Chris Noone

CAR subscription company Carly has opened in Sydney as a precursor to expanding around Australia.

The company is offering customers a flexible monthly vehicle use service and a sixth revenue-generating stream for dealers.

Carly, part of listed Australian company Collaborate and a sister business to DriveMyCar, is touted as Australia’s first flexible car subscription service that has beaten subscriber services by OEMs – including Mercedes-Benz, Volvo and Audi – to the market.

Collaborate CEO Chris Noone said that with Carly going live in the past two weeks, the focus was on the consumer side to expand the business before going back to dealers and OEMs.

“Everyone has now seen that there is an opportunity for subscription in the market,” Mr Noone told GoAutoNews Premium.

“We feel it is important to grow the business by learning from the customers and providers and we can move quickly to maximise the service.”

He said car subscription was “certainly one of the solutions” to giving customers choice while supporting the car industry.

“Car subscription is a viable alternative to saving for a deposit or taking on a loan or a lease as it provides the customer optimum choice and flexibility, without the downside of long-term financial commitment,” he said.

Mr Noone said subscription was for “a certain segment of the population”.

“If someone needs a car for four years and they don’t expect their job or lifestyle or family size to change, then it may be better for these people to save or take a lease to get a car,” he said.

“For everyone else, who can’t predict exactly what’s happening in the next four years of their lives, we think subscription is a viable alternative.

“Yes, it may be a bit more expensive on a monthly basis to take a subscription, but what is the cost of taking on a three-year lease? And what happens if you have to change your car after a year and that first car wasn’t suitable?

“Or you wanted to go overseas or you have a convertible and suddenly find out you’re going to have twins? Subscription allows flexibility.”

In an interview with GoAuto in January ahead of Carly’s launch, Mr Noone explained that Carly does not own the cars but instead “connects with the customer”.

“So the dealer, for example, provides new or used vehicles for the Carly customer,” he said.

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

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

Carly opened last week in Sydney with more than 130 vehicles and 30 different models from 13 brands with prices starting at $119 a week.

Car subscription is a viable alternative to saving for a deposit or taking on a loan or a lease as it provides the customer optimum choice and flexibility, without the downside of long-term financial commitment

The monthly subscription fee includes insurance, registration, maintenance and roadside assistance.

Customers can start, pause and restart their subscription and, as Mr Noone pointed out, switch cars as their needs change. This might include moving from a sedan to a 4WD or a people-mover to cater for short-term changes in circumstances such as holidays, travelling with visitors or needing a small city car.

The company delivers cars to the customer’s location at the start of the program or when vehicles are being switched.

Collaborate’s strategic advisor Paul Morris, who is a former chief operating officer of Automotive Holdings Group, said the program was also exciting for dealers as it added a sixth revenue stream.

Dealers typically have new vehicle sales, used vehicle sales, service, parts and F&I as the five streams.

“The announcement of Carly provides an effective car subscription solution for the automotive industry to help dealerships and manufacturers adapt to consumer behaviours shifting away from car ownership,” Mr Morris said.

He said that restricted credit availability caused by changes to the F&I regulations for dealers and the implications of the banking royal commission meant many people are unable to gain vehicle finance.

He said that the launch of Carly is ideally timed to meet the needs of people who are not being satisfied by traditional finance products.

Carly will use vehicles provided by OEMs, importers and distributors, leasing companies and dealers to Collaborate’s DriveMyCar business.

DriveMyCar has previously announced supply agreements with Subaru, Peugeot, Interleasing, Orix, Custom Fleet and dealers including LSH (Mercedes-Benz) and Cricks Tweed.

Mr Morris said Carly is working with car manufacturers, dealership groups and financiers to further refine the program.

Collaborate said in a statement that the potential market size for the Carly subscription offering is “exceptionally large”.

“Over 870,000 new passenger and SUV vehicles were sold in 2018 and were worth approximately $30 billion,” the company said.

“Additionally, there is also substantial market size potential in the used-car market.

“Whilst the transition of consumers from buying vehicles to utilising vehicle subscription services is expected to take time, an initial small take-up of 0.5 per cent a year would represent approximately $150 million of vehicles annually in the subscription space and would represent approximately 5000 customers.

“An increase to five per cent a year would represent approximately $1.5 billion annually of vehicles and would require less than 50,000 customers.”

Collaborate Corporation Limited is a publicly listed company focused on ‘collaborative consumption’, ‘peer-to-peer’ or ‘sharing economy’ business models with a strong focus on mobility solutions.

Its core business is peer-to-peer car rental business www.DriveMyCar.com.au which is now complemented by www.Carly.co. Other businesses include www.MyCaravan.com.au – a peer-to-peer caravan rental business – and www.Mobilise.com, a rental marketplace for underutilised assets.

By Neil Dowling