Collaborate Corporation – Making Car Subscription A Reality In Australia

Collaborate Corporation - Making Car Subscription A Reality In Australia

At a time when people are resisting to make long-term vehicle purchase commitment with automotive dealers trying to solve the problem ofdeclining vehicle sales, Collaborate Corporation Limited (ASX:CL8) has come up with a revolutionary solution of Car subscription, making it the first mover in the Australian vehicle subscription market.

Launch of Carly

On 29 March 2019, Collaborate launched Australia’s first truly flexible and comprehensive car subscription product, Carly, an alternative to saving for leasing or borrowing money to buy a car. Carly is a complete online process which removes the long-term financial commitment required to buy a vehicle and deliver the car directly to the subscriber’s location on time. After Sydney, Carley was further launched in Melbourne on 7th May 2019.

Journey of Carly since Launch

Carly leverages the experience, partnerships and technology of Collaborate’s core business -DriveMyCar, Australia’s largest peer-to-peer car rental platform. Soon after Carly’s launch in Sydney and Melbourne, Automotive dealers started to recognise the benefits of the rapidly developing car subscription category.

In June 2019, Collaborate reached an agreement with I-Motor, to provide vehicle subscription solution to more than 700 automotive dealers. I-Motor is one of Australia’s leading providers of digital marketing services and websites to local automotive dealers, currently managing over 700 websites on behalf of dealers and attracting over 15 million monthly page impressions.

JC Motors, an automotive dealer in NSW confirmed the purchase of 40 new vehicles (including new 2019 Kia Rio and Cerato models) to cater to Carly’s subscription demand, thereby increasing their total fleet size with Carly and DriveMyCar to 105 vehicles.

Besides, Collaborate inked a Memorandum of Understanding with iungo Pty Ltd (www.iungo.com.au) for the implementation of vehicle analytics solution, to be distributed by Carly and DriveMayCar to vehicle suppliers, ensuring enhanced vehicle security.

Collaborate also signed an agreement with leading dealership group, Suttons Motors Pty Ltd to supply vehicles to the DriveMyCar and Carly businesses in order to meet car subscription, rental and rideshare rental demand in Sydney.

Under the agreement, Carly and I-Motor will work hand-in-hand to develop the Car Subscription Solution that will enable a ‘subscribe’ option to be added to each vehicle listed on dealer websites, providing dealers a powerful new way of generating revenue from customers who may not be prepared to make a long-term financial commitment.

Later in July 2019, the Collaborate raised $1 million through a placement to a strategic investor, Turners Automotive Group Limited (ASX: TRA) with an intention to drive the growth of the Carly vehicle subscription business.  Turners Automotive Group Limited is a New Zealand based integrated automotive financial service group which has been providing innovative finance and insurance solutions for more than 30 years.

Collaborate and Turners have also agreed on an exclusivity period to negotiate the launch of a joint vehicle subscription service in New Zealand which will enable Collaborate to leverage its existing investment in the technology platform supporting Carly and access a substantial new market.

Collaborate’s Position in the Vehicle Subscription Market

By the end of FY19, Collaborate had established itself as a leader in the car subscription market, undertook major director and strategic advisor appointments, launched new products and signed new partnership agreements and secured strategic investment from a key overseas player in the automotive industry.

In FY19, the company reported revenue from continuing operations of $1.034 million and a loss of $3.23 million, marking ~3% dip despite start-up costs and Carly marketing investments during the year. At the end of FY19, the company had net assets of $1.50 million and cash reserves of $1.25 million. Recently on 27 August 2019, the company completed rights issue to existing shareholders, raising ~$1.6 million in new equity.

In its 2019 Annual report, the company has clearly stated that Carly is a major focus for growth in FY20 while DriveMyCar continues to focus on car rental, rideshare rental and accident replacement rental opportunities.

Vehicle Subscription Solution

The new vehicle subscription concept is trending rapidly all over the world. By having a single monthly payment which covers all the usual costs of vehicle ownership, from registration and insurance to maintenance and repairs, Vehicle subscription is offering all-round simpler solution to vehicle ownership.

Nowadays, consumers are feeling that owning a vehicle is too expensive. As per 2018 Evolution of Mobility Study conducted by Cox Automotive, the costs of ownership has the highest impact on Millennials and Gen Z.

Collaborate is best placed to leverage the Vehicle Subscription opportunity with the following advantages:

  • Enormous experience in delivering thousands of long-term, flexible vehicle rental transactions.
  • Strong technology platform to rapidly scale the operations,
  • Key relationships in place with automotive dealers, leasing companies, manufacturers and service providers.

At market close on 5 September 2019, CM8 stock was trading at a price of $0.009 with a market capitalisation of circa $8.89 million.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is sponsored but NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. We are neither licensed nor qualified to provide investment advice through this platform.

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