Avis Fleet, the leasing arm of Avis Budget Group, is set to become the first leasing business in South Africa to launch longer-term car subscriptions on FlexClub, an online marketplace connecting customers shopping for cars on a flexible contract, with a variety of rental and leasing companies providing car subscription offers.
This comes almost a year after Avis Budget Car Rental, the car rental division, partnered with FlexClub to launch month-to-month car subscriptions for customers shopping online for a car that can be delivered to their door within 7 days and carry no strings attached.
Since launching the Avis subscription offers on FlexClub in January 2021, a move championed by Avis Budget Southern Africa CEO, Ramasela Ganda, Avis now has hundreds of members across South Africa subscribing for vehicles via the FlexClub platform on a month-to-month basis. Ganda took the reins of the integrated car rental and leasing businesses in May 2020, the toughest, pandemic-ridden period the global car rental industry has ever experienced, and continued to drive innovation amidst the challenging market conditions.
During the 2021 Barloworld interim results presentation, Ganda reported that car subscriptions had then accounted for 20% of revenue within Avis Budget Car Rental over the preceding six months. Her foresight had proved remarkably fruitful, as the business went on to deliver stellar financial performance for the 2021 financial year, contributing towards a 10% increase of the Barloworld share price following the November results presentation.
Thanks to the meteoric rise of car subscriptions in South Africa over 2021, the business is expanding its offerings on the FlexClub platform, now through Avis Fleet.
As a result of this expanded partnership, Avis Fleet will power longer-term car subscriptions on FlexClub, targeted at consumers looking to commit for several months in exchange for a cheaper monthly subscription. These longer-term subscriptions are expected to better rival traditional vehicle financing and fill a gap left by the low penetration of private leasing in South Africa. Consumer preferences continue to shift towards mobility services over older methods of acquiring cars, especially across younger customer segments. According to FlexClub, the majority of members subscribing for vehicles via its platform are between the ages of 30 to 40, though demand growth seems to be rapidly accelerating across all age groups.
”This is an exciting inflection point for FlexClub, as members will now be able to access a wider range of vehicles from Avis Fleet, one of the top vehicle leasing brands in the country, and unlock superior value to traditional vehicle financing through longer-term car subscriptions”, says Papi Melamu, Business Development Executive at FlexClub.
Much like the flexible month-to-month car subscriptions, these longer-term car subscriptions on offer will be all-inclusive, negating the need for additional maintenance, insurance, or tracking costs. The FlexClub technology enables members to seamlessly shop for the vehicle of their choosing, select their preferred subscription terms, arrange delivery to their door and continue to manage their subscriptions all online. While there are no penalties for canceling or pausing the month-to-month subscriptions at any time, early termination of longer-term subscriptions will incur an additional fee.
“Initially, these new longer-term car subscriptions powered by Avis Fleet will only be available to consumers in Johannesburg and Pretoria. We do however plan to roll out longer-term car subscriptions nationwide and support more pioneering leasing companies with their foray into vehicle subscriptions over the course of 2022,” concludes Melamu.