Car subscriptions are being billed as the next big thing, the automotive equivalent of pay-as-you go phones or online TV plans, predicted to account for nearly 10% of all new car sales in the US and Europe by 2025.
Subscription schemes go under many different names: flexible lease or rental; long-term rental or long-term hire. The essential idea is that you have a car for as long as you like; from one month to several years. There is either no fee or a small charge to sign up and you can end the contract or swap the car when you feel like it, subject to conditions.
A standard monthly mileage allowance (typically 800 or 1,000 miles) is included or you can buy higher mileage. Subscriptions promise freedom of choice, no commitment, and no unexpected bills – in theory.
What’s the difference to a lease?
Traditional leases like personal contract hire (PCH) are fixed from one to four years for a set monthly fee, with a down payment that can amount to several months in advance. Insurance and servicing are not included but can be added. Subscriptions often have no joining fees or a one-off charge which is less than a month’s hire.
Neither car subscriptions nor leases offer an option to own the car. When the term is up you hand it back. Nor is a subscription the same as a personal contract purchase (PCP), which is a fixed term finance agreement with the option to keep the car at the end in return for a final payment.
Subscriptions usually include servicing, warranties, road tax and often insurance. Cars are collected and returned for servicing and to deal with any repairs. Some leases also offer this.
Subscription services reserve the right to swap your car for a similar model during the rental if it has for example reached its mileage limit and is to be sold on. Like a lease, the whole process of putting together the subscription package can be done online, supported by live chat or a call centre. Most providers will deliver the car to your door and collect when you decide to finish or swap. Subscriptions are predominantly managed by an app on your mobile phone.
The pros of car subscription
For many, the biggest positives will be not needing to make a long-term financial commitment or put down a large initial payment. You can start and stop a subscription – for example if you don’t need a car for a few months. It’s difficult and expensive to end a fixed-term lease, PCH lease agreement or PCP finance agreement early.
Having all your motoring costs built into one monthly payment is appealing for many and if you’ve been used to having a company car and all the support that comes with it, a subscription offers pretty much the same experience. If you are given a company car allowance, this can go on a subscription.
Subscription cars are usually new or a maximum of three years old and, if you’re a car enthusiast, some services allow you to chop and change to try the latest models or have a sports car for a weekend away. At the premium end of the market, you can have a car configured to your specification.
The cons of car subscription
All schemes have age stipulations which vary according to the car. For example, to have a Drover subscription (mixed brands) you must be at least 22 and have had a full UK licence for at least a year. Even stricter conditions apply elsewhere – you won’t be getting into a Land Rover or a Jaguar under its Passport scheme unless you’re at least 30 years old.
There’s potential for complication when it comes to insurance. Some providers include it in the monthly cost and cover you under a fleet insurance policy. Others give you the option of a headline price without insurance and a higher monthly cost is revealed once you have provided your details for a quote. There may be costs for extra drivers, as not all providers insure you to take the car abroad and there can be large excesses for damages.
Most providers let you use your own insurance policy but it must be comprehensive and it will need to be approved by them. Also, if your provider has a fleet policy, you are not a named driver, so you won’t build up a no-claims bonus for any future insurance of your own.
If you live in a town or city and park your car on the street with an annual resident’s parking permit, it can create a fair bit of hassle. The more often you swap your car, the more paperwork you’ll have to deal with to change the registration number and prove the car is attached to your address.
All schemes differ in their details, but the websites usually have exhaustive FAQs and they are open to questions.
What kind of subscriptions are on offer?
The offerings are changing all the time, but can be divided into those from carmakers, independents, fleet and rental companies. These are a few UK-based examples with prices as of April 2021.
The few subscriptions run directly by carmakers are at the premium end of the market.
Jaguar / Land Rover – Pivotal
In 2018 Jaguar Land Rover launched Carpe (from the Latin Carpe Diem seize the day) as a 12-month unlimited mileage subscription aimed at high-mileage drivers who could sign up to a new Land Rover or Jaguar every 12 months. It was relaunched in 2020 as Pivotal, with a minimum 90-day term and monthly vehicle swaps possible. There are multiple membership tiers and members can put their subscription on hold from month to month. A fresh vehicle arrives every six months. It’s £550 to join, then £750 to £1600 a month, insurance included.
Volvo – Care by Volvo
Volvo’s Care by Volvo subscription went UK-wide in 2020. Customers can choose any model from the current Volvo line-up (built to order or from stock), assemble the monthly package on an app and try the car on a thirty day trial. There’s no sign-up fee and then a three-month rolling contract. Insurance is not included and rates go from £559 to £799.
Rather than administer their own subscription services, many UK car suppliers have partnered with Drover, which is owned by one of The Car Expert’s commercial partners Cazoo, the online used car supplier. Subscribers can choose from brands including Volkswagen, Mercedes, Audi, BMW, Hyundai and Toyota. While the full range isn’t displayed for each brand, Drover offers to find specific models.
Cars can be up to three years old. Hires can be from one to 24 months and monthly costs are lower for longer durations. There’s a one-time joining fee of £249 and 800 miles a month are included. Insurance is not included. In April 2021 prices started at £249 for a Fiat 500.
Cocoon Vehicles describes itself as a family business based in Derbyshire and operates short-term leases from one to three months or subscriptions. It doesn’t sell insurance and you can rent convertibles and performance cars. A minimum of 1,000 miles is included and the lowest monthly subscription starts at £514.80 for a SEAT Ibiza.
Long-term rental options
Given that subscriptions are like long rentals, some traditional rental companies also offer short-term or long-term deals and the potential to swap from a supermini to an MPV or a van when you need one. However, if you’re set on a specific car, these schemes may not be for you as the car advertised is billed as ‘or similar’. You are renting a size and type, not a specific model.
Sixt+ is an all-inclusive subscription which allows you to swap once a month on a rolling contract which must be renewed every three months. The one-off set up fee is £249 and prices start at £429.
Hertz 28+ (for the minimum hire of 28 days) is similar to Sixt’s offering, with a few differences. It includes an additional driver, a free monthly valet and you can use own insurance. Hertz 28+ prices are not displayed on the website but but subject to an enquiry.
Electric car subscriptions
If you’re not sure about whether you could commit to an electric car yet, an electric subscription could be just right for you. Many car manufacturers and subscription providers see a car subscription service providing a gateway to electric car ownership, giving customers the opportunity to live with an electric vehicle for a few weeks or months before making any major financial commitment.
Onto claims to be the UK’s biggest electric car subscription service. You choose your model – which can be new or up to three years old – according to a monthly charge with one-month rents possible. There’s no set-up fee, but a £49 delivery charge. Access to UK public charging points via BP Pulse, Shell and Tesla superchargers is included. If you charge at home, it’s on your bill.
Insurance for one person (for over 25s) is included. The subscription is all run by an app on your phone, which also then acts as the key to the car. The Onto range starts with the Renault Zoe and runs up to Audis, Jaguars and Teslas. Prices in April 2021 started at £389 for a Zoe.
Elmo is a rival to Onto and its subscriptions differ in that users can make up a bundle of options. Open to drivers over 30, all advertised prices include the monthly cost of the vehicle, comprehensive insurance, breakdown cover, road tax and a carbon offset contribution. You can choose to add on a home charge point, renewable home energy and a public charging membership.
Subscribers have to commit to a minimum three-month rental, then they can be for one to six months. Brands available or coming soon as of April 2021 were from MG, Renault, Nissan and Fiat. There was a one-off £95 admin fee, delivery free within 50 miles from the supplier. A Zoe was from £379 a month.
Is a subscription cheaper than leasing or buying?
Comparing the price to a lease or a PCP is not straightforward because they are quite different products and you can shop around for your own insurance. What’s crucial is the total cost of ownership (TCO) once you add in all the costs of running the car.
Onto is upfront about this, saying that ‘whilst the monthly fee for usage may initially seem uncompetitive versus more traditional contract hire and PCP rates, the total cost of ownership for the customer is actually comparable when the absence of a lump-sum deposit and the inclusion of insurance, charging and servicing are taken into account.’
Rather than a bargain, the value of a car subscription is the price you put on no long-term financial commitment and being able to drive and change new or recent-model cars when you like.