Earlier this week, car subscription startup GO announced that it raised $41 million in seed round funding. The seed round was led by Synterra Capital Management with participation from Hudson Cove Capital Management. The new car subscription service, which launched last week, will use the capital to grow its fleet and expand nationally. The service is currently available in Pennsylvania, Florida, New Jersey and Delaware with new markets “coming soon.”
“We created GO to transform and simplify the experience of getting a car. This partnership with Synterra will accelerate our growth as we expand to meet customer demand in new markets,” said Michael Beauchamp, GO’s founder and CEO, in an October 19, 2021 news release. “Through technology, innovation and efficiency, GO brings customers a seamless experience and lower prices.”
How GO is different
GO describes itself as a simpler, cheaper alternative to traditional car ownership and leases. In many aspects, it also differs from other car subscriptions. It is specifically designed for daily drivers who want the best possible car within their monthly budget and who plan to keep the car for up to three years. Distinguishing features and benefits of the unique car subscription service include:
- Ordering the car online in four minutes or less
- Getting free delivery within 50 miles
- No down payment or cap cost reduction
- Savings are estimated at up to 25%.
- All cars are brand new.
- Factory warranty and maintenance are included.
- Though designed for drivers who want to keep a car longer, cars can be returned sooner than three years with 30 days’ notice and a $450 restocking fee.
- A $1,500 vehicle activation payment applies for each subscription, but it is waived for first-time customers.
- The monthly payment includes tax, insurance and a small service charge. Some taxes and fees will vary by state. Customers will receive an itemized payment breakdown before they commit to the subscription program.
- Subscribers can cancel the subscription within 72 hours to get a full refund, unless their vehicle is scheduled to be delivered in the next 24 hours. They can still cancel, but they will not receive a refund on their first monthly payment.
- At acquisition, subscribers choose from three different mile allocations that best fit their driving habits: 833; 1,000; or 1,250 miles per month. Monthly payments will vary based on the option selected. Subscribers are charged $0.25 per mile for each mile they go over. Unused miles can roll over to the next month.
When the service launched last week, Beauchamp shared how he feels GO is different.
“Let’s face it, the current car shopping experience can be unpleasant, even demoralizing. We set out to change that through innovation and efficiency. By removing the things that add cost with no value, we save customers a significant amount of time and money,” said Beauchamp.
GO vehicles come in a wide range of makes and models and include everything from hybrids and sedans to large and luxury SUVs. Vehicles available in the GO fleet vary by location, and they are not all immediately available. Prospective subscribers can visit the “select a vehicle” page on the GO website and input their zip code to check availability of the subscription program and vehicles in their location.
For example, in Jacksonville, Florida, a subscriber can reserve a 2022 BMW X3 for $519 a month for delivery as early as November 30. A 2022 Nissan Rogue is available for $319 a month (18% savings), a 2022 Toyota Highlander is available for $429 a month (28% savings), and a 2022 Nissan Altima is available for $299 a month (20% savings), all with delivery as early as November 30. Other vehicles like a 2022 BMW 530i ($649 a month), a 2022 Toyota Sienna ($499 a month) and a 2022 Toyota Prius ($379 a month) won’t be available until at least February 15, 2022.
While some car manufacturers have had more success than others with car subscriptions, many have launched, lingered and lapsed. None of them have been wildly successful. They each had limited availability in specific markets and used a slightly different business model. One consistent theme was that all of the car subscription services were priced beyond the reach of the average car consumer and monthly payments were higher than most traditional car financing and leasing models. This business model, however, might actually work.
Though too new to gauge interest in their respective markets, GO’s model is a cross between traditional financing and a lease, at least for first-time subscribers who don’t have to pay the initial $1,500 vehicle activation fee. The idea of not having a down payment is attractive, the makes and models of vehicles are varied because they are working with multiple manufacturers and/or dealers, and monthly payments are reasonable and affordable. The idea of the all-inclusive payment – which other companies have tried – is also attractive. If executed and scaled properly, this car subscription model has the potential for success.