Car rental apps show gears up for relaunch


Fair CEO Brad Stewart joined the group in May 2020.

After a tumultuous 2020, Fair Financial Corp. tries to get back on the road.
The Beverly Hills-based auto tech company, which launched subscriptions to its used car inventory in 2016, is changing its strategy. In the first quarter of 2022, Fair will launch used car rental subscriptions provided by third-party providers, with the broader goal of becoming a central hub for all automotive retail businesses.


“We want automotive shopping and transactions to be stylish, beautiful and immersive,” said Brad Stewart, who took over as CEO of Fair in 2020. “We want to have the largest and widest inventory available for purchases. “


The original strategy had tremendous support. At the end of 2019, Fair had around $ 2 billion in debt and equity financing, a partnership with Uber Technologies Inc., and a remarkable $ 1.2 billion valuation.


But the case quickly ran out of steam. He has resisted layoffs and a leadership reshuffle. He even took his app offline – twice.
“We are moving towards… (towards) becoming a true technology company, which focuses on brand and consumer demand, as well as products and technology,” said Stewart.

Stall

Fair was founded by automotive technology mogul Scott Painter. The company previously bought cars from local dealerships, held vehicle titles and handled registration.
Customers would find and subscribe to a car through Fair’s app, show their identification to the dealership, and receive the car. They would have three days or 100 miles – whichever comes first – to return the vehicle for a full refund. If customers were not happy with their vehicles after this initial period, they could return their cars and end their subscriptions without penalty, as long as they paid the subscription fee until the end of the month.


Investors rallied around Fair. In September 2019, the startup secured a $ 500 million revolving credit facility from Japanese technology investor SoftBank Group Corp. to intensify its partnership with Uber. The ridesharing giant planned to use Fair to help its drivers rent cars as part of short-term weekly deals.


Fair’s business model had never been profitable and the company fell as a result. A month after securing the funding, Fair laid off 40% of its staff, including then CFO Tyler Painter. A week later, Tyler Painter’s brother, company founder Scott Painter, resigned his position as managing director; he said he disagreed with SoftBank’s strategy of involving Uber in Fair.


In October 2019, the company closed its app as it hired a new management team and planned a relaunch. In February 2020, he ended his partnership with Uber. He restarted his app that month, only to shut it down again and put new orders on hold last April.


There are 5,000 users who still drive cars of Fair’s original model, but once these cars are returned, they are wholesaled to a dealer through commercial auto auctions. The company did not disclose how much it made from these sales.


“It became clear that our subscription business was not ramping up as quickly as investors would like,” said Stewart. “It really stimulated the development of our new business plan, which started in the fourth quarter of last year, and it has really continued to progress throughout this year.”

Drive change
Although Fair is shifting gears, the company’s mission to simplify car buying remains the same, Stewart said.



“This is the place to go for people buying vehicles and ultimately managing their mobility after the transaction,” said Stewart. “My dream is that if people want to buy cars, the only place they really feel comfortable and safe to do so is on Fair.com.”


The industry – which generated $ 980 billion in sales in the United States in 2020 – is poised to be disrupted, said Ruhell Amin, equity research analyst for Playa Vista-based investment advisory firm William O’Neil and Co. Inc.


According to Amin, nearly “90% of vehicle buyers in the United States want part of the vehicle purchase to be done online.”
He said companies like Carvana, CarMax Business Services and TrueCar Inc., the latter of which was co-founded by Scott Painter, have become successful in the used car industry due to consumer behavior tending towards the e-commerce.


“Auto consumers generally want to feel like they have more control over the buying process without being pressured,” Amin said. “They want their transactions to be more convenient and on their own desired schedule, and that really plays into this trend towards the line that we’ve seen.”


As part of its brand evolution, Fair will change its legal name from Fair Financial Corp. to Fair Technologies Inc. and moved its headquarters from Santa Monica to Beverly Hills.
Its new model focuses on partnering with used car dealers to provide leases, rather than owning its own vehicle inventory.


And it will focus on “consumer-oriented technology” rather than infrastructure and inventory, Stewart said. Some of the new platform features will include connecting users with customizable loans, car swaps, and insurance plans.


The platform will also allow customers to extend their warranties and schedule auto service appointments.
Fair executives would not say if they had secured any new funding or investment to fund the development of the new platform.


But for all of this to happen, Stewart said, Fair will rely heavily on partnerships. In addition to making deals with local dealers, the company works with financial institutions, such as Ally Financial Inc., JP Morgan Chase Bank, Wells Fargo and Co., Bank of America and Westlake Financial Services, based in Hancock Park, to offer loans. . Fair is in the process of selecting a partner to offer car insurance through its platform.

Deployment
The company’s platform will showcase cars from “hundreds to thousands” of physical dealerships for users to browse and compare for the best prices and payment options, said Craig Nehamen, chief strategy officer for the company. .



Users will be able to hire a car online with a seven-day money-back guarantee. If the deal is local, users will have the option of taking a test drive before purchasing.
“Our intention is to offer the benefits (both) of shopping in the online retail market and of a traditional reseller,” said Nehamen.


Nehamen said the company aims to record 100 trades per day through its platform after one year of returning to the market, but the company’s targets will be “detached” from trading volume.


“The whole organization will focus on listening and learning from each client to refine the build,” said Nehamen.


On the consumer side, Nehamen plans to integrate AI-based support and recommendations; transparency related to the condition of cars, their prices and dealers; and the flexibility to take any step of the car buying experience online or in person.


New tools will be released throughout the quarter with the first launch slated for California, followed by debuts in other states by the end of 2022.
“The consumer experience is going to be much broader and much more immersive,” said Stewart. “What we’re going to deliver to consumers is a top-notch e-commerce experience. “

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