JULY 23-25, 2019 | RALEIGH, NC

Mobility as a Service:Dealer Tech Opportunities

John F. Possumato

President & CEO

DriveItAway

john@possumato.com

A VUCA WorldVolatile

UncertainComplex

Ambiguous

of ACES MobilityAutonomousConnected

ElectricShared

Mobility as a Service: Unleashing Profit Opportunities

MaaS

What is

MaaS?

How can dealers

profitably and

flexibly get in the

game to be

prepared for the

future?

Why is it an

opportunity now

for dealers?

“It’s not the strongest of the

species to that survives, nor the

most intelligent that survives. It is

the one that is most adaptable to

change.”

-Charles Darwin

“It’s still Day 1 of the Internet and

of Amazon.com: Though we are

optimistic, we must remain

vigilant and maintain a sense of

urgency.” *

-Jeff Bezos

* Concludes every annual letter to shareholders by

reminding readers of this, since his first annual letter in

1997

Mainstreet & Silicon Valley: 2 Different Worlds / 2 Different Languages

Change is Evolution…

Invented digital

photography…and

dismissed it.

1980’s

NetFlix Founder Reed Hastings

approached Blockbuster CEO John

Antioco and asked for $50M to sell

and merge the companies… NetFlix

is now worth $160B

2000

… and Things Are Changing

Cox takes a deeper dive into mobility

“The multibrand industry player, with more than $7 billion in

revenue last year, expects the new mobility business to dwarf its

cash-cow Manheim auction business within a decade, according to

an internal memo obtained by Automotive News.”

“Cox expects the division to grow to revenue of $100 million to

$150 million in the next few years, and then balloon into a $5 billion

business in a decade, according to the memo.”

As Dealer and Consumer Base is Expected to Shrink?

New Age of Transportation Expected to Thin

Auto Dealer Ranks

“There are about 9,000 (dealership) owners now,” O’Neil says. “By

2030, we think there will be 1,000. That’s drastic.”

Mark O’Neil, COO of Cox Automotive, on US Franchise Dealer

Forecast

…. and Opinions Differ

Car-dealer leader: Don't believe Auto 2.0 hype

“Lutz set out to debunk three main narratives: that ride-hailing

services will replace personal-vehicle ownership; that autonomous

vehicles will make roads safer; and that dealers are holding up the

move to electric vehicles.”

Wes Lutz, Immediate Past Chairman of NADA

AmericaMerrill Lynch Global Research:‘Car Wars’May 2019

until 2026.

U.S. auto industry faces 30% drop by 2022,

analyst predicts

According to ‘Car Wars,” annual sales will plummet from 17.27

million last year to between 13 and 14 million by 2022. That's a

massive advance on Car Wars' previous timeline. In the 2016

study, analysts didn't predict the 14-million sales figure

until 2026.

Dealers can

leverage this to

their benefit if

they act earlier

in the process

MaaS Will Dramatically Effect Vehicle Ownership

Source: Deloitte University Press, The future of mobility: What’s Next? 2017 Issue 20

MaaS Will Dramatically Effect Vehicle Ownership

Source: ABI Research Report, Nov 2016 Mobility as a Service

MaaS Will Dramatically Effect Vehicle Ownership

Source: ARK Investment Management LLC | ark-invest.com

Source: Shaheen, Cohen, Jaffe, (2018)

“Innovative mobility: carsharing outlook –

Carsharing market overview, analysis,

and trends.”

Global Carsharing Market Trends

What Do These Valuation Predictions Mean for the Future?

Fewer cars

needed by individuals

Vehicles sold decrease

by 33% from

80 million to 54 million

Global vehicle miles

travelled up 65%

More miles

travelled by cars

IHS Markit Predicts

from 2017 to 2040:

Deriving revenue & profit by SHARING generates more money than the one time SALE of a vehicle.

For Example: United States Used Vehicles

SHARING (26% Estimated

Usage)

3.9 trillion miles

$ 0.608 per mile

$2.37 trillion

industry

35.5 million vehicles

US USED

SALES 2018

$19,000

$675 billion

industry

Change...

Gradually, then Suddenly*...

* How did you go bankrupt? Ernest Hemingway, The Sun Also Rises

… IPO’s Didn't Work Out So Well...

Let’s Keep this in Perspective:These Start-ups have lost Billions in 7+ Years of Operation

$ 1 billion losses in Q1 2019

$ 1.8 billion losses in 2018

$ 2.2 billion losses in 2017

$ 11.58 billion total losses since it started

$ 1.38 billion losses in Q1 2019

$ 911 million losses in 2018

$ 688 million losses in 2017

$ 0.42 for every $1.00 of revenue in 2018

…and not without

Emerging Issues

Are Uber Drivers

Employees? The Answer

Will Shape The Sharing

Economy

NOTIFICATIONS

000

Uber and Lyft are

fighting tooth and nail

against a California bill

that could make some

drivers employees and

bankrupt both

companies

For Those Who Think Uber is Intimidating?

Loss $ 9,000 per vehicle

with cap cost of less than $

30,000 in 18 months…

(40,000 vehicles)

New Models Not Without Cost Issues

“When is a failure not a failure? When it occurs in

France.

Ever since the arrival of Zipcar more than 10 years ago,

the concept of car sharing has become increasingly

compelling. Launched not long after Zipcar, which is

now owned by Avis, Autolib promised Parisiens

liberation from car ownership. That liberty was short-

lived as losses mounted at Autolib and the government

refused to offer a bailout. The company reported high

approval ratings and utilization, but the mayor of Paris

said: "No, merci!““

Autolib Lessons

Learned?

Do Autonomous Vehicles Make These Models Work?

Not until vehicles service, clean and repair themselves as well…

Vehicle Evolution - MaaS Business

OFFLINE

VEHICLES

• Private vehicles

• No online support

SERVICE

INTEGRATION

• Enhanced vehicle interfaces

• Integration of local services

VEHICLE AS A

SERVICE

• Car services such as vehicle

sharing

• Private

• Fleet

• Public

MOBILITY AS A

SERVICE

• Intermodal mobility with

different offerings and mobility

schemes

• Customized mobility on

demand based on individuals

GET IN TODAY…

SO YOU CAN LEAD TOMORROW

PAST YESTERDAY TODAY FUTURE

Adding New Technology to Existing Infrastructure

New York Post Office 1915 Compra Directa Autoped

The Fact that No One Seems to Acknowledge…

Dealers are already positioned to be more profitable in Car Sharing & Ride Sharing / Ride Hailing than any “Start-Ups”…

Why Car Dealers are Best Positioned for MaaS Vehicle Operations?

Cover variable cost and every additional dollar

of revenue falls to the bottom line

• Lower cost of asset (vehicle)

• Lower cost of maintenance & management of

asset

• Fixed facility already paid out

• Lower cost of customer acquisition (already

sales / service hub)

• Residual financial benefits

• Retention of service revenue if you have facility

• closings on previously “un-bankable” deals

• Peer to peer car sharing is F & I “upsell” for

online & on-location sales

“Car Dealers Thrive in the

MaaS Ecosystem”

“More than just a few

‘crazy’ pioneers*”

Giuseppe Marotta, (2019) MaaS-Alliance

https://maas-alliance.eu/car-dealers-thrive-in-the-maas-

ecosystem/

*Map based on the information

gathered during the investigation

Much Easier to Bring the Technology to the Infrastructure, than the Infrastructure to the Technology

Adding this is easy and

inexpensive – multiple

vendors and technologies.

Adding this is a little more

challenging, but the

software/mobile apps, as

with any technology, is

quickly going from unique

to a commodity.

Difficult for the new

tech start-ups to

duplicate or recreate

this infrastructure –

dealers are now the low

cost producer.

Car Dealers Thrive in the MaaS Ecosystem, Giuseppe Marotta, 2019

Car Dealers Thrive in the MaaS Ecosystem, Giuseppe Marotta, 2019

S W O TSTRENGTHS WEAKNESSES OPPORTUNITIES THREATS

Capillary Presence –

extensive service &

distribution network

Image & Customer

Acquisition – brand

awareness at local level

Know-How – long-standing

experience in servicing

vehicles and managing fleets

Vehicle Sourcing – B2B

purchasing prices

IT Infrastructure & Culture –

dealers don’t have this now,

but IT easy – getting faster,

better cheaper... Can Culture

Change Happen???

Financial Firepower –

Challenge, is there an ability

to enter the market without

substantial investment or

initial negative cash flow (DIA

“low hanging fruit”

Facilities – some more rural

locations might not warrant or

support initiatives

Expansion of Shared

Mobility Solutions in New

Locations (not just major

metro)

Policy and Financial

Support by Cities – eager

for public and private

partnerships

Strategic B2B Synergies –

partnering and networking

with other vendors

Financial Dilemma of Car

Sharing Schemes –

Financing vehicles/dealing

with depreciation verses book

value

No Right to a Second

Chance – dealers and their

funding sources are not like

Silicon Valley VC’s – no

funding for prolonged

negative cash flow

Low Demand in Smaller

Cities and Rural Areas –

recent studies and real-life

examples indicate interest in

MaaS in smaller cities and

rural areas, but there is a risk

in sufficient demand

• Owned an early Stake in Lyft Inc.

(Sold Pre-IPO at IPO Price to

George Soros)

• Controlling position in Hertz Global

Holdings

• 2,300+ Service centers in US – Icahn

Automotive Group (Pep Boys, Auto Plus, Driveline Systems,

Precision Tune Auto Care)

• Sold Federal Mogul Holdings Corp

(aftermarket parts) to Tenneco (Board Seat &

36% of surviving company)

Requirements for a Successful Dealer Based MaaSAdaption/Adoption Strategy Today:

Must be highly

profitable today

with little upfront

investment

Must be able to

scale effectively

Must feed

traditional sides of

the business

• Vehicle Sales

• Fixed Operations

Definitions US: (it’s all just Car Rental / Leasing)

Subscriptions Car Sharing

Cadillac Cancels $1,800-a-

month Car-Subscription

Service

GM brand was among the first to

launch a Netflix-style alternative

to owning a car; exit comes as

more car makers dabble with

such subscriptions

Definitions US:

Ride Sharing or Ride Hailing

The Worst Kept Secrets of Ride Sharing Companies:

1

Largest fleets in the

world, yet do not

manage their fleet –

each is just a

software platform

Critical need for new

drivers & 40% of new

applicants in US do

not have vehicles

2

In almost every

metro area in the

North America,

there is a critical

shortage of vehicles

for potential ride

share drivers!

Industries’ best kept secret:

All new approved

drivers have a

clean DMV &

passed a

background

check

Turn-over of

Ride Share

drivers is roughly

50% annually

Approximately 50,000

New Drivers Sign Up to

Drive for Ride Sharing in

a month NA but Roughly

40% of them do not

have a vehicle to drive

Every Day all over the US

Individuals are put Into the

rental business by peer to

peer Car Sharing networks

– Turo, HyreCar, FlexDrive

(a new car rental company

created just to service Lyft

drivers) etc. - to profit from

this shortage of vehicles

As of the end of

2018 – 3 Million

Uber drivers &

1.4M Lyft drivers

in the United

States

DRIVERSSALES GROWTH

1.4M drivers

1% of US

workforce

3M drivers

… if MaaS Vehicle Providers are Causing this Reduction in Private Ownership, Why Not Explore “Fishing Where the Fish Are” (USA)

2018 - 2.16B

Up 103% year

over year

2018 - 11.3B

Up 43% year

over year

New Idea in the US: Growth in Car Sharing for Ride Sharing Promoted at the Retailer Level Becomes the New Way for Cash Strapped, Credit Challenged Consumer to Buy

New Source of

Prospects with DMV

& Background

Checks

Room for Growth:

In US 22% of vehicle

buyers are subprime/

62% of population

Payment and Credit

Rehabilitation Starts

at Platform Level -

eCommerce

First Stage Dealership Adaption/Adoption –Car Sharing for Ride

Sharing

Bridges gap of the needs of

emerging & current transportation

Infrastructure – profitably merges

tradition and future

Dealership provides “full service”

(insurance + maintenance)

temporary used vehicles to Ride

Share drivers, with a clear “path to

ownership” for future vehicle

purchase

Everyone Wins

• Solve the critical willing

driver / no vehicle problem

• Recruitment more effective

• Sustainable drivers make

more money

• Improves lives

Ride Share Company Drivers & Consumers

• On demand employment

+ sustainable vehicle cost

= changed lives

• Highly profitable

• Scalable

• Feeds traditional business

• Sales

• Fixed Ops

Dealer Preparing for MaaS

Future

Dealer

Business Model:US Dealer

$8,000 Compact

fuel efficient vehicle

(40k miles)

$ 35a day

(full maintenance)

95% utilization

3000average miles

per month

Dealer Charges Monthly Gross Return

$ 1030

-$ 154

-$ 103

less SaaS Fee

15%

servicing

allowance (10%)

$ 773 net revenues

24month

useful

life

$ 18,552

- $ 8,000

net revenues

less vehicle cost

$ 10,552 return per vehicle

Car Sharing toRide Share Drivers

STAGE 1A Strategic Approach

to Entering MaaS

Vehicles to current Ride Sharing Drivers

• Low Cost/Risk – High Return

• Additional High Profit Department

• Additional Vehicle Sales

• Additional Fixed Operations Revenues

• This is a Used Car Business – New or Slightly

Used Vehicles Do not Pencil Out!

Some Early Dealer Adopter Success Models: Converting Car Sharing to Ownership

US dealer offers:

• Free credit repair to Ride Share

• 90 Day “Path To Ownership” Rent-to-Own program

• Over 450 drivers sign up in the first 24 Hours

Some Early Dealer Adopter Success

Pennsylvania, US Dealer dedicates

facility exclusively to Ride Share drivers

• 14 car showroom

• lounge area

• vehicle service facility

Lyft Region holds annual new driver

appreciation party with dealer’s grand

opening, an industry first

Pennsylvania

An Early Adopter Dealer Approach:Acura Franchise Store, Washington, DC USA

Required:

• Telematics – gps,

starter interrupt, etc.

• Vehicle Floor

Plan/Finance

Provides

• Insurance Providers

• SaaS Platform and

App Providers

1.

New Vehicle

Placed in

Dealer

Service

Loaner Status (OEM Incentive)

2.

Loaner Vehicle

Placed in

Subscription

Service

3.

Subscription

Vehicle Placed

in Car

Sharing or

“Car Sharing

for Ride

Sharing”

4.

Car Sharing

Vehicle Sold

to Ride Share

Driver or

Used Vehicle

Buyer

An Early Adopter Dealer Approach:Avis Franchisee, Pennsylvania USA

This Operator has

already converted

60% of his business

to profitable

monthly

subscriptions...

something the

manufacturers still

have not figured out

how to do...

1.

New Vehicle

Placed in Rental

Vehicle Service(OEM Incentive)

2.

Rental Vehicle

Placed in

Subscription

Service

3.

Subscription

Vehicle Placed

in Car Sharing

or “Car Sharing

for Ride

Sharing”

4.

Car Sharing

Vehicle Sold to

Ride Share

Driver or Used

Vehicle Buyer

Subscriptions | Retail Car Sharing

STAGE 2A Strategic Approach

to Entering MaaS

Builds on foundation platform

–software, insurance, set-up

Additional profit from new

business

Additional fixed operations revenues

Retain current customers – no

migration to 3rd parties

Car Sharing Implementation

Longer term benefits of STAGE 1 & STAGE 2

A Strategic Approach to Entering MaaS

Provides flexibility to adapt to

alternate future scenarios

• Experienced in servicing fleet

management needs

• Established car sharing & ride

sharing partnerships with

vendors

• Filling the needs in peripheral

markets

• Experienced in MaaS with

database of drivers and

customers

• As car sharing & ride sharing

platform becomes

commoditized easy to

implement local ride sharing

services

Ride Sharing &

Car Sharing Giants

Dominate

Car Sharing &

Ride Sharing Giants

Falter

Future Scenarios…

To Sum it Up:

JULY 23-25, 2019 | RALEIGH, NC

Questions?

JULY 23-25, 2019 | RALEIGH, NC

Next:Inaugural Emerging 8 Luncheon in the

Glenwood Ballroom –with TED Ted-style talk kicking off at 12:15

John F. Possumato

President & CEO

DriveItAway

john@possumato.com