Socar "We Will Achieve Operating Profit of 100 Billion KRW by 2025"

Socar is implementing the ‘Socar 2.0’ strategy to secure growth momentum by significantly expanding the LTV (Lifetime Value) of vehicles and customers through focused investment over one year. The goal is to achieve an operating profit of 100 billion KRW by 2025.

On the 14th, Socar announced the ‘Socar 2.0’ strategy during the Q3 2023 earnings conference call. This strategy aims to maximize the LTV of vehicles and users to grow into a mobility platform that achieves 30% annual high growth and dramatically expands profit scale.

Socar plans to flexibly operate short-term car sharing and mid-to-long-term Socar Plan vehicles according to demand. Previously, car sharing vehicles and plan vehicles were operated separately, and vehicles were sold off during the car sharing off-season. Going forward, instead of selling vehicles, they will be operated longer through the mid-to-long-term product, Socar Plan. In fact, the number of operating vehicles in Q3 increased by 3.7% from 20,900 last year to 21,600 this year.

By switching from vehicle sales to plans, utilization rates are expected to increase by 3?5 percentage points, while the average vehicle service life will extend from 36 months to 48 months. According to this strategy, Socar explained that from the second half of next year, the lifetime revenue per vehicle will increase by 11% compared to before, and profits will rise by 1.4 times.

Through marketing investments and partnerships with other platforms, Socar is expanding car sharing demand by more than 20%, while broadening the service lineup linked to car sharing and increasing loyal customers to enhance user LTV. Following the mobility platform strategy launched in Q2 this year, monthly unique visitors (UV) increased by 43%, from 800,000 in January to 1.15 million in October.

Following KTX, accommodation, and shared electric bicycles, Socar plans to expand its service lineup within the platform to include air travel and other services to increase LTV per user. They plan to lock in loyal customers by strengthening Passport membership benefits and expanding the application scope of Socar Pay and credits. With the Q4 Open API strategy, Socar expects to add over 150 billion KRW in transaction volume within three years by linking with Naver, car sharing, and online parking services. This is expected to increase cumulative LTV per user by 3.1 times compared to short-term car sharing.

To implement the 2.0 strategy, Socar reduced used car sales by 82% year-on-year in Q3 while expanding Socar Plan supply. Vehicles deployed for short-term car sharing during the summer peak season were quickly converted to plans, increasing the number of Socar Plan contracts to 2,869 at the end of Q3, a 93% increase year-on-year, and exceeding 4,000 units as of the end of October. Next year, Socar plans to expand Socar Plan to up to 10,000 vehicles.

Socar increased marketing investment by 251% in Q3 compared to last year to proactively secure demand. As aggressive marketing created demand and the mobility platform strategy combining accommodation, KTX, and shared electric bicycles took off, active users of the Socar app increased by 30% year-on-year. Since launching accommodation services in May, the proportion of customers booking both car sharing and accommodation on the Socar platform has grown to as much as 10%.

However, due to increased investment, Q3 revenue decreased by 3.7% year-on-year to 112.7 billion KRW, and operating loss turned to a deficit of 3.5 billion KRW.

By segment, car sharing revenue was 104.2 billion KRW, down 6.9% year-on-year, but excluding the amount from used car sales due to the surge in Socar Plan demand, revenue increased by 6.2% over the year. Platform revenue was 8.5 billion KRW, up 69% year-on-year, driven by synergy effects between Socar and its subsidiaries.

Jaeuk Park, CEO of Socar, said, “We will maximize revenue and profits from our vehicle fleet through outstanding technology and operational efficiency, adding value to customers’ mobility and growing together. We will devote all efforts over the next year to building systems for maximizing sales growth and profitability.”

This content was produced with the assistance of AI translation services.