THE $10 million vehicle purchasing program by leading automotive subscription provider, Carly, to provide its own fleet of cars to subscribers has been a windfall for the dealers who have handled or will be handling the purchases.
The company is currently in the market for $6 million of the $10 million earmarked to build its own fleet and placed an order before Christmas for $2.8 million worth of vehicles.
Carly has adjusted its business model due to the shortage of vehicles the market experienced in the past two years. With dealers running long waiting lists to deliver orders, the appetite to offer vehicles to Carly for its subscribers waned.
Carly works well for dealers when there is stock on hand that can be put out to subscription.
So when dealers were unable to supply Carly’s customer base with cars, Carly decided it needed to blend into its mix cars that it would purchase for itself and therefore get more control over its business model.
And the beneficiaries of the purchase program have been dealers. The CEO of Carly, Chris Noone, told GoAutoNews Premium: “The $6 million that we’re spending now, all of that money is being spent with dealers. We are buying those cars through the dealer network.
“That means we now have a multi-layered relationship with dealers. It provides a great opportunity for us to also have another conversation with dealers about how they want to enter the subscription market.
“We have always been agnostic as to whether it’s the vehicle that we own or it is a vehicle that is owned by a manufacturer or a dealer. And what we’re finding is that we’re getting a lot more inquiries coming through from dealers post Covid.
“They are starting to say their competition is heating up, supply is increasing, and they are now starting to once again investigate alternative revenue streams, such as subscription.
“But they are also trying to guarantee their used car stock as well because a brand new subscription vehicle that’s put on in January can be an ideal used car in October when it returns from subscription.
“So the smarter dealers are essentially creating their own used car stock so that they can be winning in the used car market, but also hitting their targets in the new car market as well.”
Asked if there was now room for dealers to use subscriptions as a way of moving stock to meet the targets that are going to come at them, Mr Noone said: “We are ramping up our demand; we have increasing demand from our customers. So we can find homes and good revenue for any vehicles that dealers have for us.”
Mr Noone said that Carly was starting to roll out its CarlyNow service that allows vehicle shoppers in the showroom to take delivery of a car as a subscriber rather than through a car loan or lease. The company says the deal can be arranged in just minutes.
CarlyNow by-passes a raft of paperwork. It allows a buyer to drive out in the car of their choice with the flexibility of being a subscriber rather than locked into a longer-term financed contract.
Mr Noone told GoAutoNews Premium: “Normally when we work with dealers they allocate a dedicated subscription fleet to Carly. We put them on our website, we find subscribers for them, we collect the payments and we do all of the marketing.
“What we’ve created with CarlyNow is the opportunity for a dealer to create a subscription on any vehicle that they own,” Mr Noone said.
“Under this new product they don’t have to dedicate a fleet to subscription. Now we can just create the subscription for any car on-the-fly. So the dealer doesn’t have to allocate and set aside vehicles purely for subscription. They just work on an ad hoc basis.
“The web app allows the dealer to subscribe any vehicle in their stock. So it could be a vehicle that arrived that morning.
“The customer has placed an order for the blue car. But the blue car is not going to be available for four months, and the red car is sitting there. Do they want to subscribe to the red car for the next four months and then swap it over when the ideal car arrives and then purchase that car.
Mr Noone said that Carly has “only deployed a few million of the available finance and the biggest chunk of that we’ve got hasn’t yet been deployed. But we’ve now got that available to us.”
Mr Noone said Carly only buys vehicles with five or seven year warranty.
“We are going for brands that we know have a good service and spare parts network. And we’re also going for vehicles that have fairly proven technology as well. So we’re not looking to be fully out there on the edge of every different type of technology.
“We are trying to take a fairly reasonable approach and we want to have a vehicle that works well for our subscribers against the latest versions of those vehicles. Our subscribers are looking for a practical solution, which is: “I need a car to get me around’. We do offer some more advanced vehicles and some luxury vehicles but at the moment we shy away from the European brands and focus more on Japanese, Korean and some of the Chinese brands.
“In terms of the vehicles we have bought, we have never sold a car yet. We will hold them for a number of years. But we haven’t determined exactly when the first sale will be. They’re all in very good condition. None of them have reached the point where we find that we have to sell them.”
Asked if Carly intended to become a used car dealer Mr Noone said: “No. We are 100 per cent focused on subscription. We know there are some other players out there that are moving into that. We want to partner with dealers. We don’t want to be a competitor with them in the used car space. We want to provide them with tools that can grow their own use car business,” he said.
By John Mellor