A new company that focuses on car subscriptions in South Africa and Mexico claims it has disproved the concept that people aspire to own their own vehicle.
FlexClub CEO and founder Tinashe Ruzane said they have been fortunate to partner in South Africa with vehicle dealership groups like Barloworld and Motus to bring this product and concept to the market and are now delivering almost 100 cars a week across South Africa to its partners.
“I think that points to the fact that we have this strong demand for subscriptions.
“We are certain that a lot more automotive stakeholders will consider it seriously, especially considering some of the macro trends that exist now globally around car subscriptions,” he said during a webinar on the future of automotive retailing hosted by Deloitte.
Ruzane said the uncertainty of the pandemic has created an openness to new ways of consuming cars, adding that FlexClub’s view is that retail encompasses more than just the traditional path that consumers currently follow.
“That is a path that for many consumers is fraught with friction. We focus on car subscriptions, which to our mind is a lot more convenient, it's all inclusive, it's seamless for a customer and allows for that leap towards a digital experience.
“Even in a market like the US, which is arguably and probably the most sophisticated automotive market in the world, only 1% of retail is online. So, there is enough opportunity there and there are businesses there that are focused on driving that evolution and have done incredibly well,” he said.
Ruzane said a car subscription reduces the complexity of the retail transaction apart from other benefits, especially with the uncertainty created by the COVID-19 pandemic.
He said a car subscription involves a customer paying a flexible monthly fee for the use of a car.
Ruzane said consumers did not have to negotiate any insurance on the vehicle or decide on an appropriate service or maintenance plan.
“They can stop it at any time. They can also swap the vehicle at any time or choose to buy the car at any time. We believe that car subscriptions present an opportunity to create an all-inclusive experience that allows us to make this experience as simple as buying a pair of shoes online,” he said.
Ruzane said customers order the car on the website, it is delivered to their home and when they do not want the car anymore “it disappears”.
“If I want to change the car, I do that with a click of a button. There is no need to negotiate what trade-in assistance I will receive or my negative equity with the bank as far as the settlement versus value is concerned. None of that is a consideration for a consumer,” he said.
Ruzane said they are bullish about the role of car subscriptions in the retail environment and believe there will be increasing opportunities to drive strong partnerships across different mobility stakeholders.
“For us as a business, we see a world where we can be helpful to dealers that want to launch subscriptions, banks that want to launch subscriptions and manufacturers that want to launch subscriptions.
“We have proven the case with some of our partners. This is going to be an exciting time to make this shift from maximising unit sales to focusing on maximising the service and the experience the customer has with the vehicles by bringing together the strengths of each of the ecosystem stakeholders,” he said.
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