Loopit, a Software-as-a-Service (SaaS) provider for the automotive sector, has secured US$3.95 million in pre-Series A funding to support its expansion across the US market.

In a press release, the company said the investment strengthens Loopit’s position as a technology provider, enabling Original Equipment Manufacturers (OEMs), dealerships, and rental companies to adopt flexible car access models like car subscriptions and micro leasing.

The funding round saw contributions from existing investors Upswell, Common Sense Ventures, and Luxem, as well as new participants AeroCorp, a major AVIS licensee, and RAC venture capital arm BetterLabs.

This capital infusion is expected to enhance Loopit’s capabilities, enabling it to broaden its presence in the US market and prepare for a Series A round later in 2024.

Loopit co-founder Michael Higgins highlights the growing demand for more affordable subscription services, driven by economies of scale and increased confidence from automakers. He points to the success of France’s subsidised flexible EV leasing programme, which doubled its yearly targets in just six weeks, as evidence of strong market demand.

Higgins emphasises that affordability and accessibility, rather than technology alone, will be critical in driving mainstream EV adoption. He anticipates further cost reductions as automakers refine their pricing models, making car subscriptions financially attractive, particularly for consumers prioritising flexibility.

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Changing consumer preferences, especially among younger demographics are fueling the expansion of the car-as-a-service market, according to Higgins. He notes that subscription costs are currently comparable to car ownership when factoring in maintenance and depreciation but predicts subscriptions will become the more economical choice as prices decrease.

Loopit provides mobility management software to automakers, dealerships, fleets, and rental providers, serving clients like Porsche, Subaru, Polestar, and Sixt.