"This is for people who want to have a car in the driveway all the time, but don't want a long-term car loan," said Jose Puente, founder and CEO of flexdrive.
With the average monthly loan payment on a new car being around $533, and about $400 for used vehicles plus $1200 on average to rent a one-bedroom apartment in most major US cities. It is understandable that consumers today, especially Millennials are looking for cheaper alternatives to owning a car.
Uber has become the giant tech firm that it is today due to the fact that people, in most cases and in urban areas simply cannot afford to own a car anymore. Most automakers are working to meet the needs of younger car buyers who would rather not make a long-term loan commitment but would like the convenience of owning a vehicle.
Most U.S Automakers and now offer car subscriptions models as an alternative to long-term auto loans, which increasingly is becoming unfeasible for most households in which the main breadwinner is under the age of 35.
One startup making headlines in the Vehicle Subscription space is Flexdrive. Founded by Jose Puente, an industry veteran and General Manager at Cox Automotive, the Auto tech firm allows users to obtain a "sort of" lease on a new vehicle without the hassle of owning the car outright.
The company is based in Atlanta, GA, and offers its service mainly via a mobile app. On which consumers can select desired vehicles and execute a majority of the necessary steps needed to take possession of a vehicle.
There is a shared view among industry watchers that the subscription model will eclipse the ownership system at some point in the near future.
"There's a reason consumers are gravitating toward these services — what's out there right now isn't very good," said Gary Hallgren, president of Arity, a technology start-up founded by Allstate.
The team at Flexdrive is determined to get ahead of this trend and to position their firm as the ubiquitous player in this new segment. To date, the company's app has been downloaded by 10,000+ users on the Google Android Play store and a reported 9000 + active users. According to the company 600 and 800 new subscribers sign up each month.
Flexdrive's vehicles are now available in over 17 U.S. cities and the company plans to be national by 2019.
The app allows any user to order a new car in minutes with no credit check or long forms to fill out. A clean driving record with at least three years of driving experience is required to take possession of one of the company's cars.
The user does, however, pay a premium for convenience. The average monthly subscription is, on average about $800, but you can have a Toyota Yaris for around $400, or a Porsche Cayenne for more than $1,500.
In most cases, you have to pay a refundable deposit on the car. All Flexdrive vehicle subscriptions come with a warranty, standard roadside assistance, maintenance, and insurance.
The company also offers its state-of-the-art Vehicle subscription management platform to other auto dealers and startups to manage their own Vehicle subscription business. A move that will probably be, at some point in the future, the largest revenue source for the company, as smaller local dealers who might not be able to afford to build out their own platform will be able to generate recurring revenue from their excess inventory by creating their own subscription model.
Flexdrive has also partnered with Lyft to launch Expressdrive, a service that offers low-cost rental cars to consumers, as long as they agree to give a minimum amount of rides per week via Lyft to other consumers.
The average rental cost for Expressdive is about $200 per week with a minimum of 20 rides every seven days. There are no long-term contracts and users can return their Vehicles at any time.