For episode six, we were excited to be joined by Desmond (Des) Hang, CEO and Co-Founder of Carbar. Carbar is an innovative automotive technology provider that offers an alternative to traditional car ownership with its vehicle subscription services.
In this episode of Legally Consumed, Des explains how a focus on consumer mobility shaped their product offering, and how the vehicle subscription model differs from traditional leasing and renting services. With sustainability as a primary driver of consumer decision-making, he details how Carbar is leveraging strategic partnerships to drive a more sustainable subscription service.
Creating the concept
For most people, a car is the second largest purchase that they’ll make and involves many ongoing costs including insurance, maintenance, and depreciation. The capital-intensive nature of owning a vehicle forms a barrier which limits consumers’ financial mobility, especially with rising costs of living. When developing Carbar’s headline product of car subscription, to ensure product market fit, Des and his co-founders focused on addressing these barriers and enhancing the consumer experience. This helped differentiate their offering and gave them a new goal to be the number one company in car subscription.
In the subscription model, rather than paying the entire value of a car upfront or taking out a loan to finance the purchase, consumers pay a fixed weekly amount which will be determined by the capital value of the vehicle. For added convenience, Des explains that this weekly subscription fee includes insurance, registration, servicing and roadside assistance. Rather than going through the whole selling process through a dealer or privately, Carbar’s model allows customers to either swap or stop their subscription with a two-week notice period. By focusing on the customer experience when purchasing, using and selling their vehicles, Carbar was able to deliver a unique and valuable service.
Hiring vs subscription vs leasing
Des explains that car rental offers short-term access to vehicles for a price that generally includes insurance, maintenance and roadside assistance. Typically, car rental companies maintain a very homogenous fleet of vehicles. Carbar’s subscription model provides a middle ground between short and longer-term solutions, as they offer a diverse selection of cars. This variety provides customers more choice in vehicles to match their needs.
When comparing car subscription to leasing, Des explains that a lease is generally a lengthier commitment, often lasting between one to five years. For Carbar, a typical subscription goes for approximately 27 to 30 months. However, during that time frame, customers go through on average 1.5 to 2 different cars across the business’s portfolio. He points out that leasing requires a greater financial commitment from the individual, with full recourse back to the individual in the event of a default or failure to meet the lease obligations. This service also doesn’t include insurance or maintenance. Additionally, if a leaseholder wishes to terminate their lease, they will have to pay additional fees – meaning that it’s a less flexible option than a subscription.
Making subscriptions sustainable
Consumer behaviour in the automotive space is increasingly influenced by sustainability – a trend that has proven to shape the selection criteria when choosing a vehicle. Des observes that subscription numbers for electric vehicles (EVs) at Carbar is increasing, however, consumers still experience anxiety about whether an EV will be suitable for their lifestyle. To help alleviate these concerns and facilitate customers’ transitions towards more sustainable practices, Carbar has formed partnership programs with energy providers AGL and Aurora Energy for the provision of EV subscription services.
Des reveals that these partnerships leverage AGL’s green energy program and Aurora Energy’s fully renewable energy services, which should help increase both the awareness and market penetration of EVs. By offering a more flexible alternative for consumers to try EVs, they have addressed one of the prevailing barriers to the adoption of EVs, which is the upfront purchase price. This is predicted to trigger a rise in consumers choosing to switch to an EV over an ICE (internal combustion engine) vehicle and will help achieve Carbar’s goal of being a leader in sustainable mobility solutions.
Get in touch
To find out more about Desmond Hang and Carbar, tune into our podcast, Legally Consumed, where we delve into everything consumer products related. Keep up to date with new podcast episodes by following us on Apple Podcasts, Google Play, Spotify or wherever you choose to listen in from.