
These are the exact areas the likes of Carro, Carsome, and Moladin have spent years and millions of dollars on. They face entrenched incumbents with deeper pockets, broader distribution and longstanding brand trust.
Now the question is this: Can these smaller players survive – and thrive – as the giants move in?
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Astra declined to comment, while Toyota did not respond to Tech in Asia's requests for a comment.
Big brands, bigger footprint
Yannes Martinus Pasaribu, an automotive expert from the Bandung Institute of Technology (ITB), pointed out that used vehicles offer a more flexible, lower-cost path to expansion. But it can also be be more profitable than selling new vehicles: while gross margins for new vehicles generally range from 2 to 5 per cent, it can reach 5 to 15 per cent for used cars.
Toyota has also ventured into the used-car trade overseas, operating an online store for used models in Japan. In the US and Singapore, it has dealerships selling certified used Toyotas.
Astra has done something similar with another brand that it distributes in Indonesia – BMW Astra Used Car, a dealership focused on certified pre-owned BMWs in Jakarta.
The appeal is clear. Consumers, especially those who aren't savvy, can't always assess a car's true condition. Having a vehicle certified and guaranteed by the brand itself can provide peace of mind.
Currently, it's unclear whether Toyota and Astra want to build something similar. But doing so would unlock a massive market.
Luxury brands such as BMW appeal mainly to affluent consumers in major urban areas. Toyota, on the other hand, has had nationwide reach for decades – thanks to cheap, readily available spare parts and deep familiarity among Indonesian mechanics.
Indeed, Toyota was the country's top-selling car brand in 2024. It sold 288,982 units and commanded a 33.4 per cent market share, as per Gaikindo data.
The brand also has an unparalleled offline footprint: It has more than 360 dealers across 143 cities in Indonesia.
ITB's Pasaribu believes it could be key to breaking into the used-car segment, particularly when it comes to building consumer trust. It's understandable as vehicles are big-ticket items, and buyers tend to consider many factors carefully before making a purchase.
'Each stock-keeping unit in the used-car business represents a single unit of inventory, and the transaction is non-repetitive – especially in the retail segment,' one industry expert, who asked not to be named, told Tech in Asia.
Unlike e-commerce platforms such as Shopee, Tokopedia, Grab or Gojek – whose users open the apps multiple times a day – used-car transactions are far less frequent.
'If a customer uses a used-car platform once every three years, that's already good,' the expert added.
Carro and Carsome, for example, began primarily online. But now, they follow an online-to-offline model, operating showrooms and inspection points.
The two companies have seven and nine offline points, respectively.
In contrast, Astra's OLXmobbi already has more than 30 dealerships across 10 major cities in Indonesia. Adding Toyota's offline footprint would make the Toyota-Astra alliance hard to beat.
Scale isn't everything
Still, Toyota-Astra's advantages do not negate Carro's or Carsome's. Indonesia's used-car market is 'too fragmented', the industry expert said.
'The used-car market is so large that even combined, Toyota-Astra, Carsome and Carro probably barely scratch the surface,' they said.
Indeed, independent dealerships and individual sellers also dominate the used-car space. Most transactions still happen offline and informally.
Hence, the country's used-car market is unlikely to become a winner-takes-all arena.
Jongkie Sugiarto, chairman of Gaikindo, explained that while legacy players already have strong distribution networks, they are often limited to the brands they represent.
In contrast, startups are not tied to specific manufacturers, allowing them to buy and sell across a wider range of brands.
Carro and Carsome also certify the cars they sell based on thorough inspections and specific quality standards.
'Carsome's focus has always been on building trust through consistency – whether in how we inspect or refurbish vehicles,' said Aaron Kee, the company's chief business officer.
One of the most important components in used-car transactions is financing. In 2022, around 70 per cent of car purchases in Indonesia were made through credit.
Riyanto, a researcher from the University of Indonesia, believes startups can offer more flexible financing integrations. Traditional players tend to have more rigid and complicated financing schemes.
Most used-car marketplace platforms in the country – including Carro, Carsome and Moladin – have embedded financing features into their platforms.
But so does Astra, which offers car loans through Toyota Astra Finance with its Japanese partner.
BMW Astra Used Car also provides an example of what Toyota-Astra can do: It offers financing at new car interest rates. Typically, these can be as much as 50 per cent lower than interest rates imposed on purchases of used vehicles.
The real battle: profit
While Indonesia's macroeconomic woes have made used cars more attractive than new ones, it doesn't mean used-car sellers are completely unaffected by market lulls.
'Some used-car dealers have observed a slower pace of business in recent months,' Carsome's Kee said.
Following Toyota's investment, some expect OLX to burn cash acquiring vehicles for its inventory. Carro and Carsome, however, may not have the same appetite, with both companies eyeing potential initial public offerings.
Both firms have also turned Ebitda-positive.
Carro reported an earnings before interest, taxes, depreciation and amortisation (Ebitda) of around S$40 million for the financial year ending March 2025, according to The Business Times. The company is aiming for one final funding round this year before pursuing a public listing.
Its rival, Carsome, posted an Ebitda of US$4.3 million for the first quarter of 2025. It achieved full-year profitability with an adjusted Ebitda of US$10.5 million in 2024.
Khailee Ng, managing partner at 500 Global, one of Carsome's investors, believes the entry of large players such as Toyota can help grow the overall customer base, creating even more opportunities for startups.
'Time and time again, we've seen that fast is better than big,' he said. 'Advantages come from resourcefulness, not just resources.'
On the other hand, startups innovate new products more easily. For instance, Carro recently expanded into the business-to-business space by offering new vehicles to private-hire drivers.
The anonymous industry expert argued that smaller players also have advantages in unit economics. Smaller companies, according to the source, can fine-tune their cost structure without resorting to disruptive actions such as mass layoffs.
'The company needs smaller numbers to hit profitability,' they explained.
Ultimately, the competition won't come down to size alone. As funding becomes harder to secure and legacy players step in, startups that focus on efficiency, adapt to market changes and maintain customer trust may still find room to grow. TECH IN ASIA