Fair.com — an all-digital car marketplace that was co-founded by car industry vets Georg Bauer of BMW, Mercedes-Benz, and Tesla; Scott Painter of TrueCar; and Fedor Artiles of Mercedes-Benz, Chrysler, Volkswagen, and Tesla — has been largely operating under the radar since quietly launching its business earlier this year. But today, it’s coming roaring down the street, ready to take on the market of car ownership with its new, flexible model.
The startup has announced a strategic round of funding from BMW’s iVentures, Penske Automotive Group, and other investors; as well as debt funding from a group of investment banks and a Sherpa Capital entity, “set up to strategically fund innovative transportation models like flexible ownership and ride-sharing.”
The individual equity amount is not being disclosed, but the total amount of all funding is up to $1 billion, the company has confirmed to me. Currently the company is active in Los Angeles and has plans to expand to the rest of California by the end of 2017, “and to other select markets nationwide through 2018.”
There are a number of players in the world of car sales and car rentals, both online and offline. But what Fair is bringing to the table appears to be something more akin to a lease program with unfixed terms, and a range of very modern details: you use a mobile app to do everything, from searching for cars to authenticating yourself to paying; you need to give only five days’ notice before you decide to return the car; you get all-in monthly payments that include insurance; and AI-based pricing that Fair claims means users will only get “great deals.”
“It’s clear that technology is transforming how we buy and own our cars, and the consumer is the winner – with simpler, more flexible, and more cost-effective options than ever before,” said Scott Painter, founder and CEO of Fair in a statement. “Fair is on the forefront of making personal mobility more accessible for a new generation of customers.”
The name Fair may sound familiar to you. It was the company that last year was slated to acquire Beepi, a startup that raised $150 million for an all-online model to search and buy used cars. That sale fell through and Beepi was shut down and sold for parts (its domain, in fact, was picked up by another used-car hopeful, Vroom, which now picks up a redirection if you visit Beepi.com).
While there are a lot of online and offline car sales platforms in the market today, Fair is trying to tap into some emerging trends in the automotive industry.
The first of these is how people are getting around these days. Transportation-on-demand services like Uber and Lyft have been leaning on technology like apps (and a lot of funding-fuelled price subsidies) to make it significantly easier for people to order rides when they actually need them; and for those who don’t have to use their cars every day (and even in some cases when they do), they are finding that these transportation on demand services work out to be cheaper and easier than owning their own vehicles.
That situation, some believe, is set to become even more acute in the future. The thinking goes like this: as autonomous cars, and those cars with other “smart” features, start to hit the market, many of them will be well out of the price range of average consumers. That will lead to people using more transportation services where they do not own the cars themselves. This potential outcome is one that others are also considering, including major car companies like GM.
The idea with Fair is that, in fact, we don’t need to wait until the day of overpriced autonomous cars to see this getting played out. When it comes to actually driving yourself somewhere, many people today already want something longer than rentals and shorter than outright ownership.
“Fair offers a completely new customer experience,” said Ulrich Quay, BMW i Ventures Managing Director, in a statement. “The company allows users to access vehicles without a fixed term. This appeals in particular to younger generations who want more flexible usage models.”
It’s notable to see Penske also putting in investment here. The company has a business that ranges from truck rental to car dealerships and logistics, and it implies that Fair might potentially expand its services to more than just consumer car leasing.
“Penske is committed to be on the leading edge of technology, and our investment with Fair reflects that commitment,” said Penske President Robert Kurnick. “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.”