Holman Enterprises, parent of New Jersey's Holman Automotive Group Inc., is preparing for a future that could rely less and less on personal car ownership by teaming up with Cox Automotive to expand a retail vehicle-subscription service dubbed Flexdrive. Holman wants to take it nationwide.
"Dealerships understand the world is changing," said Jose Puente, president of Flexdrive, a joint venture between Holman and Cox. "On-demand rides, the emergence of car sharing — how do you integrate that into the [dealership] operation?"
Flexdrive's mobile app allows consumers to look up and book available vehicles — generally off-lease ones — from dealership inventories for weeks or months at a time with no down payment, mileage limit or long-term contract. The dealership will retain the titles to the vehicles in the program.
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.
Holman Automotive Group, of Mt. Laurel, N.J., 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.
Cox developed FlexDrive's underlying technology in 2014. It has been piloted at a handful of dealerships in Atlanta and Austin, Texas, and evolved into a joint venture with Holman in early April.
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 showed 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 addresses 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, [dealers] 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 excess used inventory 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," Puente said. "Consumers are conditioned to come to a dealership to pick up a car."