- Traffic challenges in Malaysia mean growth potential for Socar
- Socar aims to have one million Malaysians go carless by 2020
SOUTH Korean car-sharing startup Socar officially launched in Malaysia on Jan 23, its first overseas expansion. The tech startup aims to bridge the gap in the existing multi-flex transport system with its on-demand car-sharing model.
Launched in 2011, Socar today operates about 9,000 cars in 3,200 Socar zones – areas in which Socar cars are available to rent - throughout South Korea, where it has more than 3.4 million users.
The car-sharing platform allows users to book a car through an app and rent it by the hour, day or week. Cars can be picked up from Socar zones, which are high-foot traffic areas such as shopping malls or LRT or MRT stations. All cars use a keyless system that is operated by the Socar app; basically, users unlock the car via the app on their phones.
In Malaysia, Socar is starting with a fleet of 240 vehicles in the Klang Valley. Four types of cars are available for rent at different hourly rates – Perodua Axia from RM8, Honda City from RM9.90, Honda HR-V from RM18.90 and Mini Cooper from RM25.
Socar Malaysia CEO Leon Foong (pic, right) said that the startup is focusing phase one of its launch on densely populated areas rather than ensuring large areas of coverage across the city.
“The key part of the launch strategy is to ensure convenience for anyone who wants a car, so they don’t have to walk more than 400 metres to get one,” he said.
Current Socar zones in Kuala Lumpur include Bangsar, Bangsar South, Mont Kiara and Sri Hartamas, while Cyberjaya in Selangor is also a Socar Zone.
The Malaysian market is already being served by other players such as GoCar and moovby. Socar has at present the biggest car-sharing fleet in the Klang Valley.
“We are studying our data carefully to be ready to grow our fleet to meet the increasing size of the car-sharing pie,” said Foong
He declined to reveal the amount of money Socar has spent on entering Malaysia or the cost of installing the technology into its Malaysian fleet, instead drawing focus on its investment into Malaysia, saying that Socar aims to expand with a customer-first approach.
“Our data driven strategy will then dictate where we roll out and which vehicle types are deployed. We will base our expansion strategy on what the public and customers want and strive towards making multiflex transportation a reality,” said Foong.
Socar Malaysia has plans to grow its fleet to 1,000 cars by the end of the year. Foong revealed that the startup is also looking to expand further into Malaysia by end of 2018.
It is currently studying the markets in the southern state of Johor and the northern state of Penang prior to making a decision about which state to go to.
Good growth potential in Malaysia
Foong, who is also co-founder of Malaysian job platform GoGet.my, said that Socar chose Malaysia for its first foray into Southeast Asia because of the country’s strong growth potential for car-sharing in its densely populated urban centres.
Ninety-three percent of households in the Klang Valley own private vehicles, which, according to Foong, means that 93% of households have people who can drive and are potential Socar users.
“This is asset underutilisation – these cars are not being used 90% of the time as they are parked while the driver is at work or shopping for example. What Socar aims to stop is the underutilisation of cars so that the system can become more productive,” said Foong.
Socar Korea CEO Cho Jeong Yeol revealed that the startup is studying the Indonesian and Vietnamese markets to determine where next to expand.
“We are studying the market, car ownership rates, transportation coverage rates, IT coverage and so on,” she said
“Malaysia is such an important country to us, the first country we decided to expand to after a lot of study. We want to succeed here first before we go into another country,” she continued.
Car-sharing part of multiflex transportation system
Working with the Malaysian government, Socar has been able to place its cars at major public transport hubs in Kuala Lumpur.
The government has been investing heavily in public transportations services as part of achieving a multiflex transportation system where each part complements the other for the greater convenience of the user.
More city dwellers have been using public transportation recently after the opening of new urban rail transit lines.
However Malaysian commuters still face challenges in completing the last leg of their journeys as bus services from stations are often deemed to be unreliable, forcing commuters to seek alternative means of transport, such as ride-sharing.
Foong points out that car-sharing apps such as Socar could be an even more convenient solution to the predicaments commuters face, especially if they need to make multiple stops, travel long distances or travel out of the city.
“As a tech company, Socar can only succeed if we partner with the government. We really hope to continue working with the government in driving innovation,” said Foong.
One of Socar Malaysia’s stated aims is to make it as easy as possible for Malaysians to go carless, not an easy feat in a country where the majority of the population own or plan to own private vehicles.
By 2020, the startup aims to empower one million Malaysians to have the choice to go carless.
Foong said that changing Malaysians’ mindsets about owning private cars and going carless will not be easy but is something that Socar Malaysia wants to do.
“This seems like a big number, but I’ve seen big numbers [in my previous company] and I believe this is achievable. This is just the start of a movement where people can say it's really easy and attractive to go carless.”
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