The company car market is being targeted by a new medium-term subscription operation as an alternative to traditional leasing.
The concept has been launched by the former UK boss of the PSA Group’s Free2Move leasing arm, Duncan Chumley.
Mycardirect offers subscriptions on a stock of new and used cars of between one and 24 months, with users able to cancel their vehicle at a month’s notice. They would then pay the difference between the monthly cost for how long they have had the vehicle versus the longer contract they signed up for, rather than an early termination penalty that comes with leasing contracts.
“I was looking at the marketplace and what customers want, and my plans were probably accelerated very much over the last six months with Covid because it has changed the way people think and the way they act. Basically, it brought about the birth of Mycardirect,” chief executive Chumley tells Company Car Today.
“This year will have a lasting impact in terms of the way people purchase in every aspect of their life.”
The flexibility of being able to adjust a car fleet on a monthly basis is key to Mycardirect’s offering, with Chumley saying it was an important factor for two of the company’s early customers.
“In both cases they were companies that were seeing their business grow, but didn’t want to go into a four-year lease because they weren’t sure where their business would be in six months, which I think is a situation with a lot of businesses at the moment,” Chumley explains. “They want to grow their business but protect cash flow as well.”
Mycardirect is able to plug into a company’s intranet system, for company car or cash-for-car. “If you put us in the background, we can ensure that the cars your drivers have are all serviced and well-maintained but also fully compliant and your duty of care is correct” continues Chumley. “If they’re using insurance through the platform then we can ensure that cars are always fully insured with the correct business cover.”
He admits that the flexibility does mean monthly rates are higher than on a typical multi-year lease, but points out that the subscription model means there’s no upfront cost when taking the car in the first place.
“When I look at the competitive marketplace I say yes, if you went over a four-year period you will get that car for less money, but you will be locked into that contract for the whole four years, and it depends on what you want to pay up-front as a company,” he says. “I’m not going to claim we’re the cheapest in the marketplace, because we’re not. In the same way that Amazon Prime customers could get items cheaper elsewhere, but you pay for the convenience.
“My thought process was very much around the way subscription is growing in the UK and the number of subscriptions to the likes of Microsoft, Netflix, Sky coming out of people’s bank accounts; there are lots of reports out there that say by 2025 40% of our disposable income will be spent on subscription services,” continues Chumley.
At present the company lists around 60 cars in stock on its website, from Peugeot 208s up to the Tesla Model 3 and Porsche and Range Rover models, 60% of which are new and the rest used. “I’m trying to get the right mix of core fleet cars, and also electric and hybrid. We can try and source any car a customer wants, but the vehicles that are available we can deliver quickly,” says Mycardirect’s chief executive.
“But if a customer wants a particular vehicle then of course I and my team will try and source that vehicle.”
Early customers have been split equally between private and business, with the fleet business revolving around SMEs. “They want the service, the quality, the flexibility that maybe they wouldn’t get from one of the big leasing players – I’m not going up against the big leasing companies, that’s not where I want to be,” Chumley comments.
“This is aimed at the smaller businesses but I see no reason why, if there’s a larger fleet of 100-200 that wants to maybe scale back a little and offer its employees some flexibility, that subscription can’t work for them. It also gives you the ability that if an employee leaves the company or it has to make redundancies, it could just give back the car.”
Mycardirect is also operating a daily rental business with around 400 cars from its sites in Hemel Hempsted and Birmingham, with the goal of adding further sites in Scotland and southern England. The company is also looking to expand into the light commercial vehicle sector into 2021, as well as adding a fleet management product to cover vehicles that aren’t run through Mycardirect.