Used-vehicle subscription service Fair has stopped signing up new subscription and lease customers as the company considers a possible bankruptcy filing and prepares to convert its business into a third-party marketplace.
The Santa Monica, Calif.-based company plans to relaunch as a digital vehicle marketplace in early 2022, with the first quarter as a goal, CEO Brad Stewart told Automotive News. The move comes after Stewart, who joined the company as its chief executive in May 2020, said he evaluated the business and determined its capital-intensive nature, which required Fair to hold vehicles on its balance sheet, made it too challenging to scale.
"We're going to exit that business and focus elsewhere," Stewart said.
Fair stopped originating vehicle subscriptions and leases about four months ago, he said. An estimated 5,000 to 10,000 vehicles remain in its inventory.
Shortly after taking the top job, Stewart told Automotive News that Fair needed to expand into more markets and attract more funding from more diverse sources. Yet he said this week that the company ultimately opted not to raise the additional capital it would have required to scale beyond California and Florida, the only states in which it remained after leaving a number of other markets.
Fair's subscription service operated on a mobile app, through which consumers could drive a vehicle on a subscription basis after paying a start fee, followed by a monthly payment. Roadside assistance, limited warranties and routine maintenance were included.
The company was founded in 2016 by Scott Painter, who left the CEO role in October 2019. The company had raised money, including in a $385 million funding round in 2018 led by SoftBank, but struggled to become profitable.
Bloomberg reported this month that a bankruptcy filing would allow SoftBank to keep control of the company, but it could impact other equity investors.