Car subscription packages have been hitting the market one after the other over the past year, with manufacturers – and outsider businesses – jumping on what they feel may be the next big revenue opportunity in a global auto market that is both buoyant and shaken by big technological changes.
With car subscription, the focus is not so much on what vehicle the customer is getting – though of course a brand’s prestige still matters – but on giving them access to their car of preference while relieving themselves of burdens like insurance, residual value management and fuel type restrictions.
In a subscription agreement, a single monthly bill covers all car-related expenses, and the customer gets to switch to a different vehicle after some time – or to cancel the subscription altogether at relatively short notice.
Jaguar Land Rover, Volvo Cars, BMW and Ford have all launched car subscription products, while others like Volkswagen have been experimenting with the model through high-end brands (Porsche, in VW’s case). New entrants to the European space, like Volvo sister brands Lynk & Co. and Polestar, have decided to bypass dealership completely and use car subscription as their main route to market.
On the independent side, you have startups like Drover, EVezy and Wagonex in the UK and Flexdrive in the US. Dutch lessor LeasePlan, meanwhile, has begun offering car subscription in selected markets, with a twist – the cars are second-hand.
Reasons for switching to a car subscription
There is a number of reasons why customers might prefer car subscription over a more traditional leasing contract like PCH, or a conditional purchase agreement such as PCP. In an age of where carmakers are playing catch-up with threats of fuel bans, having the certainty that you will get access to a new vehicle – should the one you’re currently driving fall foul of city authorities’ emission-abating measures – is reassuring. Plus, having the flexibility to switch between vehicle types means that you can drive a city car for the day-to-day and still be able to get that SUV when you go on holiday in the summer.
Of course, convenience does not come cheap: car subscription packages currently available are considerably more expensive than your average PCH or PCP plan – and you are not building any equity in the car. But carmakers are betting that need for flexibility will trump other considerations – at least for drivers that can afford it – and they are preparing for a future where transactions and interaction with the customer will be frequent and continuous.