A CAR designer in Paris is developing a new no-frills vehicle that aims to fundamentally change the economic model for driving – by paying for itself over time.
The Free Car Project was born from the belief that many consumers have had enough of over-equipped and over-priced cars – and that the “cashback” system offered by e-commerce and credit card companies could be applied to shops who make money from car owners.
Mr Oualid, a design specialist who previously worked for PSA Peugeot-Citroën and Volkswagen, has envisaged a system where drivers recoup the cost of the vehicle over its lifetime by getting a discount from retail partners on everyday purchases. The merchants would also pay manufacturers a commission, which would be reinvested in making new models. As a result, the cost of a €6,000 car could be split 50:50 between the driver and the manufacturer – and both parties would make the money back gradually as the vehicle is used.
He says drivers who buy the budget car will have more disposable income and more purchasing power, and can be more easily attracted to out-of-town shopping centres and DIY outlets as a result, because the convenience of having a vehicle makes drivers spend more. The system can be used to encourage people to shop outside peak times – by offering better cashback mid-week.
Mr Oualid estimates that, over the course of its life, the Free Car would generate about 20 times more than its on the - road price in revenue for shops and petrol stations, and that it makes sense that “the ones who make money out of the car are the ones who pay”.
He explains: “The car is equipped with a box. Every time the owner uses it, they swipe their bank card to identify themselves. If during their journey they buy something with a participating retail partner – a flat-packed set of shelves from a furniture store, for example – the driver just has to pay with the same card and the shop will offer a small amount of cashback, about 2%, and will also pay a commission to the car manufacturer.
“The same happens when the driver fills up at the petrol station or gets their car serviced – everything he or she buys with a partner organisation is eligible, and after several years, the cost of the car is recouped.” He says the average car generates €3,700 a year in revenue for petrol stations, motorway toll operators, car parks and insurers – not to mention the thousands spent on shopping.
On a €10,000 annual family spend, he estimates that each car could generate about €500 in commission each year for the manufacturer – and would pay for itself within a few years. The annual income could rise to €1,500 if the vehicle is shared among multiple owners. The card-reading box allows shared use and insurance firms can identify who is driving, making it possible for them to offer tailor-made packages based on vehicle use – a “pay as you drive” system.
Mr Oualid says that, at present, constructors see about €500 to €1,000 in profit from the sale price of a car, but this new model would enable them to earn “five to 10 times more” but over a longer timeframe.
He likens the commission paid to the manufacturer to that paid by a hotel to an online booking site that sends custom its way – the car is seen as a generator of business. He adds: “The new digital economy shows how profitable microtransactions can be.”
Mr Oualid says he has “met a lot of people” – from manufacturers and retailers to drivers and insurers – and, if he gets the green light from a constructor, the car could be on the road within a year. At the heart of the project is what he calls an “iconic and solid” design that aims to be cheap to produce, lightweight, adaptable, environmentally friendly and easy to repair. He says many features in a modern car are surplus to requirements.
“I quickly came to discover that many people are frustrated,” he says. “Cars are too expensive or boring. They are over stylised or not rewarding enough.”
He says it has been difficult selling the idea to manufacturers, who are worried about selling a car too cheap. “The Dacia Logan costs about €3,200 to make, but it’s sold for €10,000 with added extras. A good car can last on average 15 years – small, practical ones even longer. The on-the-road price for a sustainable, practical, light car can be effortlessly kept below €6,000.
“Everyone needs an affordable car – whether young people, the retired, unemployed or families. One research body believes there will be 15.6 million ‘Ultra Low Cost Cars’ on the road around the world by 2020.
“It is a simple and lightweight design. The free car is more environmentally friendly to produce and to drive and it is sustainable because the longer you keep the car the more profitable it is for the user and the manufacturer.”