PHILADELPHIA, PA, Jan. 03, 2024 (GLOBE NEWSWIRE) --
Dear Fellow Shareholders,
As we all mark the end of 2023, I want to share my enthusiasm about what has been accomplished by your Company in meeting the challenges and headwinds of 2023, and my optimism that, in setting the foundation for future growth, we have defined the strategy and path to leverage the tailwinds for us in the automotive industry that we see forward into 2024.
Our Company software platform and app is dedicated to enabling millions of people in the United States who do not have access to personal transportation or have inadequate personal transportation, the ability to immediately drive and then buy the vehicle of his/her choice. Through our technology that “de-risks” the transaction of subprime and deep subprime credit, we do this in a way that creates new customers for car dealers and allows everyone access to quality vehicles, and now access to EV/PHEV vehicles, for the growth in a sustainable future.
2023 – Progress Amidst Challenging ‘Headwinds’
2022 and 2023 have not been easy for companies like ours, as the historic unprecedented new and used vehicle shortage in the United States, for all dealers, greatly reduced our platform inventory.
During this time, however, your Company has continued to lay the foundation for rapid future growth. As for the last one hundred and twenty or so years vehicles have been for sale, there has almost always been more “supply” than “demand,” we worked past the current market anomaly and we prepared for the future by continuing to develop the processes, technology, and relationships that we feel will make DriveItAway the high growth leader in its emerging market.
This temporary supply/demand challenge did force us to temporarily find new avenues for vehicle inventory, so we formed a mutually beneficial sublease relationship with a large national subscription service to keep internal combustion vehicles available to our customers, while we also ran our own small fleet of EV units, to develop the expertise of operating EVs and “selling” their efficiencies to entry-level drivers, as we anticipate this knowledge will serve us well in the years to come, as the manufacturers and nation step up to the challenge of getting “regular folks” (not just the affluent) into EVs.
We also had some transition issues, with the professional administrative vendors we took on from the previous management and company. I am pleased to say that we resolved these vendor issues, transitioned to some new professional service organizations, and our latest quarterly filing was on time, as we anticipate all future filings to be on time.
2024 – Foundation for Growth: Set to Scale with Market ‘Tailwinds’
FIRST, we have developed our SaaS platform further, to provide the highest most efficient, and equitable level of service to our dealer customers, partners, and end-user drivers. For example, ahead of most in the industry, we successfully migrated from providing a uniform fleet insurance coverage for all drivers, which inevitably, given flat pricing, overcharged those with a good driving history and undercharged those with less of a good record, to an app administered “bring your own insurance” model, where every renter selects and secures his/her insurance for our vehicles.
SECOND, the pendulum is rapidly swinging back in the auto industry to conditions much more favorable for your Company. It has become apparent to all now that new and used vehicle inventory is building rapidly, and the industry is back to “normal” with increasingly more vehicle supply than demand. As I write this, overall new vehicle inventory is now at an average 70-day supply (from less than a 30 day supply a year or so ago…60 days is the industry goal), and new EV/PHEV inventory is now at an industry-paralyzing 120-day supply, this with over 100 new EV models entering the market in the next 30 months. Used car values, in general, have fallen and used EV values are down a record 30% or so in just in the last twelve months. In addition, sale prices of vehicles have not gone down, so affordability is a key reason for the slowdown in sales growth, while banks in general have tightened credit standards for the qualification of car loans, particularly in the subprime and deep subprime categories. Finally, vehicle loan delinquency is up dramatically, particularly in the subprime and deep subprime categories, the highest it’s been in 17 years, by the end of November 2023.
On the supply side, this bodes well for your Company, as our SaaS program works best for dealers, where new or used vehicles are sitting “underwater” (retail value less than dealer cost, while inventory flooring/carry costs accrue daily and add to the loss), as a “safety valve” using our app and platform to create revenue and net income immediately while enabling a new customer to purchase in the process.
On the demand side, these macro conditions also are good for DriveItAway. As vehicle lack of affordability becomes more of an issue and higher down payments are required for car loans, credit tightens and delinquencies rise, more and more people fall into the “unbankable” category, leaving no desirable alternatives to acquire personal transportation. The “unbankable” have, historically, been forced to buy from independent “Buy Here/Pay Here" (BHPH) car dealers, many of which operate in the “backwater” of automotive retailers, self-financing “junker” high mileage vehicles, usually marked up at three times (or more) over fair market value, with finance rates usually at 29% or higher. Many vehicles purchased from BHPH dealers break down well before any finance note is satisfied, leaving the buyer in a worse condition than before the sale. When compared to the DriveItAway micro-lease/rent-to-own option introduced, people in this situation invariably choose our program – indeed, if you look at our reviews, it's usually a “this is too good to be true” reaction. With millions of Buy Here/Pay Here transactions happening every year in the United States, there is plenty of demand for DriveItAway’s future growth.
Further, the plateau of both new and used EV sales in the United States, now apparent to all, combined with the rules for the 2023 Inflation Reduction Act EV/PHEV new and used federal sales incentives, present a particularly positive area of high growth for your Company.
As all vehicles in DriveItAway are rentals in commercial service, all fall under the US Treasury “45W” rule, which determines that all new EV/PHEVs in commercial service receive the full $7,500 tax incentive, with no sourcing requirements, this, while the majority of EV/PHEVs in 2024 will not qualify for full incentives, based on country of origin for the vehicle build or battery components, for a conventional retail sale. This means that in most cases any dealer that puts a new EV/PHEV on our platform is entitled to the full $7,500 tax incentive, even if the vehicle would qualify for no incentive with a traditional sale.
In addition, all used EV/PHEVs that are at least two model years old, sold for $25,000 or less, to someone that makes no more than $75,000 annually ($150,000 filing jointly), qualify for the $4,000 (or 30% of the sale price, whichever is lower) federal tax incentive, for the first retail sale of the vehicle by a car dealer.
These rules on the federal EV/PHEV incentives set up a very good situation for car dealers to utilize the DriveItAway platform, to generate immediate cash in rental/leasing monthly usage fees for new and used EVs that are clogging up their lots (and accruing inventory floor plan costs daily), usually triggering the full new EV incentive when the vehicle is flipped to dealer rental/leasing company for the DriveItAway program, and a way to write used EV inventory down, through usage payments, to trigger the $4,000 or 30% used EV credit to any retail buyer (including the DriveItAway driver).
Finally, as the used car value of EVs plunges, it creates a market opportunity for DriveItAway to expand its own Company owned fleet with low capital cost quality inventory. Many end-user customers of DriveItAway, particularly those referrals coming from our large national staffing company partnership, just need reliable transportation, and do not drive far in a day, have (or will soon have) the opportunity to charge at work, and welcome the benefits of an EV, which garners, on average, $200 less in fuel expense each month. We can leverage the abnormally low acquisition costs of used EVs and create immediate profitable cash flow and net income for our Company with this market opportunity.
As it is becoming apparent that the EV market has now run out of affluent, early adopter buyers that have fueled the growth to date, more focus is placed on getting “EVs for everyone,” as CEO of General Motors has stated, and DriveItAway is perfectly positioned as the platform to do this in scale.
THIRD, DriveItAway has developed relationships in the last year with many partner organizations, that will allow it to scale in 2024 and many years to come, by helping to solve very real problems in the United States and Canada today.
For example, the Company has developed and piloted a vehicle access program with Partners Personnel, the fastest-growing industrial staffing company in the United States. The collaboration looks to provide stability for the many employees who lack a form of reliable transportation by offering affordable vehicles, including electric vehicle, options, through the DriveItAway platform. Partners Personnel has thousands of employees across the US, and DriveItAway in 2023 successfully piloted a few smaller regions, preparing to handle much more volume, once vehicles become available. This helps to secure the “demand” side of the equation for DriveItAway, while it also helps to put people to work and solve the current “entry-level” worker demand shortage throughout North America. Today the problem isn’t getting a job, it's getting to the job for many workers, and DriveItAway is proud to help solve this problem for the benefit of all, in a sustainable way.
“We are delighted to join forces with DriveItAway to address a significant challenge faced by our associates – reliable transportation,” said Kristy Gebhart, Regional Vice President and Chair for the Associate Resource Committee at Partners Personnel, as quoted in a DriveItAway press announcement June 21, 2023, announcing the relationship.
Summary
While 2023 presented many challenges, we are leaving the year much stronger, having gone further in creating the foundation upon which to scale rapidly, as the macro-economic tailwinds in the United States move in our direction. With a clear strategy, and with the continued support of our shareholders, we are poised for a journey of remarkable growth and achievement in the coming years. We look forward to sharing this journey with you and to achieving new heights together.
Thank you for your support and belief in DriveItAway in 2023 and beyond.
Best regards,
John F. Possumato
Chief Executive Officer
DriveItAway Holdings Inc.
For further information on DriveItAway Holdings, Inc., and all the Company’s subsidiaries and products please visit www.driveitaway.com
About DriveItAway Holdings. Inc.
DriveItAway Holdings, Inc. is the first national dealer-focused mobility platform that enables car dealers to sell more vehicles in a seamless way through eCommerce, with its exclusive “Pay as You Go” app-based subscription. DriveItAway provides a comprehensive turn-key, solutions-driven program with proprietary mobile technology and driver app, insurance coverages, and training to get dealerships up and running quickly and profitably in emerging online sales opportunities. The company is now introducing its ‘subscription to ownership’ micro lease platform to enable all consumers to drive and acquire new electric vehicles with its “EVs for Everyone” initiative.
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This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond our control, and may cause actual results to differ significantly from those expressed in any forward-looking statement. All forward-looking statements reflect our good faith beliefs, assumptions, and expectations, but they are not guarantees of future performance. We caution investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this press release.
