Car subscription start-up eyes European market after $3.6m funding
Summary
Michael Higgins, managing director of Loopit, said the funding from the oversubscribed round would help the company expand internationally, using its new UK office as a launch pad into Western Europe.Mr Higgins said the business had landed large enterprise customers since launching in the UK, and that the companies likely to win in the subscription car space are the ones that already have the existing vehicles, customers and capital.The ones who already have the structures in place are the ones who can roll it out the fastest, he said.Weve found theyre the ones really taking this up quickly and growing quickly.Other start-ups banking on consumers changing their attitudes towards car ownership include ASX-listed Carly and Carbar, which recently closed a $28.9 million funding round led by its majority owner IAG and new backer Seven West Media.Long delays for consumers who want to buy new cars, the high price of second-hand vehicles and EV-curious consumers have pushed more customers to trial car subscription services, Mr Higgins said.The pandemic overall was very positive for our business. People were very uncertain about what they wanted and what the next few years look like for them. Subscription provides flexibility in a time of uncertainty, he said.The supply chain problems that have delayed the arrival of new cars in Australia have also pushed consumers towards subscriptions while they wait for their vehicle to arrive in the country, Mr Higgins said.The price of second-hand cars surged during the pandemic. The overall increase in used car prices since the start of the pandemic in early 2020 is 79 per cent, according to Datium Insights and Moodys Analytics Used Vehicle Price Index.We also saw people wanting to take advantage of high prices for used cars. They would sell their car at a very high price and move into a subscription, said Mr Higgins.He said there is a clear link between the rise of electric vehicles and the rise of subscriptions, with consumers wanting a trial run before they spend upwards of $50,000 on an EV.The average length of a rental subscription in Australia is six months, Mr Higgins said, and one of their car dealers recently reported that 40 per cent of its subscription customers would later return to buy their own car.