1. Startups

Moladin Layoffs of 360 Employees, Car Marketplace Business Needs Adjustments

Previously, OLX Autos and Carsome had reduced their employees, affecting hundreds of their employees

Startups car marketplace Last week Moladin announced that he had laid off 11% of his total employees. At least 360 employees were affected by layoffs. The company argued that this difficult decision was based on efforts to create a sustainable business in the long term.

Even though the company guarantees that the rights of affected employees will be given according to existing regulations, this decision certainly adds an unfavorable record to the digital startup ecosystem. Moreover, the news had spread that the announcement of the dismissal of employees was carried out in town hall lasts about 5 minutes.

layoff in the segment car marketplace

In segment car marketplace, Carsome has done a similar action before. Q4 2022 and then Carsome is also reported to have carried out operational efficiency by laying off 10% of its total employees. The layoffs were carried out in stages, impacting his business units in Indonesia, Thailand and Malaysia.

January 2023 OLX Autos also cut 300 employees and change their main business model to B2B and C2B. This was done after in mid-2022 they found an increasing trend in the used car sales business which was presented at the GIIAS 2022 show. The increase was up to 8%, with sales transactions of up to 20 thousand units per month with an estimated value of IDR 4 trillion.

Menurut Gaindo, in 2022 retail sales for (new) cars will reach 1.013.582 units. This figure is up 17,4% compared to 2021. Strengthening conditions to recover like the pre-pandemic sales trend.

In 2023, Gakindo has sales target of 975 thousand units. This is not far from the target figure last year, namely 960 thousand units. It seems unambitious, because it tries to be realistic in seeing economic conditions amidst the threat of a recession which will result in a decrease in purchasing power (or at least stagnate).

Businesses that investors are interested in

Most platforms car marketplace currently carries a C2B2C business model. Buy used cars from users, then auction them off to business partners (dealers) or sell them directly through their digital applications. Detailed inspection process and availability inspection center spread across various cities is one of the value propositions offered. The buying and selling process which used to be complicated and took a long time, is now relatively faster and transparent.

The pandemic that made buying and selling of used cars increase made every player car marketplace want to be a winner. One of them is by utilizing investors' money to maximize growth and expansion.

To optimize this momentum, in early 2022 Moladin managed to close a series A funding round, as well as strengthen their new business model. It is known that when launched, Moladin focused on selling motorcycles, the new funding became "fuel" for the company pivot and focus on becoming a marketplace for four-wheeled vehicle products.

Not long ago, it was reported that Moladin also got it $96 million series B funding from DST Global and a number of other investors. This achievement made the company's valuation range increase to $ 700 million.

Moladin Co-Founder & CEO Jovin Hoon once said that the used car market in Indonesia is still very fragmented. There are still many players in the ecosystem, such as agents and dealers, who do not yet have a structured platform and work system. Moladin's aim is to democratize the system. Post-pivot, he said that for 6 months Moladin had experienced explosive business growth, although he was reluctant to give a range of figures.

Carsome is the same, in early 2022 they just announced series E funding worth IDR 4,1 trillion. To increase their business, even one month later they did acquisition of iCarAsia, which is the parent startup Mobil123 and Carmudi Indonesia. Expansion is indeed the company's key to expanding the used car sales ecosystem in its network.

Business car marketplace need adjustment

Strategy growth at all costs began to be revised, along with investors' concerns about their portfolios in order to reach a profit point. On the other hand, the threat of global economic turmoil has also given special attention to the automotive industry.

In the United States, arrears on car payments increased significantly in December 2022. Latest data Cox Automotive, loan arrears for more than the last 2 months in 2022 increased by 5,3%. Compared to 2021, the spike is 26,7% worse. This sets a precedent in itself, as it is at its highest level since the global financial crisis 15 years ago.

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Although we haven't found any similar data for consumers in Indonesia, there are some interesting findings related to consumers here. According to a survey conducted by Astra in 2021, about 71% of respondents admitted to buying a car on credit.

Meanwhile, data from the OJK said the ratio of bad loans at multi-finance companies (companies that handle a lot of credit for buying motor vehicles) was at the level of 2,54%. On the other hand, number of vehicle withdrawals caused by default reached an average of 144 units per month.

These conditions force every business engaged in it to make adjustments, at least until economic conditions are confirmed to return to normal with people's purchasing power getting better. It could be one year or more. The company anticipates by making efficiencies at points that can be relaxed, including perhaps by reducing expansion by focusing on conversion transactions from existing distribution.

Moladin currently they have around 10 thousand agents, with hundreds warehouse spread across dozens of cities in Indonesia.

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