Planet42, a South African founded car subscriptions start-up, has tripled its vehicle acquisitions over the last 12 months. This, after it recently raised $30 million of equity and debt from investors like Naspers and Lendable.
The car subscription company champions people “unfairly ignored by banks”. It has purchased 10 000 cars since its inception in 2017, providing people access to much-needed personal vehicles. During the same period, Planet42 has extended its reach across South Africa by adding new car dealers to its partnership network, which has now grown to over 800.
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The Boston Consulting Group estimates that car subscriptions could become a $30 to $40 billion market in the next 10 years, with Planet42’s rapid growth and recent successful $30 million funding round led by Naspers, is living proof of the business model’s immense demand. Transport plays a key role in providing social inclusion and equality of opportunity.
However, while 75% of Europe’s and North America’s urban population has access to public transport, in sub-Saharan Africa that drops to 33% according to the United Nations.
Planet42 reduces transport inequality
Many low-to-medium earners with stable incomes that would traditionally get car financing in other countries are unable to in South Africa due to banks’ strict lending criteria. This transport inequality reinforces socio-economic divides, impacting on livelihoods and safety, something which Planet42 is working to address.
According to Grant Wing, managing director of Planet42 South Africa, “Personal mobility is the gateway to economic opportunity, but transport inequality leaves too many deserving individuals in emerging economies unable to reach their full potential. We are constantly working on ways to better determine the risk of each customer and as a result, being able to lower the price of our service.
“We are here to make transport more accessible and our rapid, but structured growth is a testament to the demand for better mobility in South Africa. Our aim is for Planet42 to have 100 000 vehicles on South Africa’s roads over the next three to four years.”
Success in South Africa has emboldened Naspers-baked Planet42 to set its sights on new markets, including Mexico. There, every year more than 7 million second-hand cars are bought and sold, but Mexico also faces the social and economic challenge of having a large population of underbanked individuals. After developing a foothold in Mexico, Brazil is the next major market Planet42 is planning on moving into.
Wing explains: “Mexico faces similar challenges to South Africa with an incredibly large population of underbanked professionals and substantial transport inequality. We feel we can really make a difference there and in other similar emerging markets, including Brazil. Our long-term goal is to have purchased more than 1 million cars by the end of 2025.”
Planet42’s socially inclusive subscription model provides people who are denied a loan by traditional banking institutions, but are willing and able to afford a car, a path to ownership.
Its proprietary scoring algorithms and data science technology instantly assesses a customer’s affordability and offers them new or used cars from a list of local dealers located country-wide.
Planet42 then buys the car and rents it to the customer on a flexible subscription basis. Meanwhile, dealers in Planet42’s South African network have seen an average increase in sales of 26% since becoming partners.
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