Dealerfloor asked CEO and cofounder Eerik Oja how the process of enlisting as a dealer works.

Planet 42 states on its website that its mission is to “democratise mobility by enabling people unfairly ignored by banks to rent a car and eventually own the vehicle”. The company does this using its own algorithm to assess prospective renters’ credit risk and then renting them second-hand cars bought from a network of over 300 motor dealers, without the need for customers to see the car or for Planet42 to meet the customer.

Are these dealers independents, or franchised dealerships?

Planet42 offers car subscriptions for second-hand cars, so it makes sense that we buy most of our cars from independent dealerships. In fact, Planet42 is the largest buyer of many of the independent dealerships we work with. We recently started signing up OEM dealerships too and bought our first cars from them. We don’t plan to stop there, however: our ultimate goal is to sign up every dealership in South Africa.

What percentage of the 2,000 used cars bought from dealers to date are entry-level cars vs bakkies and SUVs and what are their ages?

Our portfolio of cars is very diverse because we can buy any car that the customer wants, provided that the dealer is happy to take responsibility for the condition of the vehicle. We bought a 2019 Renault Kwid and a 2018 Datsun GO, but there’s also a 1988 Ford Bantam and a 1990 Toyota Corolla. The average car is 12 years old.

“We now take in more than 10,000 applications each month. Simply put: the ability to decide which customer will be a good payer is the core to everything Planet42 does, and we have become very good at it.”

How do the dealers’ contracts work, does Planet42 call dealers, or can or do dealers call Planet42?

We’ve seen immense inbound calls from dealerships contacting us to get signed up, but our sales team has also been reaching out proactively. Dealers can contact Planet42 through a dedicated web form at planet42.com/newdealer

Does Planet42 negotiate a dealer discount on each deal in exchange for taking the risks that make a sale possible?

No, we pay the full retail price to the dealer, much like banks do. The difference is that we serve the customers that banks ignore and we can buy any car, even the ones that banks deem too old.

Are any payments in cash?

Planet42 is a no-cash company, so all payments are routed through banks. We pay out immediately after the dealership signs the contract with the customer on our behalf.

Extending trust and relying on customers’ honesty to keep paying the monthly rental fee have burnt several businesses in SA. How does Planet42 protect itself against bad debtors?

We have amassed the most comprehensive dataset on our target customers, based on this we have built an automated scoring algorithm that is able to instantly assess the creditworthiness of each customer. The algorithm is improved continuously, as we collect more data. We now take in more than 10,000 applications each month. Simply put: the ability to decide which customer will be a good payer is the core to everything Planet42 does, and we have become very good at it.

How has the lockdown impacted on existing clients’ ability to pay?

Many of our customers were heavily impacted by the lockdown. We took a personalised approach to tackle this issue, offering a comprehensive set of payment relief options. This included everything from a simple payment holiday to what we have called “solidarity payments”, where Planet42 paid the customers’ subscription payments for them until they were able to resume working and could start paying for their cars again.

Car subscription has the added benefit of flexibility, after a minimum subscription period of six months, the car can be returned to Planet42 by paying a return fee of one month’s subscription payment. Some customers chose this option back in April and now that they’ve been able to earn a salary again, they are applying for a new Planet42 car subscription.

Planet 42’s founders can compare credit risks of emerging markets around the world, how do SA consumers’ credit-risk profiles rate globally?

Owing to different definitions of what constitutes a “good” and “bad” risk profile, this question doesn’t have one simple answer. Suffice to say though that we believe the risk profile of South African customers is attractive, otherwise we would not have quit our jobs in Europe to move to South Africa to launch Planet42.

Planet42 needs to buy another 98,000 cars to meet its 100,000 target by 2024. That averages to 2,042 cars a month, competing with several other used platforms, foremost of which is WeBuyCars. Does the SA market have enough used vehicles or is Planet 42 experiencing a shortage?

We don’t see WeBuyCars as a competitor; it’s rather one possible source of cars for our customers to choose. Planet42 does not have a stock of vehicles of our own as we rather buy the specific car that a customer has chosen from a dealership that we have partnered with. There are well over 10 million passenger cars in South Africa, our target of 100,000 vehicles makes up less than 1% of the total, so there is ample room for us to grow and put cars in the hands of people who otherwise would not have them.

Used car sales always generate dissatisfied customers, mostly because of vehicles that develop faults after the sale. What percentage of the some 2,000 customers to date were not satisfied, what are the most frequent complaints and how does Planet42 handle complaints?

Breakdowns do happen as we focus on second-hand vehicles. However, much like the banks, we rely on dealerships to know their stock. Our dealerships don’t want to sell faulty cars because they know that they will have to repair or replace them. Planet42 also pays for a motor warranty policy that is chosen by the dealership, providing coverage for the rare cases where the car does break down.

“More than half the adult population is now considered blacklisted by banks and other traditional players. We believe this is unfair and frankly stupid. Something is wrong with the definition of blacklisted, and Planet42 is doing its part to solve the problem.”

Why did the name change from CarGet to Planet42?

We felt that the name “CarGet” had done its job of being a straightforward “launch brand” that is easy to understand for all market participants. However, our ambitions have grown along with our portfolio, and CarGet is a very restrictive name. For example, we may want to start buying motorcycles in the future, and CarGet won’t make sense in that case. We decided to rebrand to Planet42 to reflect our global ambitions.

To protect the local car-building industry, it is against the law to import and sell used vehicles in SA, but not in neighbouring countries. Why does Planet42 not rent out cars to South Africans with the lessor based in a Sadec state that does allow such imports?

The goal of a set-up you described would be to save money on buying vehicles and avoid paying taxes in South Africa. This would directly contradict our core values of integrity and transparency. Planet42 is primarily a South African company. We buy cars from South African dealerships, for South African people. Most of our employees are South African. Even though the founders are originally from Estonia, Planet42 is very much a South African business. We are grateful to the country that has welcomed us and feel privileged that Planet42 can contribute to the South African economy. Scheming to avoid paying taxes would go against everything we stand for.

Demographers say populations will start declining around the world from 2030 for the first time in recorded history, except in most African and Arab states, where birth rates remain high. This population decline is already noticeable in Baltic states. Did this consideration of shrinking markets play a role in the founders’ decision to base their growing business in SA (other than the sun and wine and winding roads)?

The main consideration for launching in South Africa was the gap we saw in the market. There are literally millions of people who earn sufficient income to afford monthly payments for a personal car, yet banks ignore them by branding them as “blacklisted”. More than half the adult population is now considered blacklisted by banks and other traditional players. We believe this is unfair and frankly stupid. Something is wrong with the definition of blacklisted, and Planet42 is doing its part to solve the problem.

And finally, did Douglas Adams’s “Hitchhiker” series have anything to do with naming Planet42?

Yes! I love that Dealerfloor got this reference, not many people do. In “The Hitchhiker's Guide to the Galaxy”, 42 is the Answer to the Ultimate Question of Life, the Universe, and Everything. (Unfortunately, no one knows what the question is.)