CARSOME Group (CARSOME) and JACCS, a member of Mitsubishi UFJ Financial Group (MUFG), have established a strategic partnership to transform Southeast Asia’s automotive finance market through CARSOME Capital.
JACCS has acquired a 49% stake in Carsome Capital, a move that will combine CARSOME’s automotive ecosystem with JACCS’s financial expertise to provide innovative financial solutions particularly for underserved segments. This article explores the background and prospects of this partnership through interviews with executives from both companies.
Partnership through CARSOME Capital
CARSOME Capital was established in 2018 as the automotive finance service division of CARSOME Group. It provides comprehensive automotive financial services including retail financing for individuals, inventory financing for dealers, and automotive insurance solutions. It allows CARSOME to cover multiple touchpoints in the vehicle ownership journey, including discovery through classifieds listing platform, automotive media, sales, purchasing, maintenance, and financing.
The use of advanced data analytics and machine learning to optimize vehicle pricing, inventory management, and credit assessment is a key feature enabling risk assessment particularly for segments not adequately covered by traditional financial services. CARSOME Capital has executed over RM1 billion (approximately JPY30 billion) in financing for about 45,000 transactions since its establishment.
In 2019, CARSOME connected with JACCS through one of its shareholders, MUFG Innovation Partners (MUIP), and in 2024, CARSOME Capital began exploring possibilities for strategic collaboration with JACCS. Meanwhile, JACCS was considering entering new markets with an eye toward business expansion in Southeast Asia. After researching the economic conditions and market sizes of various Southeast Asian countries, JACCS selected Malaysia because they expected increases in used car sales volume and its target middle-income segment.
However, with numerous companies already established in Malaysia’s finance market, entering the market solo would be difficult. While exploring entry through a joint venture, they were introduced to CARSOME Co-founder and CEO Eric Cheng by MUIP, which led to the beginnings of the partnership with MUFG.
For CARSOME, financial services are essential to their goal of providing a seamless car ownership experience. Finance is a crucial part of the automotive ecosystem because it increases transaction volume by making car purchases more accessible to both dealers and consumers.
CARSOME aims to address various challenges through this partnership. First, they want to solve the problem of limited financing options faced by used car buyers and small-scale dealers by expanding their access to affordable automotive financing.
Next, they aim to expand CARSOME Capital’s lending capacity while avoiding excessive reliance on CARSOME Group’s equity capital to achieve sustainable business growth. They also look to strengthen credit assessment capabilities by leveraging JACCS’s expertise to optimize risk management and reduce non-performing loans (NPLs).
This partnership also holds strategic significance for JACCS. “It facilitated JACCS’s entry into Malaysia, as its fifth market of operations,which signifiedtheirfirst step in establishing a new revenue base to drive future growth.
Potential of the Southeast Asian automotive finance market: the reality of the “underserved segment”
The automotive finance market in Southeast Asia, particularly Malaysia, holds significant growth potential and opportunities for innovation. Many consumers and dealers are underserved by traditional banks. Used car financing in particular is still developing, with banks prioritizing new car loans and relying on conventional credit assessments, thereby excluding many potential buyers.
Both CARSOME and JACCS believe they can gain unique competitive advantages in the market by combining CARSOME’s strong ecosystem and technology with JACCS’s solid financial expertise. In particular, they aim to expand and deepen the market by providing innovative solutions to the underserved segments. In Malaysia, about half of the working population earns less than RM5,000 per month (approximately JPY160,000). This population includes new graduates, gig workers, and blue-collar workers who struggle to secure financing for new cars.
CARSOME Capital provides flexible financing for these consumers, making car ownership more accessible to underserved segments by offering competitively structured payment plans with competitive rates.
Unlike traditional banks, CARSOME Capital also focuses on “value” cars, which often include older models that are restricted in conventional financing. By leveraging robust credit assessment models and proprietary vehicle data, CARSOME Capital maintains a low non-performing loan (NPL) ratio, ensuring sustainable and responsible lending.
AI-Powered credit assessment
CARSOME Capital’s financing is optimized by a unique credit assessment system. The system continuously improves accuracy based on past repayment patterns, utilizing alternative data sources such as CARSOME’s transaction data, vehicle condition reports, and market price trends, to supplement traditional credit indicators.
JACCS implements appropriate risk management and non-performing loan countermeasures by utilizing CARSOME’s rich data bank along with its assessment expertise.
Maximizing benefits for customers
The strategic partnership between CARSOME and JACCS will offer customers a wide range of benefits through new services.
First pertains to expanded automotive finance products. Loans with more competitive rates will be accessible to a broader customer base. This is expected to become even more attractive if JACCS contributes to reduced funding costs.
Second, dealer financing will also be strengthened with higher credit limits and faster loan execution, allowing dealers to expand their inventory.
Next are innovative insurance and warranty solutions. The aim is to make it easy for customers to purchase and own a car by offering automotive insurance and extended warranty plans (EWP) integrated with financing as a package.
By supporting business expansion through stable funding from its capital participation, JACCSwants to build an environment where many customers can utilize loans. JACCSwants to consider the best interest rates and assessment criteria based on Malaysian market conditions and customer attributes through CARSOME’s ecosystem.
For existing CARSOME customers, the greatest benefit of this partnership is gaining a more integrated experience throughout the entire car ownership process. The financing process is enhanced by CARSOME’s unique vehicle data and market insights, leading to more appropriate evaluations and loan terms.
Expanding across Southeast Asia, starting from Malaysia
CARSOME and JACCS envision future growth and expansion in their strategic partnership. Both companies will first focus on strengthening CARSOME Capital’s business foundation in the Malaysian market. They plan to expand business scale with funds secured through JACCS's capital participation and enhance their lineup of loan products to meet diverse customer needs.
After establishing their business foundation in Malaysia, they are also considering expansion to other Southeast Asian countries. "This partnership provides strategic support for regional expansion. JACCS's existing presence in Vietnam, Indonesia, the Philippines, Cambodia and Malaysia provides a solid foundation for CARSOME Capital to expand its financial business throughout the region," CARSOME’s Co-founder and CEO, Eric Cheng shared.
CARSOME’s long-term vision is to become Southeast Asia’s leading automotive finance platform, supporting the region’s growing used car industry with innovative financial products. JACCS plans to develop optimal business models beyond Malaysia while assessing the market characteristics of each country.
According to JACCS, the Southeast Asian market consists of countries with diverse business practices, and it is important to accurately grasp market needs in each country and proceed with localization. JACCS will work with CARSOME to accurately capture needs through market and customer analysis so as to develop optimal financial products.
Opportunities to collaborate with Japanese companies
CARSOME is considering collaboration with Japanese companies other than JACCS. They are exploring engagement with Japanese banks, including MUFG, to strengthen CARSOME Capital’s lending capacity.
Collaboration possibilities include exploration of other business areas within CARSOME’s ecosystem. For example, they could provide integrated financing options to automotive manufacturers, distributors, and parts suppliers in the after-sales field.
CARSOME is also considering expanding vehicle protection plans and developing usage-based insurance tailored to Southeast Asian mobility trends.
Leveraging their relationship with JACCS’s affiliate, MUFG, CARSOME is also exploring access to broader financial services to diversify CARSOME Capital’s funding sources to enable the provision of financing on more competitive terms to ultimately benefit potential users.
This strategic partnership, starting in Malaysia, is expected to open up new opportunities both geographically and through new forms of partnerships. While the nature of such opportunities remain to be explored, what is clear is that this partnership is the first step towards bringing fresh perspectives to the automotive finance market throughout Southeast Asia, providing more consumers with the opportunity to realize their dreams of car ownership.
