Georg Bauer has joined Scott Painter’s subscription service founded in October 2020, NextCar, as co-founder, president, and vice chairman of the board of directors. Bauer and Painter founded leasing startup Fair together in 2016. Fair had a $1.2 billion valuation before a its lead investor, SoftBank, began restructuring the company in late 2019.
Bauer is a 40-plus year veteran of the auto finance industry, having served as chief executive of Mercedes Credit Corp. and BMW Global Financial Services. He is also credited with building Tesla Finance’s businesses in Europe and Asia, according to a NextCar release.
“The automotive industry is the last major sector of the economy to digitize its retail experience for the consumer,” said Bauer in a statement. “The ability to secure a vehicle via an app, then simply pay-as-you-go for as long as that vehicle serves your needs is logical given the dynamic lifestyle of today’s consumers, especially taking into account pandemic driven priorities.”
Bauer expects consumer adoption of subscription finance products to gain massive traction in the coming years; he forecasts 20% of all new- and used-vehicle retail sales will come from subscriptions by 2025, likening the budding industry to leasing 40 years ago.
“It’s clear that vehicle subscriptions strongly resonate with today’s modern consumer, but they also benefit car dealers by expanding their market size through velocity,” Bauer said. He plans to leverage his “deep experience and relationships with automakers, their captive finance arms, independent auto lenders, and dealers to create a subscription ecosystem that enables a profitable and scalable business,” the release noted.
NextCar has already garnered interest from auto lenders. Westlake Financial, for one, is providing a $400 million dollar debt facility to NextCar, which should allow NextCar to fund the purchase of 20,000 to 30,000 vehicles taken out on subscription, Painter previously told AFN.
NextCar’s business model differs from the traditional subscription services insofar as the company only purchases the vehicles that are taken out on subscription from its partners, rather than maintaining a pre-set fleet. The company keeps the vehicles out on contract on its balance sheet and sells the asset back on the wholesale market after the contract expires.
Auto Finance Innovation Summit, the premier event for technology in auto finance, returns March 16-17, 2021, as a virtual experience. The virtual experience will offer the quality networking and education of past events, all through an online platform. To learn more about the 2021 event and register, visit www.AutoFinanceInnovation.com.