Lease, own or subscribe? Carma wants to jump-start the car-as-a-service market

The way we move changes quickly. Between travel services, car-on-demand sharing and other methods of having a car only when you need it, having one is becoming less and less convincing. A new company called Carma offers a happy medium for those who want the convenience of owning a car without the hassle, well, of owning a car. Instead, you simply subscribe.

Carma was released publicly today in Startup Battlefield in TechCrunch Disrupt SF 2018. Its system is more flexible than a lease, cheaper than shared car services per hour or per day and oriented to the generation accuracy of the millennium (whatever it is those are) and concessionaires.

It works like this: you choose from a variety of new and new vehicles from the inventory of car dealers in the area. For a set monthly fee, he basically treats it as if it were his car. Insurance is included, just like ordinary maintenance: you are mainly lurking gasoline and some unforeseen expenses.

Continue paying for all the months you want, or just one, and when you do not need the car, more, just give it back to the dealer. Boom, you do not have a car anymore.

It is assumed that there is a considerable population of people trapped between the automotive world and the high-cost, low-commitment sharing, and the high cost and high-engagement world of property. They do not want to have a $ 20,000 asset without doing anything but spending money, but they do not want to pay for the nose every time they want to go more than one or two miles. Where is the option of average cost and average commitment? That's where Carma intends to fit.

"If you are looking for a week or a trip, there are many good options that are for fractional use, per mile or minute, or daily rentals." explained the founder and CEO Azarias Reda in an interview. "This is for someone who needs a car every day."

Young millennials, frivolous and reluctant to compromise are the main demographic groups, he said: "Millennials are the biggest consumers of leases, they are already promoting this notion of & # 39; I want to access this vehicle but I do not necessarily have it & # 39; Subscriptions combine those wishes. "

Ultimately, the cost is more per month than a lease or property, but if what the driver values ​​is flexibility, there is no comparison.

More importantly, it is an excellent option for dealers. These places have all kinds of inventory available that could be deployed in the way that seems most appropriate: a couple for prolonged driving tests of new models, some older paying in their own way despite being the last four of last year's lot , a different way to obtain economic benefits of many used vehicles, and so on.

It's not the only one: Fair and FlexDrive are startups with similar aspirations and are already in the market. And some automakers offer specific subscriptions, albeit often aimed at luxury, in the medium term. Carma, however, is taking a slightly different course. While those services are direct to consumers, Carma aims to be a white label backend for similar services marked and operated by local concessionaires and financial teams.

Carma tested the consumer model but discovered that there was friction in usurping the place of primacy for drivers of the dealers themselves. After all, your local Subaru dealer does not just want to be full of cars: he wants to be a well-known local presence and a reliable maintenance partner for his customers.

So, the agreement would be for Carma to provide all the infrastructure in terms of insurance management, fleet tracking, user agreements and billing, but everything is carried out through a specific application for a dealer or group from them. It allows the direct connection between the driver and the dealer to remain in place while offering the benefits of subscription to both parties. The licensees would pay a monthly license fee based on the size of the fleet.

The organizations that administer the leases could also be the client, offering the possibility of subscription to the distributors with whom they work. This is the case of one of Carma's first deployments in Canada, where a leasing team with more than one billion dollars (Canadian, of course) in lease origins has launched its own brand subscription service, AutoONE.

Allowing dealers to maintain their pride can be a great advantage over national or international brand services that treat them as inventory management modules. And the mobility market is big enough, of course, that several services should be able to compete with each other with variations in offers and inventory.

After all, why pay for a service with incorporated insurance if your work pays for that? Alternatively, why have yours if you can get it month after month for a few dollars more? Do you want to change your car every month? Do you want to pay less to be limited to the three-year models and back? These variations will certainly come into play.

Reda comes from a computer and fleet management experience at the University of Michigan, where, of course, you can find some of the brightest minds in automotive technology. The company is a student of Techstars and is supported by them, Fontinalis, Kybba, Right Side Capital and IDV, terms not disclosed at the moment.

The space of mobility is evolving rapidly, and it is companies like these that maintain evolution.