As we’ve described in our guides, the idea of a car subscription is very simple. Instead of buying a car, you choose to pay for a car a little like Netflix; month to month and cancel anytime (subject to conditions).
Car subscriptions can last from one month to several years. There’s usually a small deposit to sign up, and you can end the contract or swap the car when you feel like it (subject to conditions).
All the running costs are often included in the monthly payment. You can change cars to suit your needs and change brands as you feel. We’ve often said that it’s a good way to try out an electric car without a commitment. Van subscriptions are also offered.
Here at The Car Expert, we have commercial partnerships with several of the UK’s top car subscription providers. As well as our partners, there are several other subscription providers as well. Some have a few hundred subscribers, some over a thousand. In addition to subscriptions, some also provide traditional rental (hires as short as a week) and leasing agreements (large advance payment, agreement fixed for several years).
Insurance may be included or optional. Some offer subscriptions which start from one month but they all say that the average length of time somebody has a vehicle is longer, sometimes over 12 months.
Depending on the provider, subscribers can choose to have a one month rolling contract or commit to longer periods. All our partners say that the majority of their subscribers are private individuals rather than companies. The cars supplied are either new or up to three years old (sometimes older in the case of prestige cars).
What about the car makers themselves? Depending on the country, manufacturers have blown hot and cold on the idea. For example, in the US, Mercedes-Benz closed its service because customers tired of the novelty of swapping cars (and all their stuff from one to the other). But this scenario was more about having a convertible for the summer, an estate for the holidays. The usual reason people like subscriptions is because they want an easy short-term, no commitment set of wheels.
Car subscriptions are more popular in mainland Europe than the UK. For example, in Germany, Volkswagen offers ID.3 and ID.4 subscriptions, but not here.
“There are 20 or 30 subscription companies in Germany today,” says Drive Fuze chairman, Nick Rothwell. “The biggest difference is usership versus ownership. Most people don’t own their property and rent. We tend to own our property in this country. And there’s less of a leasing market – subscriptions have a significant opportunity.”
In the UK only a few manufacturers offer car subscriptions. Volvo, Jaguar Land Rover and Genesis have been long-term players (although currently Land Rover and Range Rover choice outnumber available Jaguars).
Looking at less luxurious brands, Mocean is Hyundai’s subscription service (currently with a limited offer) and Cupra is a recent entrant, as are Renault and Nissan.
In 2021 Renault Group acquired Bipi, a multi-brand car subscription platform for used vehicles, which operates in Spain, France, Italy and now the UK. Subscription Renaults come through Bipi.
Over the last few years there have been new car subscription providers enter the arena and some departures. Overall, The Car Expert’s partners predict a growing market. We asked them for their thoughts on the current issues.
How is the car subscription market doing?
“We doubled all of our numbers last year and we’re seeing vehicle volumes grow and better availability coming back into the market, but there’s oversupply of EVs, a disconnect between demand for EV’s and the supply. And that’s a market wide issue.”
Toby Kernon, chief executive officer.
“The market is quite stable, cars are coming through but they seem to be back towards ICE models and the enquiries regarding EVs have dropped.”
Rhys Adams, company director.
“In terms of people visiting our website, enquiries and the level of interest from customers is increasing month on month. To me this is the first sign that more people are becoming aware of what a subscription is, which is a positive trend.”
Duncan Chumley, chief executive officer.
How’s the future shaping up?
“All the independent research talks about this being a significant channel. Another channel for various distribution models to work their way into the marketplace.”
Nick Rothwell, company chairman.
“Subscription offers people a flexible model that they understand, because as consumers we are becoming very used to using subscription models in all other parts of our daily life. We think there’s a big future for subscriptions and there’s a lot of industry research out there which suggests the same.”
“I don’t see subscription replacing everything within the marketplace. I just see it enhancing what’s available to give the consumer a choice. I believe this is right for a lot of people, where their lifestyles are maybe changing and don’t want a financial commitment for three or four years at this point in their lives.”
What should we think about high profile failures such as Cazoo subscriptions, and the electric-only Onto and Elmo?
“With the EV providers there was the price war caused by Tesla and the heavy reduction in EV values. But they were also giving free charging and electricity prices went through the roof. It seemed a perfect storm of problems that challenged their business model.”
“As a bank, I wouldn’t want to have concentration of risk and if I’m a subscription company, I don’t want to put all my eggs in one basket. So if I went into hybrids in isolation, or another powertrain in isolation, I’m restricting my target audience.”
“In my view, you never really saw Cazoo promote their subscription business. It was all about their online used car platform and I think subscription was just an additional add-on service.”
Why do we not yet see very many subscription services run by carmakers?
“Manufacturer subscriptions are very important and we watch these closely, as everyone is aware many have dipped their toes in the water. But even a certain Swedish car manufacturer has pushed the subscription model behind other forms of finance for one reason or another.”
“There are other challenges in the automotive industry at the moment and often at a strategic level they need to take precedent over innovation. The OEMs who are offering subscriptions are doing well and see it as a way to have the customer for longer over the lifecycle of the vehicle and subscription also has the potential to attract a new type of customer.”
“I think the challenge that a manufacturer has is how they manage it. They obviously want to provide additional services to clients, but their main aim is to sell new cars. I think it’s how they would manage a large fleet of cars in-life and the logistics and infrastructure behind that. This is why we are working with manufacturers in order that we can provide the infrastructure to be able a subscription offer to their customers.”
How do you find the general awareness of car subscriptions?
“Our consumer research found that for those who have heard of car subscriptions, they were still unclear on what exactly it meant and how it’s different. There’s still quite a lot of confusion about the different ways that people can finance their cars, even with established models like PCP and HP, where we’re still finding that consumers are confused, we’re trying to educate consumers however we can.”
“I don’t think this is a Netflix product per se. But I think that the awareness that you can use rather than buy is very important and that’s an increasing consumer trend.”
“Awareness of Car Subscriptions is still very low, but we’re working hard to try and raise awareness of these in the press and advertising. We’re currently running a campaign called “Subscribe to your next car?” with a QR code and the Cocoon logo.”
“I think it’s still quite niche in terms of awareness but growing, and people are looking at it as an option. We’re trying to educate the consumer that we have all these different options now available. So, if they feel subscription isn’t quite right for them then we do offer leasing and if they want really short term, we offer rental.”
Any there any trends regarding electric car subscriptions?
“There’s a massive debate and two polarised views. One is that there’s a conspiracy theory and the other one is, ‘you’ve just got to take it up because it’s coming’. But my view is very simply from customer feedback on our electric vehicles. When we put them on our site, they go out reasonably quickly.”
“I’ve been driving electric cars for the last two years and I love it. We have seen a steady increase in demand for EV’s on subscription, however there is still customer confusion in the EV arena and there’s been a lot of negative press, maybe unfairly in some cases around electric cars. That obviously impacts what consumers want to take.”
What’s your position on whether to include insurance or not?
“When you look at the price increases that went through the insurance market, people suddenly said ‘I can’t afford my insurance’ – it came as a shock. Most people don’t budget in their head for a surprise. So, it’s about reassurance. It’s about the ability for them to budget with confidence that there are no surprises coming.”
“It’s something for consumers and for suppliers to decide. We have always focused on having an embedded product sitting in the customer journey to give a bespoke price per location per vehicle, per their driving history. And we’ve partnered with Admiral Group to have their pricing sitting within that journey.”
“Our customers don’t want the all-inclusive insurance option, which is why they use us over other companies. They say that policies can be quite restrictive or complicated when it comes to claim.”
“We prefer giving the customer the choice and continue to work with a number of insurance providers to provide both options. We’ve been slightly different. We offer a lease contract rather than a rental contract, which is regulated [by the FCA], which allows the customer to use their own insurance policy if they wish and continue to benefit from their No Claims Discount.”
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