Chris Noone, the CEO of subscription service provider, Carly, told GoAutoNews Premium at the recent AADA Convention that having a subscription service as one of the ownership options within the dealership’s sales armoury was giving dealers more flexibility in handling specific buyer issues that threaten to sideline a deal.

Mr Noone said there were frequent occasions in vehicle showrooms where customers who are not able to proceed with buying a car can sign on for a vehicle subscription instead. By signing them up for a subscription the dealer can meet the customer’s needs, prevent them from leaving the showroom disappointed and retain them as a client of the dealership.

Mr Noone said that vehicle subscriptions were becoming increasingly mainstream as the advantages of flexible access to cars became better understood by dealers and consumers.  

He said subscriptions were increasingly finding their way into conversations dealers were having as “they asked themselves what their future looks like, especially with the agency model and EVs coming down the line’’.

Chris Noone

“They’re starting to look towards the future and looking in other areas at how they can grow their businesses. Subscription is one of those. 

“They’re looking at EVs and we give people try-before-you-buy opportunities for EVs. And dealers are also thinking about when supply opens up and they want to get some volume targets. A subscription gives them more opportunity to put more vehicles on the road.

Mr Noone said dealers’ understanding of subscription sales was growing. He said that several years ago, dealers wanted to know what a subscription was. 

“People were asking: What is a car subscription? Now that people have dabbled with it and gained some experience, they’ve got a better understanding of where it fits within the market. 

“There used to be a perception among some people that subscription takes away from selling cars. Well, it doesn’t. It only serves the needs of people who need a shorter-term solution. 

“Our average subscription period is 5.7 months,” Mr Noone said. “So we have very much proven that it’s not a rental proposition and it’s not a purchase or finance proposition. It’s right in the middle.

“There are an increasing number of people who actually want cars for a shorter period of time,” he said. 

“Some are not sure about committing to buying a car because the economy’s looking a bit wobbly at the moment and we are just coming out of COVID-19. 

“They might be getting married or having kids. Do they get the sportscar, do they get the SUV? What do they do? Well, subscription allows them to have exactly the right car that suits their needs right now. When their needs change, they change the car.  

“But if they have actually bought a car and they have to change it in a year, for example, then they have to sell the car with all those changeover costs, the depreciation and all that hassle of finding a buyer. By comparison, subscription is really easy.”

Mr Noone said that with borders opening up again there was definitely an opportunity with visa holders who cannot access finance; “especially in New Zealand, where we are seeing our partner over there, Turners Subscription, doing a lot of business with visa holders coming into New Zealand. 

“And we’re seeing this here as well. We have always had that business; obviously the last couple of years it dwindled, but now it’s picking up a lot.”

Mr Noone said that car subscriptions were fairly common in Europe and other countries and that visa holders were exposed to the concept but in Australia “there is a massive opportunity because most customers still don’t know about it”. 

“The industry here has to do a lot more education to bring customers into the category. But that’s a really great problem to have because it means most customers have not yet engaged with you.”

Mr Noone said that Carly was now in a position to give dealers the opportunity to sign up a subscription customer who is in their dealership right now.

“We give dealers the opportunity to actually set up that subscription agreement on the fly. 

“By giving us the customer details and the vehicle details, we create the subscription agreement, we collect the payments, we do the insurance and the roadside assistance, so the customer can be driving out that day with their subscription car. 

“It allows the dealer to take advantage of a real time opportunity. Even though they weren’t thinking of selling a subscription, if the opportunity falls into their lap they can grab it.” 

Mr Noone said that dealers who are selling cars with very long waiting lists can get their customers into a temporary car immediately by using a subscription. 

“It could be that a customer comes in to order a blue car and that will be there in six months time. But they need a car now. They can subscribe a white one right now. When the blue one comes from the factory, we can swap them out and they drive away in the car they ordered. 

“The same with EVs. The customer comes in not sure about an EV. They are not sure about the range; not sure about how it’s going to charge and all that. So why not subscribe to it for three months, then come back once they are sure of what they want, then they can buy the car? So it’s about getting over that anxiety of the newness of EVs and how they work.”

Mr Noone said that subscription services could also help buyers who could not get over the line for finance. 

“We don’t want bad-credit customers, but there is a band of customers who have just missed out on finance approval and we can put them on ‘training wheels for finance’ with car subscription. 

“So, if we have put the customer in a subscription vehicle, they can make their regular payments and we can provide a statement to a future finance provider. And so here is a record of payment. If there is a problem, and they can’t afford the vehicle, they give 30 days notice.

“With other subscription services with minimum periods of three months, that’s a bit of a problem. A month in and you’re stuck for another two months, then if they can’t pay and it affects their credit rating, then they go downhill even further.

“We want to work with people to help them. We know that subscription makes sense for people at different times in their life. We are not trying to stop people buying or financing vehicles. 

“We are trying to give subscription vehicles to people who say buying or finance is not right for them right now. Visa holders, employees on probation are great examples of that. They want to pay for a car, but they can’t,” Mr Noone said.

By John Mellor and Haitham Razagui