November 15, 2016 — UPDATED: Word is getting out that Scott Painter is soon to be back in the auto industry. His newest initiative is being called, “Fair.”
The project has come up in a few conversations that we’ve had the last several months — mainly just cocktail reception gossip. Then, a couple of weeks ago over lunch, someone familiar with the project confirmed that Painter was working on launching a company that will offer different types of ownership models for car owners/buyers. Think “micro-leasing,” or “micro-ownership.”
The company had a hospitality room at the AutomobilityLA show (the renamed Los Angeles Auto Show) this week.
The former TrueCar CEO and founder apparently has raised $16 million in seed money according to an article today in Business Insider by Matthew DeBord, who always brings the goods with what he writes.
Also involved in the project is Georg Bauer, the president of Fair, who most recently was the managing director for Tesla Motors in Germany. Prior to joining Tesla, Bauer was CEO of Global Financial Services for BMW, and for Mercedes Benz Credit Corporation. Bauer has more than 30 years experience in automotive financing whose influence in the industry is far-reaching.
For now, it’s a solution for the pre-owned market but could grow into a product for the new car space in a few years. But the focus now is entirely on helping dealers sell used vehicles.
The concept of micro-leasing or ownership is intriguing because it could radically change the current system that places people into vehicles for three or more years. If it pans out, dealers will be able to sell significantly more used vehicles than they do today because the will be able to sell the same vehicle multiple times. Long term, the company could affect models involving sales, pricing, payments, lending and remarketing. Meanwhile, how vehicle residuals are determined likely would be much different than today’s models.
The company is being positioned as a fin-tech company because it is actually providing the financing for the vehicle purchase.
On the surface, the model sounds risky, but Bauer and Painter have assembled what appears to be a powerful group of data scientists to ensure the company doesn’t get sideways on residual values.
Once customers submit information linking their bank account to the mobile app, and scanning their drivers license, Fair makes a determination on what that customer can afford each month.
Customers determine how long they want to finance the car for — it can be as long or as short as they want. Fair shows them a monthly payment instead of a set price.
The company is in the process of setting up pilots with dealers — mainly in California right now. Fair’s website — Fair.com, whose registration was updated in March of this year, was only a one-page place holder until the other day with the following image:
The company made the website live once the Business Insider story leaked.
The initiative is also intriguing because of Painter’s involvement. He has always had designs on changing the current automotive retail system. Prior efforts included CarsDirect and TrueCar, both companies which he started hoping to eliminate or reduce the industry’s reliance on car dealers.
Both initiatives ended up becoming variations of the lead generation model while proving to be controversial with dealers. We won’t rehash all the details, but Painter clashed with dealers multiple times while at TrueCar and stepped down at the insistence of the board after the stock price plunged more than 40% over a four-week period.
But if anyone is surprised that Painter could rebound from his time at TrueCar, understand this — he has often displayed a unique ability to create a vision and impart that vision to investors.
Painter is relentless in his desire to improve the customer experience and this time just might have created a solution that will resonate both with dealers and customers.