Car subscriptions: a sustainable model for the SA market?
Co-founder of FlexClub Tinashe Ruzane discusses the offerings, challenges and road ahead for his business.
When was FlexClub established?
In 2019 by Marlon Gallardo, Rudolf Vavruch and myself. The company is an online platform that helps companies offer their fleet to customers looking for month-to-month access to a vehicle through what is called a car subscription.
How many does it employ?
We have a team of more than 50 people spread across six countries, with most of the team based in SA.
What are your current offerings?
FlexClub has developed a technology platform that enables customers to subscribe for vehicles provided by merchants in SA and Mexico. Members can choose from a wide selection of car subscription offers, paying one all-inclusive fee for their preferred vehicle. Whether customers need a vehicle for personal use, business or even to work on apps like Uber, there are several month-to-month subscriptions to choose from.
How have you adapted amid the challenges of Covid-19?
Covid-19 created incredibly difficult market conditions and also accelerated the adoption of e-commerce in all its forms. We can see that with the rise in grocery delivery in SA. Every major grocery retailer increased investment in their online delivery services.
The idea of ordering a car online and having it delivered to your doorstep just days later isn’t so crazy.
More people are falling out of love with the idea of being financially tied down to a car for six years and value flexibility more than ever.
We grew our platform more than 500% in 2021 and serve more than 20 companies offering vehicle subscriptions to their customers.
Challenges facing the car subscription model in SA?
Firstly, increasing awareness of what a car subscription is and how it differs from traditional vehicle finance. One of the key differences is that with subscriptions, motoring costs like insurance and maintenance are not a separate cost you have to worry about. Some customers don’t factor this into their cost comparisons. In addition, subscriptions allow for flexible terms as short as one month. While most customers sign vehicle finance commitments of six years, data shows most new car buyers in SA don’t keep the car for more than three years. This is a legacy of not having other options for customers without a cash lump sum to buy the car. We’re helping more companies offer their customers flexible car subscriptions and improving access to vehicles in the process.
How will you expand the model beyond a niche?
FlexClub is a technology enabler for progressive merchants like Avis and Europcar looking to offer their customers a seamless way to subscribe for a vehicle online. We are also working with more merchants to help them easily offer subscriptions to customers. Recently we worked with Avis Fleet, the leasing arm of Avis, to launch 12-month and 24-month subscriptions that will be even more competitively priced for customers and thus reach a wider market. This is just the beginning of the rise of subscriptions in the physical world and we’re excited to work with companies looking to embrace the future. We firmly believe eventually customers will be able to subscribe for anything. Recent news of Apple’s iPhone subscription launching soon in the US is a clue of the global transformation to come.
Give us a short history of your journey?
After completing business school at the Gordon Institute of Business Science, I worked in management consulting, followed by a job with a company whose primary aim was to help micro-entrepreneurs in Soweto grow their businesses into SMEs. Following that I worked with Uber, leading their vehicle solutions team across Europe, Middle East and Africa. During this time, I realised the subscription revolution was destined to take hold in the automotive industry and I wanted to be a part of it, starting in my home market. I decided to take the leap in 2019 and started FlexClub.
INTERVIEW | Talking car subscriptions with FlexClub co-founder Tinashe Ruzane
Image: Supplied
Car subscriptions: a sustainable model for the SA market?
Co-founder of FlexClub Tinashe Ruzane discusses the offerings, challenges and road ahead for his business.
When was FlexClub established?
In 2019 by Marlon Gallardo, Rudolf Vavruch and myself. The company is an online platform that helps companies offer their fleet to customers looking for month-to-month access to a vehicle through what is called a car subscription.
How many does it employ?
We have a team of more than 50 people spread across six countries, with most of the team based in SA.
What are your current offerings?
FlexClub has developed a technology platform that enables customers to subscribe for vehicles provided by merchants in SA and Mexico. Members can choose from a wide selection of car subscription offers, paying one all-inclusive fee for their preferred vehicle. Whether customers need a vehicle for personal use, business or even to work on apps like Uber, there are several month-to-month subscriptions to choose from.
How have you adapted amid the challenges of Covid-19?
Covid-19 created incredibly difficult market conditions and also accelerated the adoption of e-commerce in all its forms. We can see that with the rise in grocery delivery in SA. Every major grocery retailer increased investment in their online delivery services.
The idea of ordering a car online and having it delivered to your doorstep just days later isn’t so crazy.
More people are falling out of love with the idea of being financially tied down to a car for six years and value flexibility more than ever.
We grew our platform more than 500% in 2021 and serve more than 20 companies offering vehicle subscriptions to their customers.
Challenges facing the car subscription model in SA?
Firstly, increasing awareness of what a car subscription is and how it differs from traditional vehicle finance. One of the key differences is that with subscriptions, motoring costs like insurance and maintenance are not a separate cost you have to worry about. Some customers don’t factor this into their cost comparisons. In addition, subscriptions allow for flexible terms as short as one month. While most customers sign vehicle finance commitments of six years, data shows most new car buyers in SA don’t keep the car for more than three years. This is a legacy of not having other options for customers without a cash lump sum to buy the car. We’re helping more companies offer their customers flexible car subscriptions and improving access to vehicles in the process.
How will you expand the model beyond a niche?
FlexClub is a technology enabler for progressive merchants like Avis and Europcar looking to offer their customers a seamless way to subscribe for a vehicle online. We are also working with more merchants to help them easily offer subscriptions to customers. Recently we worked with Avis Fleet, the leasing arm of Avis, to launch 12-month and 24-month subscriptions that will be even more competitively priced for customers and thus reach a wider market. This is just the beginning of the rise of subscriptions in the physical world and we’re excited to work with companies looking to embrace the future. We firmly believe eventually customers will be able to subscribe for anything. Recent news of Apple’s iPhone subscription launching soon in the US is a clue of the global transformation to come.
Give us a short history of your journey?
After completing business school at the Gordon Institute of Business Science, I worked in management consulting, followed by a job with a company whose primary aim was to help micro-entrepreneurs in Soweto grow their businesses into SMEs. Following that I worked with Uber, leading their vehicle solutions team across Europe, Middle East and Africa. During this time, I realised the subscription revolution was destined to take hold in the automotive industry and I wanted to be a part of it, starting in my home market. I decided to take the leap in 2019 and started FlexClub.
INTERVIEW | We speak to Festival of Motoring show director Judy Maharaj
INTERVIEW | A quick Q&A with Top Gear's Freddie Flintoff
INTERVIEW | Nine questions with Bridgestone SA's Jacques Fourie
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Latest Videos