Innovative Car-Rental Firm Expands to Vehicle Subscriptions

A trio of mobility-savvy entrepreneurs – who in 2019 founded a car-rental operation in a California garage – now enter the vehicle-subscription business, a world that’s not yet fully charted.

They see their advantage as combining operational efficiencies with innovative technology, says Nikolaus Volk, who cofounded the company, Kyte, along with fellow German natives Ludwig Schoenack and Francesco Wiedemann.

“It’s almost like building two companies in parallel,” Volk tells Wards when asked what he and his colleagues have learned in their collaborative effort.

“There is the assets part and the technology part. You’ve got to master both to make it work,” says Volk, who focuses on the engineering side of the business. He formerly worked on artificial intelligence for Uber.

Kyte’s app-oriented model is to deliver cars to people’s doors for daily, weekly and monthly use.

Kyte lifestyle

The rental business began in San Francisco “in a garage we worked and slept in because housing costs in San Francisco are so high,” Volk says.

Kyte this year expanded into the subscription service. It’s for people who want a vehicle for more than a few days but aren’t interested in long-term leasing or outright ownership.

“Subscribers (tend to) live in cities and love the flexibility subscriptions offer,” Volk says. “It’s mainly for someone who wants a car for one, two, three, six months.”

Kyte’s monthly subscription prices start at $519 for small sedans such as a Kia Forte or Nissan Versa, $579 for midsize sedans such as a Toyota Camry or Nissan Altima, $679 for an SUV such as a Jeep Compass or GMC Terrain and $899 for a Tesla Model 3.

“We see demand for all categories from people with flexible lifestyles,” Volk says.

Subscribers can use their own car insurance or buy it from Kyte. Volk acknowledges the variance of car insurance from state to state, let alone driver to driver, is “tricky.”

“There is more product there to build,” he says of the insurance side of the business. “There is a lot to offer – and build.”

Kyte has raised $100 million to date. Backers include investment bank Goldman Sachs.

Vehicle subscriptions remain relatively new to the mobility world.

They come in different versions from both automakers and independent companies such as Kyte and Fair. Asked about the competition, Volk says, “We have a model that’s unique.”

Most subscription services today involve single vehicles.

That’s in contrast to early subscription plans that allowed participants to swap in and out of different vehicles, from convertibles to pickup trucks.

But despite generating initial buzz, the multi-car subscription plans proved to be complicated, relatively expensive enterprises. They drew few takers, such as only 37 in the huge Dallas-Fort Worth metroplex for Cadillac’s swap-out plan before the automaker scratched it.

Compared to its rental operation, subscriptions “are a small part of our business – for now,” Volk says.

Kyte currently operates in 14 cities. It remains based in San Francisco, with offices in Munich, Germany. It currently employs 100 staffers.