Carbar CEO Des Hang (right) with his co-founders Davie Saw, Kenneth Teh and Richard Chen. Source: supplied
Carbar, the vehicle subscription service backed by insurance giant IAG, has moved into fleet purchase, buying the cars of Sydney property tech startup Propper.
Propper is continuing to use the cars via subscription, with founder and CEO Ash Frenken saying the deal frees up Propper’s capital and gets depreciating assets off the balance sheet ahead of an upcoming capital raise.
“Cars are instrumental to our business. We can’t travel between premises without them. This creates an issue, as to scale, we either needed to take on more debt through leasing or spend capital on purchasing cars,” he said.
“Carbar, and the flexibility of car subscriptions has basically solved this problem for us, allowing us to scale our car use directly in line with our growth. It’s also allowed us to move our entire fleet off our balance sheet.”
Carbar launched in Melbourne in 2016 and introduced car subscription hire to Australia. It began operating in Sydney this year. In July, IAG took majority stake in the venture as part of a $16.8 million raise..
Subscribers hire cars from Carbar from $109 a week, including insurance, registration, roadside assistance and maintenance, without fixed term contracts and hand the vehicle back with a fortnight’s notice. Carbar offers two subscription levels. Cruise, which has no minimum term, and Shift, which lets users swap the car for free every three months. The business also has an online car trading platform for buying and selling new and second-hand cars.
Carbar co-founder and CEO Des Hang has refocused his startup towards B2B, offering cars as tools of trade.
“This is an excellent use-case of how subscriptions can directly benefit a startup,” he said.
“I know from experience that investors expect you to use any capital you raise directly on scaling the company. Through this partnership, we’ve helped Propper solve a financial hitch that will put investors minds at ease.”
Earlier this year, Carbar secured a deal with Jaguar Australia to offer subscription in direct partnership with a car manufacturer.
Hang is looking to roll out his service nationally in the year ahead.Analysts Frost & Sullivan estimate that by 2025 almost 10% of new car sales in the USA and Europe will come as part of a subscription.