Car manufacturer Tomcar Australia claims to be the first automobile vendor to accept bitcoin. The company, which makes rugged off-road vehicles, begins accepting the cryptocurrency today.
Bitcoin has proven to be a useful currency for online services, and mail order goods. Some bricks and mortar services also take it. However, the cryptocurrency has largely been ignored for purchases like cars, unless you buy via an online marketplace. Now, Tomcar, which makes specialist off-road utility vehicles, will happily take your decentralized digital cash.
"Any startup company should maximize potential payment methods and we see bitcoin as a valid burgeoning payment format, just like credit cards were in the 1970s," said David Brim, co-founder and CEO of the Australian firm. "When our Tomcars are suited to many driving environments, it makes sense to accept a global currency without nation state borders."
How it works
The firm will be taking coins via the local CoinJar service. Customers select bitcoins on the site, and the purchases then go through CoinJar’s payment gateway. The price of the cars (which includes goods and services tax) will be calculated based on the value of the bitcoins in real time and reconciled by CoinJar. CoinJar, which provides the checkout code for its customers’ web sites, settles funds into a firm’s bank account daily and takes a 1% cut of the funds that it transfers.
Brim said that the CoinJar partnership will provide a “stability hedge” at the time of purchase, benefiting both Tomcar and the customer. He added:
"This means that we have absolutely no exchange fluctuation risks against AUD or the USD."
Tomcar’s vehicles were originally developed for the Israeli military. They now sell to military and commercial clients, who use its vehicles for applications including tourism, fire and rescue, and industrial and mining. It also sold to consumers for recreational purposes. The vehicles start at AU $24,950 and ranges up to AU $30,450 for higher-end models.
The company outsources its manufacturing, and sells directly to consumers, eliminating the traditional dealer network to reduce costs. It does maintain regional distributors outside Australia, however, along with a selection of direct agents around Australia, which it calls "brand patrons".
The key driver
Brim said that international money transfer fees are a key driver for accepting bitcoin - cryptocurrency allows overseas transactions with fewer fees. Only 5% of the company's transactions come from buyers outside Australia at present, he admitted.
"We are looking to expand this, which is one of the reasons we decided to accept bitcoin as a payment methodology," Brim said.
Tomcar already uses bitcoin to pay some overseas suppliers, according to Brim who added that he currently pays between 6-12% for conventional money transfer, compared to 1% or less with bitcoin.
Brim told CoinDesk that he is trying to persuade more companies in his supply chain to also work with bitcoin. "The cost of most international money transfers using traditional financial systems is unjustifiably expensive," he said. "We aim to get all our partners using it in the short term and we see it as a significant saving for both our businesses."
The company is talking with MTM Automotive, its manufacturing partner, which makes its cars. Last year, that firm announced a facility in Melbourne, Australia.
“We believe much of [the auto industry] requires a rethink,” said Brim, arguing that troubles in the automobile manufacturing sector show that it is important to modernize thinking in the business. He added:
“As we move into the digital era, many of the industrial methods are too cumbersome and slow in their approach. An example that springs to mind is the dealership systems and lack of true e-commerce.
Most OEMs still require you to walk into a dealership to buy a car, even if you start the process on-line. Like most retail, this system is costly and regressive."
The car industry has flirted with bitcoin before. Last year, Wikispeed, an initiative to create an environmentally-friendly car using a crowdsourced design, announced that it was taking bitcoin payments.
A Texan car dealership, Sam Pack Ford, also announced that it would be taking bitcoin payments earlier this year. However, when CoinDesk contacted representative Matt Bonner, he said that he was new and had no idea what bitcoin was. The Ford dealership still isn't quoting bitcoin pricing, but Dubai-based Al Nabooda Automobiles was able to sell 25 luxury cars for credits within the BizX community currency network.
These instances seem to be either half-baked marketing initiatives, donations for unlaunched products, or one-off deals, though. Tomcar seems to be going all-in for bitcoin, with a proper checkout system, and a policy to promote their use internally. It may be a specialist vehicle manufacturer, but it's a small foothold for bitcoin in the auto industry, nevertheless.