AUSTRALIAN subscription provider Karmo said its partnership with salary packaging and novated lease company Smart has created “the clever way to car.”

The two businesses have launched a flexible novated subscription – combining the flexibility of subscription with the financial advantages of novated leasing – as an alternative to traditional car ownership such as car loans and outright purchases.

Karmo says the partnership is the latest in its growing subscription business and follows collaborations with companies including JetCharge (for EV charging services), AusEV (for offering subscription services to users of the company’s Ford Lightning EV utes), and Ausloans and Stratton Finance (both for customers who may not be able to secure traditional car loans).

Karmo CEO and co-founder, Nick Boucher, said joining with Smart met a growing consumer desire to simplify the time and money spent accessing a car and the ownership period.

Simplification includes flexibility, such as the fully-managed novated subscription solution offering short-term mobility – of as little as four months – without long-term financial hurdles. 

Karmo CEO, Nick Boucher

“Novated subscription allows users to bundle the financing, insurance, roadside, registration, servicing, maintenance, and registration in one payment that reduces your taxable income,” he said. 

“Our subscription model is validated by over 500 per cent subscriber growth in the past three and a half years. 

“While changing consumer mindset takes effort and time, our strategic partnership with Smart will be instrumental in rapidly accelerating market awareness for both Karmo’s proven value proposition and the transformative potential of our sector as a whole.”

He said that car ownership in Australia was changing and for people who didn’t want to be locked into a five-year loan – whether they’re professionals, families, employers or growing businesses – the partnership provides a smarter, more flexible alternative. Karmo and Smart said the price point rivals total cost of ownership. 

“By combining subscription and novated leasing, we’re offering Australians a seamless, cost-effective and fully managed way to drive the car they want, for as long as they need, without the traditional financial burden or red tape,” he said.

Sid Jha

Smart group executive of novated leasing and electric vehicle services, Sid Jha, said expectations around car ownership were shifting rapidly.

“Australians are looking for smarter, more flexible ways to drive the cars they want, for the time they need, while maximising their salary benefits,” Mr Jha said. 

“By integrating Karmo’s subscription model with Smart’s expertise, we’re offering a fully-managed solution that disrupts the old challenges of car loans and cash purchases.”

Mr Boucher said the partnership will bring more people into using subscriptions as a means of having a car and forecast that it will add at least 1000 people to Karmo’s service within a year.

“Subscription isn’t for everyone. We understand that we’re not targeting 100 per cent of the market, but there are people who regularly change their vehicles who are perfect for subscription, just because of depreciation in the vehicle alone,” he said.

“And then you consider the other people who haven’t been able to meet lending criteria. There are a lot of people who aren’t getting finance, including those new Australians on a 482 visa.

“Now they can get a novated subscription through their employer. So it’s a huge opportunity for more people to be able to access a new vehicle.”Mr Boucher said it also suits people who like change, with the flexibility to change vehicles one of the attractions.

“Most of our clients will have two vehicles within a 12 month period,” he said.

“They might have a Toyota Prado, and then they might take a Mercedes GLC. They like the variation, or they actually just want a different colour – something as simple as that. 

“So we find most people actually call up and say, ‘on the next changeover, can I possibly get just a different vehicle?’ Or ‘I want seven seats, I’ve only got five’.”

It also allows people to experience different types of vehicles, including electric vehicles (EVs).

“One of those great fears at the moment is residual values on EVs,” he said.

“When you think about novated leasing through salary packaging, then you have a residual risk at the end of the term.

“With subscription, there’s no residual risk at all. It’s just one payment. You return the vehicle, and you either take a new one or you get the same model again.”

Karmo has about 12 per cent of its customers in EVs, which dovetails with the company’s relationship with JetCharge and access to JetCharge’s charging stations around Australia.

It also partners with AusEV that engineers the Ford Lightning EV ute to right-hand drive – and to meet Australian Design Rules – for Karmo customers wanting a work vehicle with tax and running-cost benefits.

“We’ve had great take-up from some businesses that are looking to transition to workhorse EVs and look at subscriptions as a great way to get into a Lightning,” he said.

“These include government fleets and larger enterprise businesses as well. Even smaller enterprises have tried.

“With AusEV, it’s a great partnership for us where we’re going to work with the team and get as much exposure to their product as possible. 

“The Lightning is an expensive vehicle for a business to obtain. So if we can make it better from their balance sheet perspective, then it’s a win for the business.”   

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