Asoka Veeravagu, chief executive of the Florida- based luxury car subscription platform Revolve, envisions a future with many competitors in the car subscription space, not just one solution that dominates the market, he told Auto Finance News.
“When you look at the size of the industry — in the U.S. new and used annual [financing] of over $1 trillion — and how fragmented the industry is in terms of both brands and dealers, this is not going to be a winner take all type of solution in subscriptions,” Veeravagu said. “There will be many modes from many entities big and small to serve a number of different needs.”
Revolve’s place in this growing alternative to traditional financing and leasing is on high-end luxury vehicles. The company’s pricing starts at $1,900 a month and tops out at $2,600 a month and includes insurance, maintenance, servicing, and concierge delivery costs. That pricing is similar to other luxury OEM subscriptions models such as Porsche Passport and Book by Cadillac. The difference is that Revolve is brand agnostic so subscribers can choose from the newest luxury brands.
“We don’t intend to be the lowest cost in the market,” Veeravagu said. “There are many models out there that are more about the utilitarian side of subscription where it’s car as a mode of transportation to get from point A to point B. We’re about cars as an experience and cars as a lifestyle. We don’t intend to be all things to all people. We’re catering to the car enthusiast and the car lover who can appreciate the premium vehicles developed by all these different brands and with that comes a premium in pricing.”
Subscriptions in the automotive world could take a similar path to other food and clothing brands that have experimented with the model, he offered as a point of comparison.
The average consumer is becoming comfortable with subscriptions through Amazon and Netflix. There are more than 100 million Amazon Prime subscribers and 117 million Netflix subscribers around the world. But, Veeravagu notes that other services have found a niche in luxury categories such as Bag Borrow or Steal and its collection of designer purses and handbags for rent in a subscription model. Or consider Eleven James, which launched in 2014 and accumulated thousands of subscribers until lenders pulled funds earlier this year.
“Across the spectrum of consumer demographics, subscriptions are becoming a bigger part of their lives, where they used to own a good they are subscribing and valuing access over ownership,” he said. “We see that automotive is ripe and makes sense to move into that same model of subscription.”
Revolve is active today in South Florida — Palm Beach, Broward, and Miami-Dade counties specifically — and plans to expand into other states in 2019.
