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The JSE has several car rental and fleet management businesses as listings, but it’s the combination of services within Zeda that is unusual. Picture: Picture: 123RF/WELCOMIA
The JSE has several car rental and fleet management businesses as listings, but it’s the combination of services within Zeda that is unusual. Picture: Picture: 123RF/WELCOMIA

Zeda is doubling down on its car subscription business, announcing the launch of a pay-as-you-go subscription offering where customers keep vehicles longer than a typical rental, in partnership with Flexclub.

In recent years, a number of companies have shifted their business models from one-time purchases or fixed-term contracts to subscription and annuity-based income to secure steady, continuous revenue.

Zeda hopes to take advantage of these trends, together with the consumer behaviour of millennials, who are more open to new concepts such as pay-as-you-go vehicle use.

The sell is made easier as in emerging markets, including SA, vehicle finance — and therefore vehicle ownership — is out of reach of most low- and middle-income earners.

Recent trends in SA indicate a growing awareness of the financial implications of car ownership, with most consumers not keeping their cars for the entire duration of their agreements.

Pay-as-you-go moves vehicle operators such as Zeda closer to the prepaid voice and data model pioneered by SA’s mobile operators more than two decades ago. Unlike a fixed-term contract, rental or subscription, customers can “top up” their use of a vehicle when needed. 

Flexclub has been piloting the model since July. 

Zeda, which operates Avis in SA and 10 other countries in Sub-Saharan Africa, says the platform makes it easier for customers “to tailor their own mobility requirements”. Using the Avis pay-as-you-go car subscription service, customers could now configure and manage their prepaid car subscription plans online.

The company’s pricing begins at R6,780 a month for a Renault Kwid. The same vehicle can be financed, starting at about R3,800, before factoring in insurance and other costs such as maintenance.

Since 2021 Zeda has been competing in a growing market that has seen the emergence of other local start-ups such as Naspers-backed Planet42 and Flexclub. 

All of these companies use a subscription model to give people access to vehicles. This could be seen as a form of long-term rental as lease periods typically go beyond the short one-day or one-week periods that rental companies such as Avis and Hertz specialise in. Amounts paid for such arrangements also tend to be cheaper than the cost of financing a vehicle. 

“Over recent years we continued to invest in a wider range of innovative mobility products that drive the usership economy,” Zeda CEO Ramasela Ganda said. “Our newest Avis pay-as-you-go subscription offering continues that evolution, putting Zeda in a prime position to champion this inflection point in the local mobility market.”

The company said the new offering addresses the growing gap left by traditional vehicle finance, where more than 70% of the demand for new cars is unmet.

Flexclub CEO Tinashe Ruzane said: “We’ve seen a clear shift in consumer behaviour towards car subscriptions since 2020, with more people opting for greater control and flexibility over rigid long-term financial commitments.

“Our technology platform for prepaid mobility addresses this need through a convenient, digital user journey designed to enable our partners to easily offer pay-as-you-go car subscriptions to their customers. We’re incredibly excited to support Avis’ vision to reshape the mobility market in Africa and build a leading mobility network.”

Avis put Flexclub in charge of part of its fleet in early 2022.

Planet42, which raised close to R4bn of investment this year, has developed credit-scoring algorithms that it uses to bridge the lending gap, using a wider range of data sources than traditional credit scores to assess risk. 

gavazam@businesslive.co.za

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