Having already achieved success with DriveMyCar, a darling of the sharing economy, Collaborate (ASX: CL8) is looking to emulate the success of subscription services like Netflix with their new company called Carly.
Carly is described as an alternative to buying or leasing a car, and instead has its users pay a monthly subscription fee to access a huge fleet of vehicles.
Subscribers will be able to switch cars as they please whenever their needs change once the service launches in March 2019.
Carly will deliver the car to the subscribers' address at the commencement of the subscription and whenever the car is switched.
The service will draw upon a fleet of cars that will be provided by car manufacturers, leasing companies and automotive dealers to the DriveMyCar marketplace.
Collaborate says in its announcement for Carly that the service provides the flexibility younger generations are clamouring for.
"Carly will provide the flexibility that many drivers and especially younger generations are now seeking by removing the long-term financial commitment required to buy or finance a vehicle eliminating the need to lock into long-term debt," says Collaborate.
With overall new-car sales in Australia down 14.9 per cent in December 2018, Collaborate believes a subscription model allowing customers to come in at a low-price-point is the future.
The company is hoping to tap into a $30 billion-dollar new car market with its service, and apparently Carly doesn't require a massive customer base to kick the company into gear.
"Whilst the transition of consumers moving from buying vehicles to utilising vehicle subscription services is expected to take time, an initial small take up of 0.5 per cent per annum would represent approximately $150 million of vehicles per annum in the subscription space and would represent approximately 5000 customers," says Collaborate.
"An increase of 5 per cent per annum would represent approximately $1.5 billion per annum of vehicles and would require less than 50,000 customers."
Collaborate CEO Chris Noone says his company is excited to get in early with vehicle subscription in Australia, building off the success the company has seen with similar offerings overseas.
"We are excited to launch Carly at a time when consumer interest in subscription services is surging and people are re-evaluating the merits of making a long-term vehicle purchase commitment," says Noone.
"Our view of the strong potential of car subscription is supported by the large number of vehicle manufacturers and startups launching services in USA and recent large investment by Softbank in the sector."
Carly will have access to the DriveMyCar marketplace which has secured partnerships with suppliers from Subaru, Peugeot, Interleasing, Orix, and Custom Fleet.
DriveMyCar will continue to operate and focus on vehicle rental options in the private, corporate, rideshare and accident replacement markets.
Business News Australia