To see what is causing this growth in the car subscription market, it is important to see why it’s becoming increasingly popular in the global market, as well as why it’s so attractive to the consumer.
The last decade has seen a shift in consumer behaviour in all areas. Markets have seen a disruption in the way sales were traditionally done and consumers of today are moving from ownership to subscription-based models. This is especially visible in the way products were traditionally sold as well as the shift from satellite TV to subscription-based models like Netflix and Amazon Prime. With the technological advances today - businesses are able to sell their goods online directly to the consumer without any involvement of a third party. While the automotive industry managed to evade this shift of perspective longer than most, this disruption is finally catching on. Consumers are moving away from ownership of vehicles and towards a new way of having a vehicle without the commitment of ownership - Car subscription.
The car subscription market is witnessing rapid growth in the industry as the modern consumer moves away from ownership to usership. The competitive auto subscription market is expected to grow in the future as more OEM’s and dealerships add subscription plans to the services that they offer.
Car subscription right now is a relatively new service that is helping people keep up with the changing trend of today's modern world. The younger generation wants to move away from traditional car ownership to subscription-based models as it offers them more freedom and reliability as well as a more digitized experience.
A car subscription is a way of gaining access to a vehicle through a subscription model. Consumers go to an online mobile application or a website, scroll and choose through a variety of different cars and models, and then select a tenure period that best meets their requirements. People can extend or alter this subscription on the go as and when they need it.
Car subscription offers many perks and benefits to its consumers. People only pay for the duration of time that they need to use the car, as well as the chance to choose from a fleet of vehicles that may have been out of their budget to purchase outright. This is very appealing to consumers as well as automakers as this increases the accessibility of vehicles in the market today. Car subscription is also keeping up with the changing trends of the world today and moving towards providing their customers with a more digitized end-user experience, where people are able to choose a car and have it delivered to their doorstep all from the comfort of their homes through a website or a mobile application. Not only do car subscription companies invest heavily in having a strong online presence, but they also offer a much more user-friendly customer support portal where consumers can easily schedule a service, repair, exchange or return. In addition to reducing maintenance expenses, car subscriptions allows drivers to enjoy additional benefits such as roadside assistance and insurance protection if they’re involved in an accident.
Subscribing to a car is a cost-effective way to obtain a vehicle, especially for consumers that don't want or need the hassle of owning a car. The most common costs associated with owning a vehicle are maintenance and fuel. A subscription service can help reduce these expenses by providing regular maintenance services at reduced rates or even free of charge depending on the terms of the company that operates the subscription service.
The car subscription market is highly competitive. There are many companies offering car subscription services in the US, UK, Europe, Asia and Austraila. Some of these include Finn, Onto, EZOO, Elmo, Autonomy, MoovbyAlfuttaim, Care By Volvo, Porsche drive and more.
The competitive auto subscription market is expected to grow in the future as more automakers and dealerships add subscription plans to the services that they offer.
According to Deloitte, this growth will be driven by millennials' desire for convenience and their tendency to move toward newer technology.
This trend is set to continue into 2023, as automakers are increasingly offering subscriptions as part of their services. For example, Audi announced its first-ever car subscription program back in May 2018. In addition, Mercedes-Benz has announced that it plans on expanding its fleet of autonomous vehicles through a partnership with Uber Technologies Inc., which will allow riders who use Uber Eats or other ride-hailing apps to access their cars via an app called Mercedes-Benz App Connect (MBUX).
The fact that big automobile companies like Mercedes-Benz, Audi, Volvo and Porsche are making subscription services available to their consumers is adding to the popularity of car subscriptions. This also means that drivers are able to gain access to expensive and luxurious cars for short periods and get the first-hand trial experience of new cars and models that enter the market before spending a lot of money on these cars. Car subscription companies like Finn, Elmo and Onto are allowing their users the chance to try EV’s which are also quickly gaining popularity as more and more vehicle charging stations become available worldwide. This experience is also more affordable and provides a much more personalized experience in comparison to trial offered by dealerships.
The auto subscription market has been on an upward trajectory since its inception. More automakers and dealerships are adding subscription plans to the services that they offer, and more consumers are beginning to realize that subscribing to a car isn't just about subscribing to the car itself, but also subscribing to all the additional perks that come with it such as getting access to maintenance and repair options as well as avoiding other vehicle-related expenses and hassles such as insurance and registration.
While it is a relatively new industry, the car subscription market is growing quickly. The global car subscription market is expected to develop 35.8 billion USD by the end of 2029. Throughout this forecast period, the industry is also expected to show a compound annual increase in price (CAGR) of 25.8 percent. This growth is largely attributed to the increasing number of consumers using cars as part of their daily commute or errands, as well as the convenience and cost-effectiveness of car-sharing services.
By 2025, the vehicle subscription market for both private and corporate demand is expected to receive more than €22bn in annual auto financing in the EU. The bulk of these subscription sales will most likely displace the former leasing business models.
Car subscription services have also become popular amongst young people who want better access to transportation options while they are still living at home or renting an apartment in a new city. According to a recent survey conducted by Zipcar Inc., more than half of the respondents between 21-30 years old said they would consider using car subscription services over vehicle ownership.
The car subscription market is growing rapidly as more people move away from the traditional ways of vehicle ownership. In fact, according to research by the Boston Consulting Group (BCG), only 20% of Americans own cars today compared with 30% in 1965. And while this trend has been going on for years now—and even accelerated during the recession—the BCG study found that millennials are more likely than older generations to opt out of having their own wheels entirely.
Subscription models also have a potential that extends far beyond the market for new cars. Car subscription companies offer a new lease of life to used cars as well. By giving used cars a second or third lifecycle, mobility providers can optimize their overall fleet utilization. Experts are forecasting a 50 percent growth in the used car market by 2030. With the market for car subscriptions closing the gap between rental and leasing, there is a massive opportunity in terms of the residual value of a vehicle when it is reintroduced in the market as a subscription option for consumers.
With the rising interest rates on new cars, long wait periods, and the responsibilities that come with owning a car - more and more consumers are looking for alternatives to buying a vehicle. There are also some consumers that don’t want the commitment of owning a car with the availability of better public transportation. There is one industry, however, that is thriving with this changing trend of ownership and this demand for more flexibility - car subscription. Car subscription offers people the option to have a car for short durations depending on their needs and requirements, without the commitment and responsibility of vehicle ownership.
The modern consumer today is moving towards convenience and flexibility. With travel restrictions lifted and people being able to move more freely across the globe, there has been an increase in the need for cars available on the go. While rental and leasing have been around for a while, car subscription has found a spot somewhere in the middle where it offers people a budget-friendly way of gaining access to a vehicle, as well as the flexibility to change their tenure period according to their requirements whenever they want, unlike car rental or leasing. It also offers consumers a more digitized experience where they can easily get support online for any of their subscription or vehicle-related issues or queries.
This digital experience is something that car ownership, leasing and rental options all currently lack. With the technological advances in today’s world, the need for automakers and OEM’s to have a strong online presence is becoming more important than ever. Many companies are now investing millions of dollars in their tech budget to keep up with this changing trend.
Consumers increasingly want car subscription services for many reasons, including that it's cost-effective, convenient and eliminates all the hassle that comes with owning a car.
In conclusion, the car subscription market is a highly competitive industry with many new entrants entering the market every year. As more consumers become aware of this service and its benefits, we are likely to see a rise in demand for these services as well as other areas related to transportation such as ride-sharing or leasing as consumers move away from car ownership. With the growing need for digitization and the new technological advances in the world today, the car subscription market is offering people a more user-friendly experience.
Although car dealerships are usually a good place to buy a car, many people would rather avoid the hassle of dealing with them. There’s no better way than using an online subscription service to find a new or used vehicle at competitive prices and get it delivered directly to your home.
Car subscription is paving the path to a new convenient way of gaining access to a vehicle. This is only the beginning of an industry that is expected to grow in the coming years as people move towards new ways of using the products available in the market today.