Vehicle ownership is a costly and potentially frustrating investment. Between monthly payments, insurance and the inevitable repairs, it can be difficult to justify the expense. These issues have pushed many consumers toward leasing, but even that comes with a multi-year agreement.
Carma Car offers something different: a monthly vehicle subscription service without a long-term commitment.
What's behind The Vehicle Subscription Model?
“We’re trying to bring flexibility and convenience, [which] has come into mobility on the fractional end of Zipcar and Uber, and really give it to the people who need a full-time vehicle,” said Patrick Min, founder and COO of Carma Car. “We offer a month-to-month subscription payment that is inclusive of all those additive ancillary benefits of car ownership.”
Unlike a traditional rental service, Carma Car does not own a fleet of vehicles. The company has instead chosen to partner with banks and rental car companies.
“When you lease a vehicle today, the bank is really the one that owns the car, whether it’s Toyota Financial or Nissan Motor Credit,” said Min. “When your lease comes back it’s really the bank’s responsibility to take and manage that car and put it out to market. Because leasing has been so prevalent, there’s an overabundance of these lightly used vehicles coming back. If they put all those vehicles back through their standard remarketing channels, it would crush resell values.”
This provided Carma Car with an unique opportunity.
“They’re looking at ways to activate and work with customers in different ways to spread that risk out,” Min added. “They also know that in the future these are likely going to be the large autonomous vehicle fleet operators. They need to understand what that subscription experience needs to be. We can start to build those mechanisms and platforms today that will make even more sense in the future [with AVs].”
Carma Car is currently piloting its service in Chicago and hopes to roll out additional cities in the near future.
“We’re looking at cities that are still car-dependent, so probably not downtown Manhattan or San Francisco,” said Min. “But there are a number of areas that are car-dependent that index highly with the demographics we know gravitate toward a subscription. Even leasing indexes very high with the 25- to 40-year-old demographic.”
Carma Car is not looking to replace the leasing market, however. The company is focused on serving consumers that need access to a car more often than a rental, but less frequently and less stringently than ownership or leasing. Customers can select a different vehicle (currently sedans, but more options may be offered down the line) each month or simply cancel when they’re done.
Insurance and maintenance are included with the monthly fee, which is set at $399 for 500 miles, $449 for 1,000 miles and $499 for 1,250 miles. That might seem high, but it’s far cheaper than what consumers would pay a rental company over a 30-day period.
“It’s a huge market,” said Min. “A trillion dollars a year gets moved in auto sales.”
About the author:
Louis Bedigian is an experienced journalist and contributor to various automotive trade publications. He is a dynamic writer, editor and communications specialist with expertise in the areas of journalism, promotional copy, PR, research and social networking.