Ford sells a monthly subscription service to his vehicle

Santa Monica, Calif., The Fair start-up has agreed to acquire Ford's monthly subscription service, Canvas, for an undisclosed amount, the two companies announced Thursday.

The purchase marks healthy growth for Fair, but is another setback compared to an emerging mobility company for Ford, which reduces the costs of a $ 11 billion restructuring plan until 2022.

Ford's shares remained relatively unchanged after Thursday's session at just under $ 10 a share.

Vehicle subscription services are marketed as an alternative to owning a car. For less than $ 200 per month for a 2017 Nissan Versa, subscribers enjoy the car, insurance and maintenance without having to sign a long-term lease. The appeal lies in the simplicity of integrating all these costs into a single monthly payment. Luxury cars are obviously more expensive. According to the company's website, a 2018 Lexus LX 570 SUV starts at $ 1,175 a month.

Fair has gained notoriety by attracting investment from leading companies such as SoftBank and by partnering with Uber to provide vehicles to their drivers starting at $ 130 a week.

Scott Painter, CEO and founder of Fair, said the acquisition would nearly double the company's engineering capabilities and provide rapid expansion to San Francisco and to all of its customers.

"We have just become a much bigger and more dominant platform," said CNBC Painter, a veteran retailer of motor vehicles, former founder and CEO of TrueCar. "This really reflects the scale of our activities."

Canvas CEO Ned Ryan called the sale a "natural solution" for both companies.

Ford acquired the San Francisco-based Canvas company, then known as Breeze, through its consumer finance group, Ford Credit, in September 2016. It began operations under the name of Canvas in May 2017, offering variable term lease contracts with flexible payment options to San Francisco area residents before they can expand. in Los Angeles.

Sam Smith, executive vice president of strategy and future products at Ford Credit, said the company "had learned a lot about Canvas' subscription services, fleet management and technology."

Fair will acquire all assets of Canvas, including nearly 100 employees. About 20% or less of Canvas' employees were fired or decided not to join Fair before the announcement, according to Painter. Thousands of Canvas subscribers will have the opportunity to join Fair at the end of their current subscription.

The canvas is the second remarkable mobility unit that Ford has thrown this year. In March, he ended the operations of Chariot, a shared carpool service. The company would have spent about $ 65 million to acquire the San Francisco-based startup in September 2016.

Ford extended San Francisco's Chariot to seven cities before ending its operations in March, seven months after Streetsblog NYC announced that the service was "a big, costly failure."

Since its launch in August 2017, Fair claims to have more than 45,000 users in more than 30 US markets in approximately 20 states. Users, with the help of the Fair app, can subscribe to the subscription program and change vehicles during the term of their "rental agreement".

According to Painter, Fair is just beginning to "take a decisive step," with 200 to 400 subscribers growing daily. He added that the private company was considering becoming public "as soon as possible".

"We do not build society with the aim of making it public, but we simply need too much money to not be an open society at the earliest and we build definitively in this perspective", a- he declared.

Fair, he said, is not under "immediate pressure" to go public, but the public sector is better suited to society as it continues to grow in the long run. Fair, according to Painter, plans to expand nationally and internationally in the coming years.

"We view all current innovations as a strong signal that mobility is changing and that we must constantly innovate to keep pace," he said.

Subscription services have been a source of money loss for many businesses and face potential legal issues related to state dealer franchise laws regarding the use of new vehicles.

Cadillac, Volvo and Porsche were among the first automakers to launch vehicle subscription services. Everyone had to change their business, including Cadillac, by suspending all their operations in the middle of the hemorrhagic treasury department.

Painter declined to provide guidance on when Fair should be profitable, but he said the underlying economic situation of the company is healthy.

"It's not an inherently unprofitable business," he said. "Our growth is very fast, so we will continue to invest in our business for a while, but the bulk of its economy is very positive – we already have profitable cohorts in our business.

"I think it's an important distinction between Fair and many companies that blindly invest in the acquisition and growth costs of their customers."