© Can Stock Photo / miss_j
Flexdrive, a platform that enables dealerships to implement a car subscription program, plans to be active in 23 markets by yearend, President Jose Puente told Auto Finance News.
The startup — which operates under 50/50 ownership by Automotive Rentals Inc. and Cox Automotive — will be active at dealerships in San Francisco and Northern California this month. It currently partners with dealers in Atlanta; Austin; Los Angeles; Cherry Hill, N.J.; New York City; and Philadelphia that are turning otherwise idle inventory into a new revenue stream.
“By providing subscriptions, you now provide the consumer access to the vehicle without all the challenges of financing and ownership,” Puente said. “What you’re also doing for your dealership is you’re creating a recurring revenue model.”
Consumers can get behind the wheel for the average price of $750 per month. When given the option of a month-to-month car payment that includes maintenance, insurance, and the ability to swap out cars, 30% of consumers chose the subscription model over traditional modes of lending or leasing, according to the startup’s internal research.
While Puente thinks traditional leasing will continue to grow for new vehicles, subscriptions offer an alternative in the used-vehicle space and allow dealers a foot into the mobility environment.
“There is a big difference between subscription and leasing,” he said. “With leasing, you have to get approved and then you have conditions that are tied to that. [For example,] you have to get your own insurance, and in some cases you have some liability on the maintenance of the car. Subscription is like pay-for-use and it’s all bundled, so I think subscription will grow in parallel to leasing.”
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