Subscribe to Our Newsletter

Success! Now Check Your Email

To complete Subscribe, click the confirmation link in your inbox. If it doesn’t arrive within 3 minutes, check your spam folder.

Ok, Thanks

Socar Pursues 'Socar 2.0' To Boost Lifetime Value

Philip Lee profile image
by Philip Lee
Socar Pursues 'Socar 2.0' To Boost Lifetime Value
Source: Socar

Seoul, South Korea - Socar (KRX: 403550) outlined its "Socar 2.0" strategy in its latest earnings call, focusing on increasing the lifetime value of its vehicles and customers.

Why it matters: 

Since the company's IPO, critics have increasingly questioned the business model's sustainability and its medium- to long-term profitability. 

As the car-sharing business model is similar to the utility and telecom business, the process, procedure, and CapEx investment amount were the key factors to watch in the market. 

The Key Points

  • Socar plans to flexibly use identical vehicles for short-term sharing and longer monthly rentals based on demand. This is expected to increase revenue per vehicle by 11% from 2023.
  • The expected impact of this operational shift includes an increase in vehicle utilization of 3-5 percentage points and an extension of the average vehicle life from 36 to 48 months. Socar expects an 11% increase in lifecycle revenue per vehicle and a 1.4x increase in profit from the second half of next year.
  • Socar's monthly rental program has grown 93% year-to-date, with nearly 4,000 vehicles enrolled. The goal is to increase the program to 10,000 vehicles by 2023.
  • The expected impact of this operational shift includes a 3-5 percentage point increase in vehicle utilization and an extension of the average vehicle life from 36 to 48 months. Socar expects an 11% increase in life cycle revenue per vehicle and a 1.4x increase in profit starting in the second half of next year.
  • Socar reported a 3.7% year-on-year decline in revenue for the third quarter to KRW 127 billion and an operating loss of KRW 3.5 billion. However, compared to the second quarter, there was an 8.5% increase in revenue. These results were partly due to decreased used car sales and increased Socar Plan contracts.

What they said:

CEO Jaeuk Park highlighted

Socar's focus on maximizing sales and profitability by leveraging technology and operational efficiency. 

This shift in strategy demonstrates Socar's commitment to evolving and improving the mobility sector.

What Comes Next:

Socar is expanding its services to include KTX, accommodation, and shared electric bikes.

Monthly active users grew 43% from 800,000 in January to 1.15 million in October. 

Future expansions include air services and enhancements to Passport membership and Socar Pay and Credit features.

By expanding its platform services, Socar aims to increase the lifetime value per user by 3.1x over the next three years.

Philip Lee profile image
by Philip Lee

Subscribe to The Pickool

Success! Now Check Your Email

To complete Subscribe, click the confirmation link in your inbox. If it doesn’t arrive within 3 minutes, check your spam folder.

Ok, Thanks

Read More