A NEW online start-up is offering dealers the opportunity for their potential customers to test drive cars from their model line-up for up to a week before deciding whether or not to buy.
The business model revolves around buyers taking the time to experience a car in realistic lifestyle situations, which is in stark contrast to the necessarily brief, round-the-block efforts available at most dealerships.
Melbourne based start-up company, TheCarTest, launched to consumers this week, and offers extended test drives of between 24 hours and one week along similar lines to a standard car rental agreement.
But instead of coming from a car rental company, the demo cars are to be supplied by either car manufacturers or their dealers who will receive 25 per cent of the vehicle rental fees and the contact details of the potential customer.
According to the founder of TheCarTest, Christian Schaefer, the company’s aim is to circumvent and disrupt Carsales pay-per-lead approach with what he describes as a “pay-per-sale” model.
In the event of direct manufacturer involvement, the car hirer’s details are passed to the manufacturer and then onto the relevant dealer as determined by their PMA. With dealer-supplied hire cars the customer contact information goes direct to the dealer.
According to Mr Schaefer the idea is to “leverage the online environment to put highly-qualified leads back into the dealers PMA”.
“Instead of paying $45 or $50 per lead from Carsales, I give 25 per cent of the rental fees back which is on average $250 to $300 per month per car. And I give dealers a minimum of four leads per vehicle. Dealers will be generating income on cars that would otherwise be sitting there waiting for people to walk in,” he said.
The hire vehicles are classified as Low, Mid or High based on the retail price and are rented for $50, $75 or $100 per day respectively. There are, of course, some terms and conditions.
Test drivers must be over 21 and under 75 years of age and hold a current full Australian driver’s licence. Test drives are currently limited to a 150km radius of the company’s Melbourne base, and no more than 150km per day.
Inducements for consumers to take up this service include preferential pricing below recommended retail and a cash-back offer that effectively refunds the car hire fees if a car of the same type as hired is purchased within six months. There will also be a concierge service to deliver cars directly to the hirer’s home or work.
The company has invested in the development of cross- platform apps designed to simplify interaction with their customers. However it is kicking off with a web-based system that allows customers to register interest in various brands and models and, ultimately, book a test drive.
Longer-term plans include the development of a briefing package used to explain the features of a given car via its multimedia entertainment system.
Mr Schaefer also outlined a two-fold approach to attract people to the service.
“The dealer network should be promoting the service as part of their business,” he said. “The second part should be, and we have already committed to this up-front, we spend serious dollars in promoting this service through native integrated placement ad units against new- car listed inventory.”
Online this will mean a “try before you buy” banner next to the send enquiry button.
“TheCarTest indemnifies manufacturers and dealers from any insurance liability, from any loss or damage,” Mr Schaefer said. “Which is a key thing to point out in this model.
Along with making the service potentially more attractive to car suppliers this also opens another revenue stream for the company. Insurance excess reduction products that shrink a hirer’s liability from $1500 to $500 cost $10 per day and, depending on take-up rates, could add a useful amount to the bottom line.
The ambitious venture is not the first automotive start-up Mr Schaefer has overseen. He was co-founder of the so far successful Carhood service that allows people to avoid expensive airport parking fees, and potentially even make money from renting their cars out to fellow travellers while they are away.
Mr Schafer’s goals include having 10 manufacturers and 50 dealers or dealer groups signed up after the first year of operation. He also plans to expand the business incrementally with operations in Sydney scheduled to open next year followed by Brisbane in 2018.
“We would really love to be able to offer this service Australia-wide,” he said.
Mr Schaefer says the concept is under consideration by manufacturers including Ford and Holden, and that it has proven popular with what he described as the “challenger brands” such as Suzuki and Haval. He is also considering expressions of interest from investors as part the company’s capital raising activities.
By Daniel Cotterill