Car subscription services have been growing in popularity due in part to the Covid-19 pandemic, according to Counterpoint Research.
Car subscription services are a way for drivers to have access to a vehicle without having to own or lease one. Drivers sign up to a monthly plan for a particular car, paying a monthly fee that typically covers insurance and maintenance.
With car ownsership, particularly among young people, declining, it looks likely that the mobility-as-a-service model will continue to grow in popularity over the next few years. Jaguar Landrover predicts that subscription services will account for 10% of all car sales in the US and Europe by 2025. Volvo also expects its subscription service Care it to account for 50% of its revenue by 2025.
According to Counterpoint, many automotive companies in the world have begun to offer subscription services. For example, India’s largest car manufacturer Maruti Suzuki has partnered with ORIX to start a pilot subscription model for new cars. In Japan, Nissan launched its ClickMobi car subscription service in March.
Toyota also launched its Kinto subscription service across Europe earlier this year. Startups, such as ZoomCar and Revv, have also begun collaborating with carmakers to offer software platforms and tech expertise needed to launch subscription services.
According to Motor1, the sale of new cars fell by 97% in the UK in April due to lockdown measures, despite car dealers being permitted to sell cars online rather than in person. However, subscription models have accelerated during the Covid-19 pandemic.
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This may reflect the fact that individuals have been wary of using public transport at this time, while financial or employment uncertainty, combined with the fact that unnecessary journeys were not permitted in lockdown in some countries may explain why some are opting for a subscription rather than a vehicle of their own.
Counterpoint also noted a general shift towards a shared economy, with subscription services growing in popularity. Along with growing competition from competition from ride-hailing services, it predicts this will push automotive companies to invest in car subscription services.