Founded in 2011, ForeverCar has created a fully-transparent web portal that enables consumers to purchase extended car warranties online which are 100% backed by A.M. BEST, A + rated, Fortune 500 insurance company. ForeverCar wants to do for car warranties what Progressive did for car insurance and Edmunds.com for car shopping. They aim to become the top-performing vehicle service contract sales platform in the U.S.
PRODUCT/SERVICE: ForeverCar has created an online platform to sell vehicle service contracts (VSC’s), commonly known as extended car warranties, to protect consumers from unexpected costly repairs. Their coverage is similar to the manufacturer’s bumper-to-bumper warranty that comes with the purchase of a new car. Car owners frequently purchase VSC’s when the manufacturer’s warranty expires after three years or 36K miles, whichever comes first. Cars must have less than 90K miles and nine years of age to qualify for a warranty from ForeverCar. Their typical warranty provides coverage for five years/100K miles and can extend to 125K miles and, in certain instances, 150K miles depending on the make and model of the car. American Auto Shield is the third party claims administrator and is backed by Assurant, the underwriter and a Fortune 500 company.
VALUE PROPOSITION: ForeverCar offers the following value propositions: 1. The first fully transparent online platform to display quotes, purchases, financing options, and legally-binding vehicle service contracts. 2. The most comprehensive coverage in the U.S. Their coverage is the equivalent of the manufacturer’s bumper-to-bumper warranty. 3. Competitive prices which typically are 20% to 25% cheaper than those offered by car dealers due to their B2B2C model without dealer markups. 4. Their contracts are backed by a Fortune 500 company.
MARKET SIZE: Consumers spend approximately $11 billion per year on VSC’s–$5.5 billion at POS (Point of Sale) and $5.5 billion at MPOS (Missed Point of Sale). Initially, they are targeting the $5.5 MPOS market which is fragmented with no dominant brand online or offline. In addition, they are targeting the 84 million vehicles on the road with less than 90K miles and nine years of age that are not covered by a warranty. This untapped market for warranties approximates $78 billion dollars.
REVENUE MODEL: ForeverCar is employing a B2B2C model which has significantly lower customer acquisition costs than a typical B2C model. It saves advertising costs and avoids dealer markups. They plan to sign revenue-sharing agreements with major consumer brands adjacent to the automotive space and use white labeling to sell VSC’s into their proprietary customer databases. ForeverCar will offer a 20% to 25% discount off the average $2500 retail price of an extended car warranty. Their gross profit margin ranges between 10% & 20%.
MANAGEMENT TEAM: Russ Carpel, founder/CEO, is a serial entrepreneur and has more than 12 years of corporate experience in sales, marketing, business development, and management. He directed advertising in the Midwest for multiple, top-tier national media brands including CBS, The Economist, and Crain Communications. Nag Oedkar, co-founder/COO, has held leadership roles at several Fortune 200 companies including VP of Consumer Marketing for the U.S. subsidiary of Aviva, Director of Brand & Advertising for Northwestern Mutual, and Brand Director at The Hartford. David Forman, co-founder/CSO, has more than 15 years of experience in sales management and is a specialist in call-center sales tactics. For five years, he managed a call center that processed over 400,000 calls per month and generated hundreds of thousands in sales. Rich Corbin, co-founder/CFO, is a former senior analyst and portfolio manager at Daybreak Special Situations Hedge Fund. He advised early-stage companies on business strategies and capital raises.
COMPETITIVE ADVANTAGE: ForeverCar offers the following competitive advantages: 1. They are disrupting the market with the first online platform to provide complete price and product transparency. 2. They offer the best coverage at the lowest price. 3. They have already signed two revenue-sharing agreements, two letters of intent, and have a long list of potential major partners. Major competitors include Stop Repair Bills, Carchex, AutoAssure, and Endurance Warranty.
PROOF OF CONCEPT: ForeverCar generated a modest amount of revenue in a limited beta test and has signed revenue-sharing agreements with two strategic partners.
CUSTOMERS/USERS: They launched a beta test in August for four weeks with a standard B2C model and grossed $30K to validate their business model. Subsequently, they switched to a B2B2C model and have begun to leverage nationally-recognized consumer-facing brands to sell into their customer databases.
STRATEGIC PARTNERS: ForeverCar has signed contracts with two strategic partners: The General Car and Swap-a-Lease.com. They signed letters of intent with TrueCar and a major auto website, and received a verbal agreement from Farmers. In addition, they are in talks with Progressive, Nationwide, Cars.com, Geico, AutoAmigo, and Autozone. Every deal will be different in terms of the revenue-share, branding, and level of integration. They aim to partner with national brands that are adjacent to the auto industry such as auto websites, auto insurance companies, auto part retailers, and national auto service centers but not necessarily auto dealers.
FUNDING: To date, ForeverCar has raised $750K from American Auto Shield, Lincoln Park Capital, and individual angel investors. They’re seeking $250K over the next three months. ❒
[Photo: Russ Carpel, Founder and CEO of ForeverCar. Photo by David Carman. © Blackline Review.]