Cox, Holman team up on subscription sales model

Cox Automotive and Holman Enterprises are teaming up to​ expand a retail vehicle-subscription service dubbed Flexdrive, the companies said today.

The service offers an app that allows consumers to look up and book available vehicles from dealership inventories for weeks at a time with no down payment, mileage limit or long-term contract.

For dealers, it provides an opportunity to get older cars off the lot while also building long-term relationships with customers who might otherwise skip the dealership. The dealership will retain the titles to the vehicles in the program.

Executives behind the partnership point to this model as an option for dealers unsure of how they fit into a future that could rely less and less on personal car ownership.

"Dealerships understand the world is changing," said Jose Puente, president of Flexdrive. "On-demand rides, the emergence of car-sharing — how do you integrate that into the [dealership] operation?"

Cox developed FlexDrive's underlying technology as a pilot project in 2014. It has been piloted at a handful of dealerships, including ones around Cox's headquarters in Atlanta, and evolved into a joint venture with Holman Enterprises in early April. Holman Enterprises owns Holman Automotive Group Inc., of Mt. Laurel, N.J., which ranks No. 16 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 33,733 new vehicles in 2016.

Usage-based models such as Flexdrive are an option for low-commitment consumers."You can see these services taking off when people don't need cars all of the time," said Mike Ramsey, an industry analyst for Gartner. But, he noted, "you may pay a higher price to get that convenience."

For instance, earlier this year Cadillac launched a $1,500-a-month service that gives subscribers on-demand access to the brand's vehicles. A recent review of Flexdrive's offerings in Atlanta show a 2013 Ford Fusion for $219 a week, a 2013 Acura TL for $259 a week and a 2013 Toyota Avalon for $279 a week. The pricing includes insurance and maintenance. Users can swap vehicles at any point.

Flexdrive is also an effort to address an awkward reality in the mobility business: Carmakers looking to get ahead of tech companies have conspicuously sidelined dealers in their initiatives. General Motors' Maven, BMW's ReachNow and Daimler's Car2Go all interact directly with consumers.

"Right now, they are not being asked to come to the table," said Gartner's Ramsey. "Dealers are unsure how these services will play out."

Flexdrive aims to address this by connecting dealerships with overflowing inventory — particularly from off-lease vehicles that may be harder to sell — with individuals locked out of the traditional financing model because of low credit scores or other issues.

"It's dealer-focused in how we scale this out," said David Liniado, vice president of consumer mobility at Cox. Partnering with Holman allows the service to launch throughout the groups' 38 franchise dealerships. Flexdrive will also have access to ARI, a Holman subsidiary specializing in fleet management.

The latter point made Holman an attractive partner in the venture. "When you think about logistics, car dealerships are at their core designed to manage the whole process of a car. Consumers are conditioned to come to a dealership to pick up a car," said Puente.

Holman executives envision Flexdrive growing beyond its own properties. "We see this being a national brand utilizing the footprint of dealerships already out there," said Bill Cariss, president of Holman Strategic Ventures. His goal is to roll out Flexdrive to 500 dealerships across the U.S. starting in the first quarter of next year. The first Holman-owned dealership to launch the service will be Holman Cadillac in Mt. Laurel, N.J.