Sabtu, 04 November 2017

Scott Painter's startup Fair gets nearly $1 billion lift










Painter: Dealers are partners.





A startup by two industry veterans trying to create a new channel for selling used vehicles just got a massive capital injection — and a de facto endorsement from two major industry players.


Fair, the company behind a mobile app that lets consumers obtain vehicles online for as long or short as they want, this month received almost $1 billion in a strategic funding led by BMW i Ventures and including money from Penske Automotive Group Inc.


Fair, of Santa Monica, Calif., was launched in September by Scott Painter, former TrueCar CEO, and Georg Bauer, former head of financial services for Tesla Inc. and BMW.


Fair's app allows consumers to prequalify for financing online, select a specific used vehicle from a list in their monthly payment range, pick up that vehicle after putting money down and making the first monthly payment and then have the flexibility to return the vehicle at any time.


Fair is trying to create a niche that gives drivers an option between a short-term rental and conventional fixed-term lease or purchase, Bauer told Automotive News.


"It's not a loan, a lease or a rental," said Bauer, who serves as the company's president. "The consumer can keep the vehicle two weeks, two months or six years. It combines the convenience of a rental but the low payments of a lease."


A central part of Fair's business model is attracting two types of consumers that dealerships have trouble reaching: people who don't want long and fixed commitments to a vehicle and those who have financial assets but don't qualify for conventional financing.


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The funding provides a big dose of liquidity in the startup's second month of operation. Fair said the investors include a group of institutional investment banks that traditionally back auto debt portfolios and an entity led by Sherpa Capital that was created to fund alternative transportation models such as flexible ownership and short-term rentals.





Bauer: App will be critical tool



Since opening in September in the Los Angeles market, Fair has about 200 clients, Bauer said. As soon as a client selects a vehicle and completes online authorization for monthly bank payments, Fair buys that used vehicle from a dealership by wire transfer, and the customer can pick up the vehicle from the dealership within a day.


The customer can return the vehicle at any time upon five days' notice. The customer has no further obligation, but Fair keeps the initial down payment.


Fair will sell all returned vehicles, Bauer said. The options include selling it back to the original dealership, to another dealership or at auction, he said.


Fair anticipates its customers will keep vehicles an average of 18 months.


The Fair website lists about 700 used vehicles offered through 17 participating dealerships. The site allows shoppers to browse by monthly payments.


On Oct. 20, a 2015 Nissan Sentra with 16,000 miles on the odometer was listed for $130 a month with a down payment of $1,000. On the higher end was a 2017 BMW X4 with 6,200 miles, listed for $3,000 down and $630 a month,


Besides use of the vehicle, each monthly payment includes routine maintenance, an extended service contract and roadside service, Bauer said.


"If the customer requests, we can add insurance coverage and add it to the single monthly payment," he said. "The idea is to provide our clients all their mobility needs for a fee that fits their budget."


Fair expects to be operating throughout California by year end and plans to expand aggressively, including into Texas and other markets in 2018 on its way to full national coverage, Bauer said.


Bauer, a native of Munich, sees potential in international markets. "There's nothing like this in Germany," he said.


In a press release, Painter said the Fair model relies on dealers as ongoing operational partners, which is why it made sense as an investment for Penske. He said Penske's physical infrastructure will serve as a foundation to enable Fair's flexible model.


"Penske is committed to be on the leading edge of technology, and our investment with Fair reflects that commitment," Penske President Rob Kurnick said in the same release. "The potential appeal of the Fair app to consumers is compelling while keeping our company at the forefront of bringing mobility solutions to the marketplace."


Bauer said Fair's structure offers dealers several advantages: an additional channel to sell used vehicles, a likelihood that a buyer will return to the dealership sooner than those with fixed lease or purchase contracts and the ability to make contact with consumers who have avoided dealerships.


"Fair offers flexibility to consumers," he said. "For them, there is no exit fee, no cost to walk away."


Bauer said Fair uses artificial intelligence to analyze pricing data and offers cars it identifies as good values. The company also guarantees a customer's monthly payment won't exceed that of a comparable loan or lease.


Bauer added: "We believe our app will be a critical tool for dealers handling the rising flow of high-quality lease returns we expect over the next several years."



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