AutoNation teams up with Fair in latest digital outreach

AutoNation Inc. is partnering with Fair, a used-vehicle leasing subscription service, to offer customers a flexible lease option, the companies said Thursday. The partnership is AutoNation's latest of several alliances with digital startups.

AutoNation, the largest dealership group in the U.S., will begin offering Fair's service at its California dealerships this month. The dealership group will likely add it in South Florida in the first quarter and continue to other markets from there, said Marc Cannon, chief marketing officer.

On Oct. 30, AutoNation announced a $50 million investment in Vroom, an online used-vehicle retailer, and in November 2017, it partnered with Waymo to provide maintenance and repairs for Waymo's fleet of self-driving Chrysler Pacifica hybrids. The partnership has since expanded. Now AutoNation offers some of its customers Waymo rides instead of a loaner during service appointments.

"We are going continue to look at opportunities as we are clearly seeing how the digital and other models are playing into the auto retail segment," said Cannon.

Through Fair, which launched in August 2017, consumers can use a mobile-phone app to shop for used-vehicle leases with no term. They scan their licenses to get prequalified for a range of monthly payments that include maintenance, a warranty, insurance and roadside assistance. Rather than stick to a two- or four-year lease term, with five days' notice, customers can return their vehicles whenever they want.

Flexible option

The partnership will give AutoNation customers an alternative to traditional ownership by offering a more flexible option, AutoNation CEO Mike Jackson said in a statement. "From a dealer's perspective this will help increase the velocity of the used-car business while also enhancing our access to new customer groups such as millennials and Gen Z," he said.

Fair has partnered with more than 3,000 dealerships nationwide, including three of AutoNation's public retailer peers: Penske Automotive Group, Asbury Automotive Group and Group 1 Automotive, a spokeswoman said.

Fair operates in 23 markets in 14 states and will have a nationwide footprint by year end, she said.

Compared with automakers' subscription programs, Fair will appeal to a broader audience of consumers who want to lease cars from various automakers, said Cannon.

Fair also guarantees that the monthly payment is comparable to a monthly lease or loan payment on a similar vehicle, Cannon said, vs. the premium many automakers charge on subscriptions.

Fair's roster

Talks between AutoNation and Fair have been ongoing since June, said Cannon.

Georg Bauer, former Mercedes-Benz Credit Corp. CEO, is co-founder and chairman of Fair. He and Jackson worked together when Jackson was CEO at Mercedes-Benz USA.

"Mike and Georg go way back," said Cannon. "Georg is a fabulous operator."

Fair is led by Scott Painter, who as founder of TrueCar had squabbled with AutoNation in 2015 over customer-data demands. Former Tesla executive Diarmuid O'Connell joined Fair this year as chief strategy officer. Bauer was at Tesla before starting Fair.