I need a car. Kind of.
The rise of car subscription services
Our colleague Dan needed a car, and fast. He was going to be relocating to Berlin for six months and would need to travel around the city and beyond as part of his job.
But Dan was up against a couple of issues:
- He was not in a position financially to buy a car he desired.
- As a car enthusiast, he wasn’t ready to commit to a vehicle that he didn’t love just out of necessity.
What was his solution?
Dan turned to a new wave of services he’d heard about online — car subscription companies. He was drawn to this idea because he had heard that with a subscription he would have the choice of a wide range of vehicles, the option to exchange vehicles at short notice, and be able to try out luxury models. Additionally, many of the packages his friends had signed up to also included insurance and maintenance costs as part of the fixed monthly fee. It was affordable for people who were not ready to buy a vehicle, and he could still get his pick of premium models.
In this article we’re going to take a deeper look at the rise of car subscription services, the different types of car subscription services available and their benefits, and finally how each type of service attempts to meet different customer needs. By the end, you’ll have a clear idea of which type of service may be right for you.
The rise of the car subscription
Dan’s not the only one to have found that, when he weighed up all his options, it was a car subscription model that best suited his needs. In Germany, one in three drivers is reported to be interested in a car subscription model, with one-fifth of all drivers expressing a preference to this model of ‘ownership’ over the traditional purchase model.
And it’s not just the car industry jumping on the subscription bandwagon. In all industries, we are seeing businesses turn to subscription models to meet a growing user appetite for service over ownership. What started with mobile phones and television subscriptions has grown to include almost every industry and product: bicycles, furniture, holiday homes, and even clothes. In the US alone, over 22 million customers are spending $57.6 billion per year on subscription services and apps.
The audience for the subscription model is surprisingly broad. This is because it doesn’t just meet the needs of the stereotypical app-loving Millennial, but also older age groups, with research suggesting that those in the 34–55 age range are also embracing applications that offer this new payment and service revolution.
That subscriptions appeal to both old and young could be partly due to the convenience of subscription services, and a post-recession reluctance to invest in products of one’s own, but it’s fair to say that easy access to luxury or high-end brands also plays a big role for older customers who can enjoy a premium product at a fixed monthly price.
The benefits of a car subscription service
Unlike car rental or leasing contracts, car subscription services offer considerably more flexibility; at the touch of a button, customers can upgrade to newer models or simply switch vehicles on a whim and have those vehicles delivered to their homes. Driving enthusiasts can try out vehicles they’ve never had the chance to drive, or simply have the feeling and convenience of owning a vehicle without the commitment and responsibility of car ownership or the extra costs that vehicle owners inevitably have to pay. In many cases, repair work, cleaning, and insurance are included as part of the monthly price.
Car subscription services offer a great alternative to a company car, particularly for mid-term business customers like Dan who have relocated for a fixed period of time. Even compared to the new so-called free-floating rental services present in large cities like Berlin, a car subscription is still useful on a daily basis. Although convenient for infrequent use, services like ShareNow or Miles become the more expensive option over time.
Different services for different needs
Car subscription services are not a one size fits all solution. Like the customers they are competing for, the subscription services out there differ wildly. However, as a general rule, they can be divided into two overall categories: those run by carmakers, like Access by BMW or Book by Cadillac, and those run by third parties, like Cluno and like2drive who can offer vehicles from multiple carmakers.
There are different advantages for customers from both groups: third-party-owned subscription services can offer a wider variety of vehicles, with dozens of brands in a single fleet, (Cluno, for example, has 15 different brands in its fleet and is ‘continuously expanding its portfolio’) while car makers can offer more luxury, high-end vehicles, giving customers a taste of a more exclusive lifestyle. What both groups are interested in is the user experience (both when using the application/service and the vehicle/driving experience), the importance (or not) of brand loyalty to their customers, and monthly cost.
As the customer, you’re likely to find yourself in one of these groups:
If you’re someone who doesn’t care about the brand or model of the car you’re willing to drive and are conscious of the cost of the service then you’ll likely be attracted to services by third party car subscription services like Cluno or like2drive. The subscription service they offer provides the convenience and flexibility of multiple low-mid range models at a significantly lower monthly price tag than their car maker competitors. All of the convenience, none of the trappings for a customer who wants value over luxury.
The same third-party subscription services are the likely solution for you if you fall into the second category of customers too. You still get to choose from a range of different brands, can exchange your vehicles, and try out others at short notice and with ease, but at a more competitive rate than if you were to go directly to the carmaker itself.
If you find yourself in the final group, you will enjoy the access to premium models that only a carmaker can provide. With a higher price tag than the third party options, and with fewer vehicles to choose from, what the car makers lack in choice they make up for in giving you a real feel of what it’s like to own a high end, luxury vehicle. A downside to this option, however, is that you may end up having to wait for your preferred vehicle to become available.
Final word
Like all subscription services, car subscription services are a great tool if you can identify the right one for your budget and driving needs. Don’t have much preference for the make or model of the car and don’t want to break the bank? Try out a third party subscription service like Cluno. Have your eye on a particular model that you’ve always wanted to try, budget isn’t an issue and you’re willing to wait for it? Check out the car maker’s own subscription service.
We’d love to start a conversation with you about your experiences of using these services. Let’s get the discussion started in the comments below.
