Planet42 is a South African-based start-up that has raised over $150m, offering a unique kind of financing for cars. It differentiates itself from competitors, such as Autochek and Moove, by renting used cars to customers on a subscription basis, with an option to buy.
Since its launch in 2017, Planet42 has purchased over 16,000 cars through partnerships with small-scale car dealerships and large brands in South Africa. It has now expanded into Mexico, where it has already acquired over 1,300 cars.
Eerik Oja, CEO and co-founder of Planet42, said the start-up aims to solve the problem of the huge number of customers being turned away by dealerships because banks refuse to finance them.
Planet42 provides a new opportunity for those who would otherwise not have access to loans. He added that the public transportation system in these markets is often slow, unreliable, and dangerous, making it essential for many people to have their car. The start-up’s service offers real cars for people who need them to get to work, take their children to school, go grocery shopping, or visit relatives.
However, Planet42’s service raises the question of what happens if a car is damaged while renting, given that these are not new cars. Oja says that every car has comprehensive insurance and that the monthly payment includes a minimum six-month mechanical policy.
Planet42 uses its data science and risk-scoring algorithms to evaluate applications for its service. It approves about half of the customers who apply, which helps solve the problem of the conservative nature of banks in Africa and other emerging markets. Less than 20% of people with a credit score can qualify for bank financing, so Planet42 is there for the remaining 80%.
The fall of African currencies against the dollar and high customs duties on cars have made car purchases less accessible to many customers. However, Oja believes that Planet42 can be impactful because it builds a business on banks’ conservative nature and the consequent denial of access to loans for potential customers.
In conclusion, Planet42 offers a unique solution to the problem of loan access for customers in Africa and other emerging markets, providing rent-to-buy car subscriptions. Its model of buying used cars and renting them on a subscription basis to customers who need them for their daily routine has proven successful.
Its expansion into Mexico shows that there is potential for growth in other emerging markets. Planet42’s service is inclusive, with comprehensive insurance and minimum six-month mechanical policies included in monthly payments. The start-up is a much-needed solution to the conservative nature of banks and the limited access to loans for customers in emerging markets.
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