CUSTOMER demand has led Australian subscription service company Carbar to expand its business model by moving into buying and selling vehicles as a full service to clients – a move which takes it back to its business roots.
The company – which has investors including Australia’s biggest insurer IAG and Seven West Media – said it has now become the first car subscription business to diversify into buying and selling to its customer base and that the move could signal similar moves by rival businesses.
Carbar co-founder and CEO Des Hang told GoAutoNews Premium that the vertical integration of the business was not as a result of any changes in the subscription service market.
“Subscription has been profitable for us and the model works well in this market,” he said.
“That’s why there’s quite a few players out there. So, within our business itself, we’re not retreating from subscription. In fact, we are actually positioning as a key differentiator in terms of what we are offering.”
Mr Hang said the goal was to become a destination to sell, subscribe and purchase cars.
“Choice and flexibility has always been a fundamental part of our offering to the market,” he said. “Now we’re underscoring this by highlighting our company’s broader offering; giving our customers substantially more options when dealing with us.”
On the selling side, customers can trade their car into Carbar using a quote tool on the website. Mr Hang said funds from the car sale can be paid as cash or put towards a car subscription, a deposit or the purchase of a new or used car.
On the subscriptions side, customers who don’t want to commit to a car without experiencing it in real life can opt to subscribe online in less than five minutes.
“The subscription offering still covers the cost of maintenance, roadside assist, insurance and registration and subscribers can stop or swap with two weeks’ notice,” Carbar said in its statement.
“Customers can also now shop to buy a new car through carbarConcierge.
“Once a customer confirms the car they’re after, a carbarConcierge will shop a network of over 1300 dealer partners for availability and offers.”
Mr Hang said Carbar started in 2016 as an online car buying and selling business with the focus on customer service. It then moved into offering a subscription service.
“The key motivation of the subscription service was to provide a vehicle for the customer very quickly. We found that having a large purchase decision made completely online was a barrier,” he said.
“Now subscription has become common in the market, we have turned back to our foundation model triggered by requests from customers to buy their cars from us.
“It made sense to be able to buy and sell cars to our own customer base.
“Selling cars from our fleet also keeps the subscription fleet current and provides the widest choice of vehicles being available back to subscribers and people who want to resubscribe.”
Mr Hang said by partnering with dealers, its customers have a broad choice of new and used vehicles.
“For many subscribers, a used vehicle is a better choice. New vehicles have a heavier depreciation and therefore the subscription rates would be more expensive than with a used vehicle.
“It generally comes down to the individual’s budget. A lot of our core customers choose subscription because they want competency in the price that they’re paying.
“So if I’ve allocated $1000 per month for my vehicle and transport needs, that’s all I want to be paying. And with a subscription, I have the confidence that with the right product, I can do that.”
Mr Hang said the IAG and Seven West Media backed business is now one of the few outlets globally to combine all three channels into a single, digital-led platform. The move was precipitated by the relaunch of the company’s website, www.carbar.com.au
“It now means we can answer just about every question that we get asked by our subscribers regarding the purchase and sale of cars,” he said.
“This is just the beginning. We will continue to iterate and evolve with the feedback from our customers, enabling us to better cater to more Australians in helping them find their next car.”