Collaborate Corporation Limited (ASX: CL8) is a pioneer in Australia’s peer-to-peer car rental market. Through its DriveMyCar business, the company has established itself as the largest peer-to-peer car rental operator. It is also advancing well across other business segments including Mobilise (rental marketplace for under-utilized assets), Peerpass (enabling people and companies to safely transact) and MyCaravan (connecting holidaymakers with caravan owners).
Not so long ago, Collaborate Corporation identified a new opportunity - Vehicle Subscription Opportunity, to access the significant new demand channel in the $60 billion Australian automotive sales industry, leveraging on DriveMyCar’s platform and relationships. Car subscription or Vehicle subscription is an alternative to buying a car or committing to a loan or lease.
Major Changes across Automotive sales industry
The automotive sales industry is undergoing enormous changes, that have guided manufacturers and dealers to evolve their offerings.
Advantages of Vehicle Subscription
- No long-term financial commitment.
- Choose a car and have it delivered next day.
- Pause subscription if the car is not required.
- Flexibility to switch the car as per the requirement.
- All-inclusive monthly subscription – insurance, registration & servicing.
Collaborate is best placed to leverage the Vehicle Subscription opportunity:
- Huge experience in distributing several flexible vehicle rental dealings.
- Close associations with leasing companies, automotive dealers, manufacturers and service providers.
- Strong technology platform to rapidly scale the operations.
Launch of Carly
In order to seize the car subscription market opportunity, the company launched Carly vehicle subscription service in late March 2019.
With the launch of Carly, Collaborate became the first mover in the Australian vehicle subscription market. By leveraging the experience, partnerships and technology of DriveMyCar, Carly was able to attract significant interest from automotive manufacturers, dealers, media and consumers. Carly provides manufacturers and dealers a new way to provide more flexible access to vehicles for consumers who are increasingly questioning the burden and inflexibility of long-term vehicle ownership.
The company has recently announced a number of significant announcements that demonsrate the future growth of Carly vehicle subscription.
- Collaborate signed an agreement with I-Motor, one of Australia’s leading providers of websites and digital marketing services to automotive dealers, to jointly develop a Subscription Solution that will enable a ‘subscribe’ option to be added to vehicles listed on dealer websites (over 700) and for customers to activate a car subscription to be facilitated by Carly.
- Suttons Motors Pty Ltd, leading NSW dealership group inked an agreement with Collaborate to supply vehicles for subscription via the Carly and DriveMyCar.
- NSW-based automotive dealer, JC Motors had confirmed the purchase of additional 40 new cars to cater to Carly’s vehicle subscription demand, increasing their total fleet size with Carly and DriveMyCar to 105 vehicles.
- MOU was signed with iungo Pty Ltd (www.iungo.com.au) for the development of vehicle analytics solution, specifically targeted towards the peer-to-peer and car subscription business segments, intended to be distributed to vehicle suppliers, ensuring enhanced vehicle security, critical alerts and usage data.
- Collaborate raised $1 million through a placement to a strategic investor, Turners Automotive Group Limited (ASX: TRA; NZX: TRA), NZ based integrated automotive financial service group, largely working in the automotive segment, wherein Collaborate proposed to leverage Turners industry experience and accelerate the growth of Carly in the car subscription market in Australia. Meanwhile, they have agreed an exclusivity period to discuss the launch of a partnership-based car subscription service in NZ region.
Carly provides the younger generation an option of monthly car subscription, which is an alternative to buying a car or committing to a loan or lease. The company believes that the Car Subscription Solution will enable automotive dealers to seamlessly introduce a new revenue stream to their dealership. Carly is playing an important role in helping the existing automotive industry evolve to a future where consumers place greater value on access to a car rather than outright ownership.
The company is also addressing the car subscription opportunity with White Label subscription platform, which enables manufacturers and dealer groups in their subscription offerings.
FY19 Annual Report
Today (i.e. 30 August 2019), the company released its 2019 Annual report. During FY19, the principal activity of the company was the operation of peer-to-peer online marketplaces, including the provision of subscription services.
For FY19, the company reported revenue of $1.034 million and loss from continuing operations of $3.23 million, representing a fall of 2.9% pcp despite investment in start-up costs and Carly marketing. At the end of FY19, the company had around $1.25 million cash on hand, an increase of $445,000 from the prior year. Following year end, Collaborate raised $1,598,491 (before costs) in new equity from a rights issue to existing shareholders which was recently completed on 27 August 2019.
Major Achievements During FY19
- Established itself as a leader in the car subscription market in Australia.
- Made major director and strategic advisor appointments.
- Launched new products while sharpening the focus on opportunities in the automotive industry.
- Signed new partnership agreements and secured strategic investment from a key overseas player in the automotive industry, which also opened up the opportunity for offshore expansion.
In its annual report, the company has assured that it is pursuing opportunities to enter into agreements with strategic partners in relation to the demand for and supply of assets for its online marketplaces, including the Carly vehicle subscription service and the DriveMyCar car rental business.
The company’s Directors are closely monitoring cash flows and funding requirements and are assessing all funding alternatives, which may include a placement to strategic and/ or high-net-worth investors to ensure that the company can continue to progress on growth opportunities of the businesses.
Stock Performance: CL8’s stock is trading at a price of $0.008 with a market capitalization of circa $7.9 million by the close of market trading on 30 August 2019.
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