Jeff Reed has been a customer of Germain Automotive Group for 14 years.
In December, he decided it was time for a new car but wasn't sure what he wanted. So his wife bought him a subscription to Drive Germain.
Since then, he's churned through about a dozen vehicles for what amounts to extended test drives.
"It's the gift that keeps on giving," said Reed, 54, who lives in the Columbus, Ohio, area. "I've had a ball driving all these different vehicles. My wife found the vehicle she's going to purchase. I probably won't buy until after spring."
Germain Automotive, based in Columbus, launched the monthly subscription program Dec. 1. Drive Germain, established as a separate company, buys vehicles from the dealership group, pays Germain to service them and eventually sells them back to the group, which markets them as certified pre-owned.
"We're not doing this to make a ton of money. The margins are terrifyingly thin," said Austin Germain, the CFO — chief "flip" officer, in this case — of Drive Germain. "We're doing this to offer our customers something our competitors don't and to make our retail process better."
Drive Germain operates through a mobile subscription car service developed by Clutch Technologies. Germain Automotive gathers customer information from the app that allows it to better service them, Austin Germain said.
Germain Automotive has 15 dealerships in Michigan, Ohio and Florida, selling about 25,000 new and used vehicles a year.
Drive Germain had just 15 subscribers in the Columbus area as of March, with a goal of at least 100 by year end. When Drive Germain was launched, the app got five to 10 downloads a week. It's now up to 40 or 50, Austin Germain said.
The fleet it uses comprises 25 vehicles from the Volkswagen, Mercedes-Benz, BMW, Ford, Lexus, Jeep and Honda brands that Germain Automotive sells. They are mostly new or late-model used cars with sticker prices of $40,000 to $50,000.
Membership costs $1,000 a month and covers insurance, maintenance, roadside assistance, cleaning of the vehicles and taxes. There is a $500 fee to join and a $1,000 deductible for insurance claims. An "elite" tier costing $1,500, with more expensive vehicles, will be offered in May.
Customers can swap vehicles as often as they want. Some customers drive a car until it's low on gasoline, then order a different car with a full tank.
"This is a time-saving service," Austin Germain said. "The customer does pay for gasoline, but we fill it for them and send them a picture of the receipt. It's automatically charged to their credit card."
Vehicle swaps, which Drive Germain and other Clutch-based programs call "flips," are done at a customer's home or other designated location, but only on weekdays during business hours. On average, subscribers flip one or two times a week, Austin Germain said.
A Drive Germain concierge delivers the new vehicle, transfers the customer's possessions into it, gives a brief tutorial and takes away the other vehicle for refueling and cleaning. It's a painless, one-minute process for the customer, said Jeremy Gillespie, one of Drive Germain's two concierges.
Germain Automotive markets the program to customers in emails and through social media. It has attracted customers ages 20 to 60, including small-business owners, traveling salespeople and stay-at-home moms.
"We believe there should be one Drive Germain vehicle per family," Austin Germain said. "It's $1,000 a month, but the potential savings of not having to have these other vehicles in your garage is there."
As for profits, those will rise as the program gains more customers and can become more efficient, Germain said. For now, vehicles are kept in Drive Germain for about 10,000 miles. But, he added, "we're trying to figure out what makes the most sense for the fleet in terms of selling them back into retail to mitigate the losses when sold as a used car."
He believes subscriptions won't fully replace buying or leasing a vehicle but do support the group's retail business.
Said Reed: "When you start buying a $50,000 to $60,000 vehicle, a two-hour test drive isn't enough."
