Collaborate Corporation’s (ASX: CL8) Carly division has inked an agreement with Hyundai Motor Company to launch an industry first vehicle subscription service.
Carly offers an alternative to saving, leasing or borrowing money to buy a car with a range of new and used vehicles up for subscription. Included in the subscription is insurance, registration and maintenance.
The subscription is paid monthly with no long-term commitments.
Customers can start, pause, and stop their subscriptions as well as switching cars.
Carly receives its revenue when vehicles are subscribed to via the Carly platform.
The company’s recent average revenue per month is $303 per subscribed vehicle. This is based on an average monthly subscription value of $863.
Although, Collaborate can’t determine the value of this latest agreement, the company’s directors anticipate the financial impact is likely to be material.
The initial six-month agreement will enable customers to subscribe via Carly to Hyundai dealer vehicles – making Hyundai the first manufacturer to support a vehicle subscription service across Australia.
The duo will jointly initiate a dealer sign-up and onboarding campaign to engage other Hyundai dealers into the subscription program.
Additionally, Hyundai will fund a digital marketing campaign, which Carly will manage.
The campaign will promote the availability of subscription vehicles from the Hyundai dealers.
Carly will use search, web display, Facebook and Instagram to market the subscriber services.
As part of this, Carly will provide the technology platform to facilitate and manage the subscription relationships between Hyundai dealers and vehicle subscribers.
This enables Carly to run a capital light business model. Meanwhile, Hyundai dealers can earn subscription revenue from vehicles while retaining long-term ownership and eventual resale opportunities.
Collaborate chief executive officer Chris Noone said that with a tough automotive retail market, Carly and Hyundai are using the opportunity to “empower” Hyundai dealers in engaging customers in a fresh way that suits their lifestyle and budget.
“Hyundai is the third largest manufacturer of vehicles supplied to the Australian market and this partnership with Carly will surely advance the development of the car subscription market in Australia.”
Mr Noone pointed out this agreement with Hyundai follows recent deals with Suttons Motors and Turners Automotive Group and further validates the “vital role” Carly plays in the changing automotive sector.
“It provides the potential to monetise a large volume of vehicles from Hyundai’s 172-strong nationwide dealer network with support from the third largest manufacturer.”
Hyundai Australia chief executive officer JW Lee said the partnership will provide consumers with more choice with the future of personal mobility offering alternatives to sole ownership.
Collaborate’s share price shot up in early morning trade to reach $0.018 before settling at $0.013 before midday prior to the company announcing a pause in trade pending another announcement.