Chris Noone

CAR subscription service Carly plans to open its business next month to cater for those who don’t want long-term commitments to owning or buying a car.

Carly will work in co-operation with OEMs, selected dealers and fleet leasing companies and is already looking at white-branding the business model to dealer groups.

It is being seen in dealer circles as a potential for retailers to get cars out of the showroom door that are presently not getting finance approval.

Dealers are saying that the reaction of some finance companies to the new ASIC rules and a very conservative response to funding cars ahead of the banking royal commission findings, is leaving thousands of willing buyers without the means to purchase their cars.

The subscription model being promoted by Carly has the potential to open up a new avenue to selling their cars.

Carly is the sister business of rental firm DriveMyCar.

Both are owned by public-listed company Collaborate which will dovetail its relationship with the automotive industry through the supply of fleet vehicles.

DriveMyCar already has supply agreements with businesses including vehicle distributor Inchcape (via Subaru and Peugeot), with commercial vehicle OEM LDV, leasing firms Orix, Interleasing and Custom Fleet, and dealers including Mercedes-Benz Melbourne Airport and Cricks Tweed.

In an interview with Collaborate Ltd’s CEO Chris Noone, GoAutoNews Premium was told that Carly would target a broad customer base for people seeking flexibility and who did not want to be locked into long-term leases or loans.

“We have a strong relationship with OEMs and dealers and leasing companies and that comes from our relationship with DriveMyCar,” he said.

“We don’t own the cars – we connect with the customer. So the dealer, for example, provides new or used vehicles for the Carly customer.

“We are not taking business away from dealers or manufacturers or lease companies but we are actually giving them another source of revenue,” Mr Noone said.

The model works this way: dealers, OEMs and leasing companies identify the new or used cars for the Carly program and these are posted on the Carly website for customers to choose from.

Buyers pay Carly a monthly fee on a month-by-month basis and can end the deal at any time.

The dealer, which receives its share of the fee, owns the car and it is returned to the dealer to be resubscribed or sold.

Carly does the subscription. Carly does not buy or own the car, it is always retained by the dealer, OEM or fleet company.

Mr Noone said Carly is for consumers looking for flexible access to a vehicle.

“It’s like the trend in movies and food delivery – you want the service but in your own time and place,” he said.

“This is being driven by the younger generation. These are the generation that, according to JD Power research, is taking up subscriptions because they want flexibility in their life.

“They are living in an environment where they may have had up to seven different employers through changing jobs, would be at ease changing locations to suit employment needs, and so their lifestyle makes it hard to plan for the future.

“They are therefore less likely to want a loan or a long-term lease, and so subscription suits them perfectly.”

The Carly model, which incidentally can suit older motorists just as easily as younger ones, allows customers a scenario where they can start with a mid-size car, for example, then return it and cease the subscription because they are travelling overseas.

Then they could re-enter the subscription program when they return, maybe choosing a smaller car or a cheaper, used car. They may then need a larger vehicle to carry more people or leisure goods, or start a family and want a people mover.

“All this can be done through our subscription service that is very flexible, doesn’t lock people in if they have to go overseas, for example, and takes care of all the time-consuming aspects of car pick-ups and deliveries, servicing, maintenance and so on,” Mr Noone said.

He said there had been some concerns in the public about the cost of subscription services but said most of that was based on overseas news.

“The overseas subscription programs are mainly provided by luxury car brands,” he said.

“These are very expensive and tailored to a market of people with a lot of money and the desire to change vehicles whenever they want.

“We see it differently. We believe the future for subscription leasing is in affordable vehicles for everyone. If you look at a three-year lease, it means there is a penalty if the customer wants to leave the lease.

“Overall, the subscription service is more flexible and can be more cost effective,” Mr Noone said.

Collaborate’s strategic advisor – former AHG COO Paul Morris – said Carly “is the right product at the right time, providing flexible access to cars for drivers and a new revenue stream for dealers and manufacturers”.

Mr Morris said subscription was an exciting innovation for car dealers, adding an additional revenue stream to the mix that now comprises new and used vehicles, service, parts, F&I and subscription.

Mr Noone said that Collaborate’s Carly would be launched next month with marketing through digital media including Instagram and Facebook.

He said he is already planning for Carly to be able to be white-branded for OEMs and dealer groups, so it becomes part of their business with Carly providing all the administrative services.

“We have experience with dealers through rental fleets and we understand what they need,” Mr Noone said.

Carly will be Australia’s second car subscription service, following the 2018 launch of Carbar that also has a range of new and used vehicles available for subscription lease and charges from $169 through to about $400 a week.

The prices include insurance, registration, roadside assistance and a full maintenance service.

Carbar was originally launched to offer potential car buyers a three-day test period.

OEMs are also considering offering subscription services in Australia. Audi has said it would introduce Audi On Demand in 2020 while Mercedes-Benz has said the concept – which it operates as Collection in some US markets – was being investigated for Australia.

Other OEMs with car subscription services in Europe and/or the US include Volvo’s Car By Volvo, Porsche’s Passport, Cadillac’s Book, BMW’s Access and Ford’s Canvas.

By Neil Dowling and John Mellor