Owning a car is often seen as a right of passage for some, from child to adult. For others in Malaysia, it offers the convenience of always having a ride and so on.
However, there are the downsides of car ownership – not least the traffic jams, pollution, rising fuel costs and hefty price tag. The question for most is, are there actually any other viable options?
SOCAR believes there is. This car-sharing startup has raised around US$18 million and currently has 2,000 cars in 27 different models in over 1,000 locations in Malaysia. Originally from South Korea, the company expanded to Malaysia in 2018.
We had a chance to speak to CEO Leon Foong about their plans for the Malaysian car market and what we can expect from them. This isn’t Leon’s first entrepreneurial effort, nor his first time in the transport industry. Prior to joining SOCAR, Leon Foong was the General Manager of Uber Malaysia and was responsible for introducing ride-sharing to Malaysia.
Here’s what we had to share.
Congrats on your recent raise. How are you planning to utilise that funding post-COVID-19? Are they still the same as before the pandemic?
First and foremost, thank you. After our announcement in February on raising USD18 million at a valuation of USD118 million from Eugene Private Equity Co. Ltd and KH Energy Co. Ltd, we are still very much heading in the same direction and remain focused and committed to expanding and strengthening SOCAR’s foothold in Malaysia with expansion to more cities, introducing more services and features to meet the demands of our members as well as exploring expansion opportunities beyond Malaysia. Ultimately, our goal has always been to encourage more Malaysians to embrace the concept of car-sharing.
In addressing the impact of the COVID-19 pandemic, we rolled out features and services and announced collaborations that addressed the needs of businesses and consumers, such as our latest offering – the SOCAR Business Mobility plan. It was introduced in the middle of the COVID-19 Movement Control Order (MCO) because we saw the opportunity to empower SMEs and home businesses with transportation solutions, in order to give them better tools for earning an income during the MCO.
Our conviction in shared mobility remains as strong as ever and we are very grateful to Malaysia and the government for supporting the multiflex movement. Our growth timeline may have moved a little but ultimately, our focus at SOCAR still remains the same. In the near future, we have some new and exciting services that will be introduced in the next couple of weeks and we aim to keep this momentum going.
Is the ‘new normal’ changing your business model? What implications do you think it will have on the entire transport industry for at least the next 6-12 months?
Transportation is still a key need for everyone, even in the wake of the pandemic. What has changed are the services or features that customers are looking for. So in this ‘new normal’, businesses need to be flexible and adaptable in tweaking their business model and offerings to capitalise on new customer preferences, in order to not just survive, but also thrive. For SOCAR, we pay close attention to the needs of our members and respond by introducing new services to meet their needs.
Due to COVID-19, we foresee that safety and sanitisation will be a top concern for commuters in the next 6 to 12 months. For those who do not own cars, they may be concerned about being in close proximity with other commuters in crowded public transport on a daily basis and perhaps worry about touching surfaces in crowded public areas, and thus exposing themselves and their family to possible infection. Thus, SOCAR is an option for them to temporarily have a private vehicle for commuting or for longer trips.
At SOCAR, we have rolled out measures to ensure the safety of our customers, including regularly cleaning and sanitising the cars and wiping down frequently touched surfaces such as the steering wheel, window switches, signal stalk, gear shift and door handles. We also offer disinfectant wipes in the cars for users and encourage them to always clean up after themselves by disposing of all rubbish to keep the car clean for the next user. For members who opt for the SOCAR-2-YOU car delivery service, we ensure that our team maintains a safe distance from members, while the keyless car-sharing technology further enables contactless handoff to give SOCAR users extra ease of mind. Our SOCARE team which is reachable 24/7 via our in-app chat function is available to assist members who may have concerns about sanitisation.
With industry organisations estimating that over two million Malaysians may lose their jobs as a result of the pandemic, some Malaysians planning to buy a car may have to shelve their plans due to income uncertainty. Here, the sharing economy is primed to fill the gap, whether by offering access to private cars on a temporary basis, through car-sharing services like SOCAR or a people-to-people (P2P) car sharing marketplace like TREVO that empowers Malaysians to defray the cost of car ownership by earning income as a TREVO Host. Malaysians who own underutilised cars sitting in parking lots and outside homes across the nation, including those who are doing less commuting after opting to work from home in the ‘new normal’, can also take advantage of the P2P car-sharing model to earn extra income to make ends meet during this challenging economic climate.
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Logistics for SMEs has also seen a strong shift to e-commerce and contactless deliveries. In response to the needs of businesses who were suffering due to a surge in third-party delivery costs or lacked the capacity to quickly scale up their delivery services, we launched the SOCAR Business Mobility plan during the height of the MCO. With this plan, we were able to empower SMEs and home businesses with transport solutions designed for their needs, allowing them to carry on with business activities with minimal disruption or loss of income. We have received positive feedback on this plan and are using this as a basis for expanding our service offerings for businesses.
On the whole, while patterns of demand in transportation will change in response to the market landscape, we are positive that the sharing economy will be able to create winners among consumers, business owners and the general public alike. We aspire to not just be a transportation enabler but to also be a driver for economic growth.
The MCO must have been challenging to your business. How did you overcome these challenges that shuttered a lot of businesses in Malaysia?
One thing made very clear during this crisis is the fragile nature of most businesses and the need to have contingencies for unprecedented events. In our current moment of despair, we have seen the COVID-19 pandemic becoming one of the greatest digital disruptors of our generation – forcing businesses to embrace new digital means of conducting business and facilitating transactions. In this sliver of hope in today’s dark times, we must certainly embrace the opportunity to find the elements in our economy and society that are impervious to viruses or economic headwinds alike.
Being in a technology driven industry like SOCAR’s, we are constantly evolving hence the turnaround time for all our efforts and activities needs to be impeccable. It is truly saddening to see businesses that have been around for decades having to cease operations and close down due to this pandemic but this has just proven the importance of flexibility and adaptability when running a business and this is something I have always stressed on not only for myself, but with the team that I have at SOCAR as well.
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Has the switch to increased delivery services helped grow your SOCAR Business vertical?
Most definitely, yes. With the SOCAR Business Mobility plan, we have seen more small business owners and SMEs becoming a part of our user base and we feel that this is a step in the right direction to have more Malaysians obtaining a slice of the sharing economy pie. We want to use our assets and platform to offer new means for Malaysians to generate extra income. With our vehicles, we are reducing the barrier to entry for Malaysians to join the sharing economy. Moving forward, we do have some new and exciting efforts in the pipeline to get more SOCAR users on board – and enjoy the benefits of the sharing economy.
What are your plans for Trevo? What are your plans to grow the P2P car-sharing market in Malaysia?
Having launched not too long ago, we remain confident there are more opportunities for TREVO to expand and continuously grow in the Malaysian market. TREVO is a platform for everyone – not just for people living in cities and urban areas; eventually, we want everyone to be able to use TREVO as a platform to drive their dreams. With TREVO, we are showing our commitment to the multiflex ecosystem by allowing a new segment of users who want to make money from sharing their cars when they are not using them. For Hosts, this refers to their financial goals while for Guests, we believe the experience of driving your dream car or driving a car towards your dream vacation is something that everyone should get the chance to enjoy.
Now that we have moved into the Recovery Movement Control Order (RMCO) phase, we hope to help Malaysians defray their hire-purchase loan payments by being a Host on our platform, especially with industry organisations indicating that up to 2 million Malaysians could potentially become unemployed post-COVID-19.
For those who do not have their own car, they can be a Guest on our platform and book their preferred cars depending on their preference, for a minimum of 24 hours, whenever they need a car. Wider adoption of work-from-home measures has also generated a wider pool of car owners who may wish to share their cars on a flexible basis.
The importance of the gig economy was also recognised when Prime Minister Tan Sri Muhyiddin Yassin announced that the government has allocated RM75 million to promote the gig economy and provide a social safety net for workers in the informal sector, through several initiatives under the Penjana Economic Recovery Plan from August 2020 onwards. Hence, we are optimistic about TREVO’s growth in Malaysia in the months to come.
What are your plans for regional expansion and what is the timeline?
At this point in time, we are very much focusing on the local market to continue growing and strengthening SOCAR’s foothold in Malaysia and to cement our position as the leading car sharing operator. However, a regional expansion for SOCAR is still something that we are very much considering as we see a lot of potential for our multiflex business model in neighbouring markets in Southeast Asia.