FlexClub allows customers to always drive a new vehicle
The age of disruptive businesses has arrived on the steps of SA’s vehicle purchasing traditions in the form of the FlexClub. It’s a car subscription service for customers who don’t want to be locked into traditional vehicle finance options, according to Tinashe Ruzane, CEO and co-founder of FlexClubm).
It’s a similar concept to leasing but with more flexibility. Where regular leasing locks you into a car for an agreed period, usually a year minimally, the FlexClub allows for a month-to-month change of cars if necessary to suit your needs.
FlexClub members in Cape Town and Johannesburg can compare various car subscription offers at a fixed all-inclusive monthly fee and have their chosen vehicle at their door in a few clicks.
Car clubs have been offering this flexibility for many years, but usually with premium cars and exotics.
“We are bringing it to the mainstream where if a family wants to purchase a new vehicle, but cannot decide between an MPV or SUV, they are able to subscribe to a VW Kombi or Hyundai H1 for a month before trialling a Toyota Fortuner or VW Tiguan the following month to help make up their minds,” explains Ruzane.
He says it’s for members who want the flexibility to swap the car, buy the car or stop their subscription as it suits them, without the burden of balloon payments or termination penalties.
“Car subscriptions aren’t for everyone but we’re certain they are here to stay,” he says.
The subscription includes insurance cover, maintenance plan, roadside assistance and vehicle tracking adding up to a total cost that is competitive to traditional finance.
We put this to the test using a Volkswagen Polo Vivo 1.6 Auto priced at R270,800 as an example. Based on a 10% deposit with no balloon payment over a 60-month payment period, the online finance configurator returned R5,848 per month. The optional service plan for this vehicle is R29,892 for five years or 120,000km which equates to another R498.20 per month. Fitting a tracking device should set you back about R400 a month on average while a 30-year-old male who is a first-time insurer can expect to part with R1,789 as quoted by Outsurance. In total you can expect to part with about R8,535 per month to run this Polo Vivo with peace of mind.
FlexClub asks for R7,700 per month for the same car, including maintenance, a tracking device and insurance with an excess of about R5,000. This is a saving of R835 per month, which certainly makes the FlexClub competitive enough.
Ruzane stresses that insurance accountability follows strict industry protocols and thorough investigations are made to determine whether subscribers were negligent or not. He also says the deal can be stopped at any time, or a vehicle swap or purchase of the car after 30,000km is possible.
The FlexClub perk is limited to certain models though. The few premium models that are on offer go as high up as a BMW X3 xDrive20d, a Mercedes-Benz C200 and an Audi A4. He says work continues to widen the scope of available premium cars depending on market demand.
The FlexClub system is also extended to the commercial vehicle sector, from standard bakkies to trucks of not more than eight tons. This is where it can turn into a juicy carrot for entrepreneurs if we are to consider the unpredictable nature of commerce, the biggest attraction being the ability to exchange workhorses for different projects or just to be able to secure wheels.
Though the concept is still in its infancy in SA, a number of similar services already exist in other markets and are offered by rental companies like Sixt, which has a large global footprint.
Some car companies have already jumped onto the subscriptions wagon. Hyundai and Volvo are some of those who already offer flexible ownership alternatives such as the FlexClub model but in other markets.
Volvo Car SA does leasing but it’s not as flexible. Customers can rent the XC90 SUV for a period starting from R22,190 per month inclusive of a tracking device, 24/7 roadside assistance, insurance and maintenance costs.
Hyundai SA’s Deon Sonnekus says the Korean brand doesn’t offer this service locally and is not in a position to do so in the near future.
Ruzane believes SA is a ripe place for vehicle subscriptions and FlexClub has already partnered with Avis, Barloworld, Europcar and Motus to provide the fleet. He says more than 5,000 people from across the country have applied for car subscriptions on the FlexClub marketplace.