Carma is currently “in talks” with about five manufacturers to form partnerships for its car subscription service, Auto Finance News has learned.
The Detroit-based startup — which is currently involved in Detroit’s Techstars Mobility accelerator program — already works non-exclusively with Ford Motor Co. and American Honda Motor Corp. as they are mentors to the Techstars program at large. The OEMs that the company is in discussion with are from the United States as well as one international one, said Azarias Reda, Carma’s founder and chief executive. Reda declined to offer the names of the OEMs, but said that some of these conversations are facilitated by Techstars, as the accelerator also functions as a network for entrepreneurs.
Carma offers sedans with fewer than 30,000 miles, including Ford Focus, Honda Accord, Chevy Cruze, and similar models, he told AFN. There are three tiers to choose from, starting at $299 per month with access to 500 miles (and 50 cents for every mile after that); $349 per month for 750 miles (and 40 cents for every mile after that); and $399 per month for 1,000 miles (and 30 cents for every miles after that).
“Auto finance, especially on the leasing side, is ready to be disrupted,” Reda said, “but the good thing is that people are recognizing this.”
Leasing is a bad proxy for subscribing, he said, meaning that a lease is like a subscription in many ways but not a very effective one. Because of the current ownership climate in which more people are leasing than buying vehicles — and ownership is likely to continue to decline as autonomous vehicles become commercially available — a car subscription is an ideal middle ground or “sweet spot” between current mobility options, Reda said.
“People are subscribing to a whole bunch of things,” he said. “[For example], people used to own iPhones, but now you can just lease it until the next [version] comes out.”
In addition to its enrollment in Techstars Mobility — and preparing for Demo Day on Oct. 18 where the OEM partnerships will be released — Carma is also looking at expansion one state at a time, Reda said, adding that the company is looking at what markets “make sense” and figuring out which places a car subscription service is desired.
