Melbourne startup Carbar has launched a weekly subscription service for cars

- August 31, 2018 3 MIN READ

From startups ApprovalBuddy and HelloCars to Pickles Auctions, a number of companies have sought to address the various issues involved the vehicle buying process (at the top of the list being that it generally isn’t a very fun process for anyone).

While Pickles is looking to work on a variety of new ideas through Pickles Ventures, an innovation arm which will focus on incubating early-stage startups with ideas that align with the company’s goals, ApprovalBuddy and HelloCars look to be online dealers, helping users buy and sell cars online and have them delivered to one’s door.

Also working in this space is Melbourne startup Carbar, launched by Desmond Hang, Davie Saw, Richie Chen, and Kenneth Yew Cheng Teh in late 2016 as a ‘virtual’ car dealership.

“The idea was born out of the need to fix the current buying and ownership experience that customers are facing. We focus Carbar on the customer experience in solving the pain around buying and accessing a car, making it simple and hassle-free,” Hang explained.

“Our key focus is always the customer: what would resonate well with our customer and help to add 10x value to their ownership experience?”

This focus saw Carbar develop two core services; available within a 50 kilometre radius of the Melbourne CBD, the first is a delivery service through which a car is delivered to the buyer’s door, and the second allows customers to test drive a car for either three days or 300 kilometres. After test driving they can either decide to buy it or have it picked up to return.

“[This] has shown much success, where 87 percent of our customers that try our cars, buy our cars,” Hang said.  

“Our model resonates well with people ages 25 to 45 that are also looking for that superior customer experience in purchasing what may be the second largest purchase in their life.”

The startup’s growth has been aided, in part, by its participation in two accelerator programs, the Melbourne Accelerator Program (MAP) and Caltex Spark.

Carbar took part in MAP, Hang explained, because it wanted to raise its profile and grow its networks as it started its fundraising journey, while the decision to apply for the Caltex program came as the startup saw the potential opportunities to collaborate with the company.

The startup came out of the accelerator with two new initiatives, Carbar 24/7 and CarbarConnect, which are helping distinguish Carbar from the startup competition.

CarbarConnect works to turn every car into a connected car through a mobile app, providing drivers with insights into their driving behaviour, service reminders, mileage tracking, and location services, while Carbar 24/7 allows the startup to extend its business hours by enabling customers to pick up and drop off cars at Caltex Foodary service stations.

“Much like how Australia Post does with their parcel delivery lockers for after hours delivery, we do it with our cars,” Hang explained.  

The startup has since developed another offering, weekly subscription service Carbar+.

The service allows customers to rent a car on a week to week basis, with cars starting from $169 a week. The weekly price covers insurance, roadside assist, registration, and routine maintenance, with customers able to swap their car for free every quarter or at any point for a $100 fee.

Customers must give two weeks notice to return a car, and can choose to pay a one-off membership fee of $495 or pay a refundable insurance bond of $2,000.

“Carbar+ was born out of the realisation that the ownership landscape is changing globally. We have seen that our lives are no longer as permanent as we may like them to be,” Hang said.

“The realisation that we could potentially lose our jobs the next day and need that flexibility of downsizing your expenses to mitigate against these risks is what resonates well with our customers.”

The subscription service for cars is an idea being put forward by everyone from other startups to manufacturers themselves: Mercedes-Benz in June launched a subscription service, Mercedes-Benz Collection, in a number of US cities, offering access to its vehicles across three tiers, with the cheapest starting at US$1,095 ($1,509) a month.

Since launching the service in April, the startup has around 30 to 50 subscribers at any given time.

The startup earlier this month raised $5.75 million in funding to help accelerate its growth, with Hang saying Carbar was “consciously built” for venture capital.

“Cars are the second largest asset class, and if we did not build [Carbar] for venture or external investment, organic growth would be too slow,” he explained.

“We looked for an investment partner that understands our space and has the understanding of how the automotive space works, consequently also realising that the market needs to be disrupted because of customer dissatisfaction.”

Given there are three million used cars and 1.1 million new cars sold in Australia each year, Hang believes there is significant scope for Carbar despite the competitors in the market.

With the funding in its pocket, the startup is gearing up to expand its service beyond Melbourne.

Image: the Carbar team. Source: Supplied.