Cox Automotive who publishes Autotrader and Kelley Blue Book, formed a joint venture with Holman Enterprises, an international automotive services company, to launch Flexdrive, a vehicle subscription and services platform that allows car dealerships to offer subscriptions in addition to traditional buying and leasing. Using the Flexdrive mobile app, consumers can subscribe to a car within minutes without having to worry about insurance, vehicle maintenance or roadside assistance. Subscribers can change vehicles at any time, based on availability.
Here's how it works. After paying a non-refundable $150 membership application fee, Flexdrive offers weekly and monthly payment options, and no down payment or credit check. However, Flexdrive does require a credit card, valid driver's license and has very specific eligibility requirements before acceptance. For example, only the approved subscriber can drive the Flexdrive vehicle. Initially, Flexdrive is only available in Atlanta, Austin and Cherry Hill (New Jersey), but Flexdrive will expand into additional markets in 2017.
“Both Holman Enterprises and Cox Automotive share an appreciation for what it means to move forward and create what consumers want today instead of fitting yesterday's solutions into today's demand,” said David Liniado, vice president of consumer mobility at Cox Automotive. “Through this partnership, we are combining the best of both companies to give consumers a new way to satisfy their mobility needs while enabling dealers to get into the mobility market.”
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Brian Bates, president and CEO of Holman Consumer Services, also commented on the partnership.
“The modern marketplace is asking for mobility solutions, not just transportation, and we are enthusiastic about working together with Cox Automotive to meet the modern consumer's needs. At Holman, we have always been committed to providing customers with extraordinary service, and giving our customers the opportunity to ‘flex' in addition to purchasing or leasing is another way we are achieving that goal,” said Bates.
According to Flexdrive's FAQs, the service offers a range of late-model, fuel-efficient vehicles including sedans, hybrids and SUVs. There is no mileage limit for vehicles, but additional fees are charged when a subscriber drives more than 300 miles per week. What isn't clear is how much the vehicle subscription service costs. The company provides ownership and maintenance costs for seven different vehicles, but it does not specify what Flexdrive's cost for the same vehicle would be. Because it is all-inclusive, we presume the cost will be more than a typical car or lease payment would be.
Flexdrive is one of several new vehicle subscriptions, each with its own unique attributes. Last fall, for example, Hyundai announced the launch of the Ioniq electric car subscription, targeting millennials with a trendy new subscription option with 24 and 36 month terms. In January, GM launched Book by Cadillac to offer luxury cars to subscribers for $1,500 a month. Clutch also offers luxury car subscriptions, but it is not operated by the original equipment manufacturer. It offers package pricing as well as a concierge service.
Like so many other industries, the car industry is trying to evolve to keep up with the changing needs of consumers. Some companies are catering to the millennial audience who want mobile, self-service options as well as choice. Others are catering to the luxury car crowd who wants to travel in style and is willing to pay a premium price for the flexibility and convenience of it.
As each new player enters the market, they are trying to figure out what they think will work for their target audience and how they can meet the needs of dealers, manufacturers and consumers in one set of offerings. Much like the streaming music and video industries, we think it will take a few years for vehicle subscription companies to find the right formula for success. Until then, they will test, adapt and test again until they find that sweet spot.