SANTA MONICA, Calif., Oct. 29, 2020 /PRNewswire/ -- Automotive retail innovator (a founder of Fair.com, TrueCar and CarsDirect), Scott Painter, today announced a new venture, NextCar Holding Company (NXCR). NXCR was launched in response to COVID-19 and the heightened relevance and expected demand for a Car-as-a-Service (CaaS) mobility model for consumers.
"Vehicle subscription is an antidote to the affordability concerns and economic uncertainty faced by today's car shopper. It was an attractive value proposition for consumers before the pandemic, as evidenced by over 3.5 million downloads of the Fair app within its first twenty-four months, and it is even more compelling today," said Scott Painter, founder of NXCR.
Vehicle subscription allows consumers to pay a monthly usage fee for a flexible term (eliminating the long-term commitment of a traditional loan or lease). Subscription services bundle insurance, maintenance and other vehicle operating costs into a single, affordable monthly payment.
"Mobility needs haven't changed drastically since the pandemic, what has changed is the immediate need for a fully digital, low commitment and affordable mobility option that can be completed entirely on a mobile device," added Painter. "Vehicle subscription satisfies all of these needs and NextCar is committed to bringing to market a platform for vehicle subscription that enables it to thrive."
According to a recent Mckinsey study, "The New Realities of Premium Mobility1," 20% of the automotive retail market is forecast to be used for car sharing driven primarily by subscriptions and autonomous taxis by 2025. The exploding Battery Electric Vehicle (BEVs) market and transition to autonomous / connected-cars will lead that transformation. When it comes to BEVs, 50% of consumers surveyed preferred a subscription model over traditional vehicle ownership, according to a January 2020 Capgemini report.
In the U.S there are 18 models and 9 brands currently selling BEVs. With steep OEM investments in BEVs and new brand entrants, over 133 models are expected by 2026 according to an IHS Market2 forecast of Electric Vehicle sales. BEV manufacturers, including Fisker and Canoo have already indicated that subscription will be either the only or primary billing model.
According to a Cox Automotive Evolution of Mobility study3 prior to the pandemic, nearly half of consumers felt that owning a vehicle was becoming too expensive. The study noted that as the costs of ownership continue to rise, these pressures are having the biggest impact on Millennials and Gen Z, which will create more opportunity for a shift in preference for mobility alternatives. When you also consider the student debt crisis, and that credit card debt and mortgage debt are on the rise as well, an alternative mobility model that doesn't rely on debt is necessary for consumers.
"Seven million Americans are behind on their car payments, and that's prior to the pandemic," continued Painter. "Subscription takes the burden of debt off the shoulders of people seeking affordable mobility options coupled with flexibility. The market opportunity is clear, it's appealing for consumers, automakers and retailers.
"Vehicle subscriptions are here to stay and I'm committed to building the technology and solutions that can enable scale and profitability."
NextCar is on a mission to create a profitable platform that enables vehicle subscription to thrive as a sustainable business model in automotive retail. NextCar is innovating through technology, operations and infrastructure, and strategic partnerships in order to advance the vehicle subscription model and marketplace.
1 McKinsey Center for Future Mobility: The new realities of premium mobility.
2 IHS Markit forecasts EV sales to reach US market share of 7.6% in 2026
3 Cox Automotive Evolution of Mobility Study: A shift from ownership to access is shaping the future of automotive.