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Cox Automotive Acquires Clutch Technologies

kevinfrye

Sr. Refresher
Apr 7, 2009
250
164
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Kevin
Clutch already powers most of the OEM subscription models as well as dealers in 25 or so states. It is a very crowded space, including another Cox backed entity Flexdrive.
Two items here IMHO. First - Cox taking the direction of "mobility solutions". I agree. Our market continues to evolve and change rapidly. Dealers will move towards providing mobility solutions, which can include the subscription model. I believe dealers should pay special attention to fleet management. Fleet is the future. Take a look at Waymo and all of the Chrysler vehicles they are buying in Phoenix. Who are they buying from? Dealers? No - more like directly from CDJR. Who will service those vehicles? Dealers. Forward thinking dealers will look at how to best position themselves to manage fleet needs. 24 hour service is key, as a fleet vehicle off the road makes no money. If you can service overnight, you provide a competitive advantage.

Per auto subscription - yes, we are leading in this area. This is still a high risk area with razor thin margins. On the pro side, I have seen nothing in my career that has created more consumer excitement. We are personally touching our subscribers 2-3x per month in a non-adversarial environment where they feel like they are getting a "new car" every time. This is the elusive "Apple Store" or "Zappos" experience of a highly satisfied customer that we have pursued for years. The con is whether we can prove a profitable and scalable model for the long term - that is our biggest challenge at this time.

I am very transparent that we might not be running auto subscription 12 months from now. However the lessons we are learning are invaluable as we test and modify this model. I am speaking about this at Digital Dealer in Las Vegas, to include multiple videos from our actual subscribers. I invite you to join me with an open mind as this is groundbreaking as we look to provide a more consumer facing experience.
 

Chris Leslie

Sr. Refresher
Oct 28, 2012
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Chris K
Is there anything that is stopping Cox from launching their own direct to consumer subscription service?
 

joe.pistell

Uncle Joe
Apr 7, 2009
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Joe

joe.pistell

Uncle Joe
Apr 7, 2009
3,989
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Joe
By the verbiage of the contracts I believe they technically are, thus the 28 day max length agreements.
Thnx! There u go @Chris Leslie Cox 'could' become another Hertz, but all it has is the software ;-) It'll probably be easier for Hertz to buy the software than Cox buying the inventory, the roofs and the boots on the ground.
 
Reactions: craigh and Cullen C

mikesayre

Getting Refreshed
Jul 11, 2009
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Mike
I believe dealers should pay special attention to fleet management. Fleet is the future. Take a look at Waymo and all of the Chrysler vehicles they are buying in Phoenix. Who are they buying from? Dealers? No - more like directly from CDJR. Who will service those vehicles? Dealers. Forward thinking dealers will look at how to best position themselves to manage fleet needs. 24 hour service is key, as a fleet vehicle off the road makes no money. If you can service overnight, you provide a competitive advantage.
I would think the OEM's should have the advantage if they chose to launch their own vehicle subscription model with their Dealer network, but in the spirit of moving more metal, they will open up sales to other companies (like waymo) and probably invest, partner, and wait. Maven looks to be only GM vehicles currently which is interesting. Fleet & Service look to be the future for sure, I wonder how this all will unfold legally with dealer franchise laws per state? It might take some time.
 
Reactions: craigh

kevinfrye

Sr. Refresher
Apr 7, 2009
250
164
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Kevin
Hmmm... good question. @kevinfrye is subscription a rental?
Just listened to Sandy Schwarz speak on Tuesday morning at VinWorx and he indicated that Cox has zero desire to tie up money in inventory - I don't believe they have any desire to do this directly with consumers. And on the same line, I believe most of the OEM solutions are being tested so that they can be taken back to the dealers if the model proves and scales. Only exception (and likely because they are not communicating well) is where Book by Cadilllac is going
 

TeddyJTurner

Getting Refreshed
Aug 6, 2018
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Teddy
This is exactly where my head was at, as I believe Clutch powers their subscription service.
I hope this works out, I do think that model can have a real foothold among the more traditional vehicle acquisition models.
Too expensive right now. Once there’s pressure on pricing you might see adoption. Anyone that would go with a subscription model most likely skews young and general eschews car ownership more than previous generations. Having it be prohibitively expensive is tough.
 

kevinfrye

Sr. Refresher
Apr 7, 2009
250
164
45
First Name
Kevin
Too expensive right now. Once there’s pressure on pricing you might see adoption. Anyone that would go with a subscription model most likely skews young and general eschews car ownership more than previous generations. Having it be prohibitively expensive is tough.
And this is the biggest challenge - understanding the true total cost of ownership. Truth - it is actually not that expensive, hence the razor thin margins. Most of our initial subscribers have been business owners. Why? They understand numbers and the total cost of owning a car. Surprisingly, our biggest detractors have been other dealers - who should be the FIRST to have an understanding of this. We use the Edmunds True Cost of Car Ownership tool to handle objections and it works very well.