Vehicle subscription

Last updated

Vehicle subscription is a service where a customer pays a recurring fee for the right to use one or more automotive vehicles. Some vehicle subscriptions offer insurance and maintenance as part of the subscription fee; other subscriptions allow the subscriber to switch between different vehicles during their subscription period. Industry commentators consider vehicle subscription to be an alternative to owning or leasing a vehicle. [1] [2]

Contents

Vehicle subscriptions have been available since 2010 when Rima Braden of Autosource, LLC offered a short-term flexible auto acquisition program from his dealership in Honolulu, Hawaii that he coined "Flexlease". Rebranded as "Carousel" in 2013, the program was restricted to the city and county of Honolulu and remains in operation today. In 2014 flexdrive, now jointly owned by Cox Automotive and Holman Enterprises, launched. [3] Clutch Technologies, a start-up, launched a subscription service for consumers in Atlanta in mid-2014; Flow Automotive Companies was the first automotive dealership to offer a subscription service, launching Drive Flow in Winston-Salem in 2016, using Clutch's technology platform. [4] 2017 saw several automotive manufacturers announce and launch subscription services, including Book by Cadillac, Porsche Passport, Care by Volvo and Canvas (backed by Ford Motor Company). [5] By 2018, a number of startups and automotive dealership companies had launched subscriptions in multiple markets [6] and flexdrive became the first U.S.-based car subscription company to support dealerships and fleet operators stateside and globally through its partnership with Dribe in Denmark.

Definition

Vehicle subscriptions are a type of subscription business model where a customer pays a periodic fee for the use of one or more vehicles. The difference between a vehicle subscription and buying a vehicle is that the subscription service retains ownership of the vehicle. While vehicle subscriptions and traditional automotive leases both involve recurring payments, many subscription services offer more flexibility in terms of minimum term and the ability to swap between vehicles. [1] The main difference between vehicle subscriptions and vehicle or car rental is that most subscriptions are designed to offer full-time possession of a vehicle such that the subscription replaces the customer's primary vehicle, whereas rental involves the effort of procuring vehicles for specific dates or trips. [7]

Vehicle subscriptions have been variously been identified as part of the "sharing economy" or part of the "subscription economy". [8] [9] Vehicle subscriptions have also been classified as a form of "transportation-as-a-service" and as a form of "mobility-as-a-service". [10] [11]

Common features

Edmunds.com observes that there is a wide variety in the types of vehicle subscriptions that are available, such that many different customer needs can be met across the various services. Most vehicle subscriptions allow customers to pay a flat periodic fee, typically on a monthly basis. Whereas some subscription offerings have no minimum term (e.g., Book by Cadillac), others do have a minimum term (e.g., Care by Volvo launched with a two-year minimum term). Vehicle subscriptions include flat-rate, no-haggle pricing. Prospective customers typically sign-up using an app. The monthly fee may include insurance, maintenance and roadside assistance. Some services include a mileage limit and some offer unlimited mileage. Several services, such as Carousel, Porsche Passport and Book by Cadillac, offer the option to swap between different types of vehicles. Some services offer unlimited swaps and some restrict the number of swaps. [1] [2] [12] [5]

Types of providers and business models

Vehicle subscriptions are offered by several different categories of company. Each category is pursuing a slightly different business model.

Automotive manufacturers

Several automotive manufacturers and brands offer or have announced vehicle subscriptions, including Porsche, Volvo, Cadillac, Hyundai, Mercedes Benz, BMW, Lexus and Ford. These services offer subscribers vehicles from a single brand or, in the case of Volvo, a single vehicle. While initial launches have tended to focus on one or two cities, [13] [14] there is evidence that the manufacturers will eventually offer their services more broadly: for example Care by Volvo was immediately available across the country and Book by Cadillac has expanded beyond its original launch market of New York City. [15] [16]

The manufacturers have announced various objectives for these programs. Volvo has described the objective of Care by Volvo as to provide convenience by offering access, insurance, maintenance and support within a single package. [17] Cadillac has described the objective of Book by Cadillac as being to grow the number of Cadillac drivers, particularly those who are new to the brand. [18] Porsche has described their Passport service as a way to cater to customers with highly varied lives. [10] Ford has described Canvas as a way to grow the number of Ford drivers while also controlling the number of used vehicles hitting automotive auctions. [11]

In April 2018 the BMW Group started their own vehicle subscription service Access by BMW as a trial in Nashville, Tennessee. Access is currently available in USA and Singapore.

In May 2020 the BMW Group started their own vehicle subscription service in MINI Subscribe. MINI Subscribe is currently available in major German cities such as Munich and Hamburg, offering a range of models including the iconic MINI Cooper, MINI Cooper SE and the MINI Cooper Countryman.

Automotive dealerships

A number of automotive dealerships have launched vehicle subscriptions focused on the markets where they have stores. The services offered by these dealerships typically include vehicles from several different brands offered by their stores, allowing customers to drive a wide variety of vehicles. Examples:

Start-ups and corporate-backed ventures

A large number of start-ups have been created to offer vehicle subscription services. One early pioneer in the vehicle subscription space was Joule. [20] Other USA-based start-ups include Go, [21] Carma, Borrow, [22] and Mobiliti. [23] Several vehicle subscription start-ups have been founded in Europe, including Wagonex, Cocoon Vehicles and Drover, from the United Kingdom, and Dribe and Bilabonnement, both from Denmark. [24] [25] [26] A UK based startup, Elmo, focuses on a subscription service exclusively for electric vehicles. [27] In 2017, Gurgaon based startup Revv Cars, launched monthly multi-brand car subscription program Switch across 15 cities in India. [28]

In 2018, another Indian company was launched. Myles Automotive Technologies (Delhi-based) is a multi-brand car subscription brand operating in all metropolitan cities.

Several established companies have created new business units that are offering vehicle subscriptions. In the US, Cox Enterprises launched flexdrive. [29] In Europe, LeasePlan, a vehicle leasing company, will offer subscriptions with their CarNext.com platform. [30] [31]

VAI, a brazilian subscription service for ride-sharing drivers was founded in December 2017 in Sao Paulo.

The German company like2drive GmbH was founded in February 2018 as part of the Fleetpool Group. [32]

Cluno, a multi-brand car subscription service operating in Germany, was founded in October 2017. [33]

A car subscription service in Czech Republic, called Driveto Klub, was launched in October 2018 by Driveto. [34] Driveto was founded in Prague in 2017 and started as an online aggregator of operating lease offers. The majority of the start-up is owned by Miton, an online investment group from Jablonec nad Nisou.

Australia's car subscription services [35] include Carbar, HelloCars and Carly, all of which were launched in early 2019. As registered Victorian and NSW motor dealers, Carbar and HelloCars subscription vehicles are owned and operated by their respective companies while Carly utilises peer-to-peer customer vehicles offered in partnership with sister company DriveMyCar Rentals Pty Ltd. In addition to retail car subscription providers, the Australian market has also seen the launch of Loopit, a software platform enabling OEMs, dealerships and rental car companies to launch and manage their own car subscription product.

A pioneer in the Swiss vehicle subscription market is Carvolution AG, launched in 2018, [36] supported a 50 million CHF investment by the insurance group Die Mobiliar Versicherungsgesellschaft AG [37] In partnerships with Mobilezone Holding AG [38] and LIDL, [39] the start-up holds around 80% of the market share. [40] [41]

CARIFY, with the largest selection of cars of similar ventures in Switzerland, was founded in September 2019 by Sergio Studer and Raffael Fiechter. [42]

Vehicle subscription has also begun to flourish in the Middle East, with Invygo launching the region's first car subscription app in March 2019. [43]

Car subscription software providers


Loopit (formerly Blinker Subscription) was launched in Australia in August 2019 and provides car subscription software to automotive manufacturers, car dealerships, car subscription companies and other related businesses to operate their own vehicle subscription service. During the COVID-19 pandemic, Loopit experienced a 52% increase in enquiries from car dealerships looking to introduce a car subscription model during the shutdown. [44]

Other providers

Zipcar is offering a version of vehicle subscription, dubbed Zipcar Commuter, that provides dedicated possession of a vehicle from Monday to Friday. [45]

Related Research Articles

The Premier Automotive Group (PAG) was an organizational division within the Ford Motor Company formed in 1999 to oversee the business operations of Ford's high-end automotive marques. The PAG was gradually dismantled from 2006 to 2011 with the divestiture of its constituent brands.

<i>Automobile</i> (magazine) American automotive magazine

Automobile was an American automobile magazine published by the Motor Trend Group. A group of former employees of Car and Driver led by David E. Davis founded Automobile in 1986 with support from Rupert Murdoch's News Corporation, using the credo No Boring Cars.Automobile distinguished itself as more of a lifestyle magazine than the other automotive publications, an editorial theme that Davis greatly expanded upon from his tenure as the editor of Car and Driver, though it was a sister publication to Motor Trend.

<span class="mw-page-title-main">Zipcar</span> American car-sharing brand

Zipcar is an American car-sharing company and a subsidiary of Avis Budget Group. Zipcar provides vehicle reservations to its members, billable by the minute, hour or day; members may have to pay a monthly or annual membership fee in addition to car reservations charges. Gas, maintenance, insurance options, and a dedicated parking spot are included. Zipcar was founded in 2000 by Antje Danielson and Robin Chase.

<span class="mw-page-title-main">Lists of automobile-related articles</span>

Lists of automobile-related articles cover a wide range of topics related to cars. The lists are organized by manufacturer, region, sport, technology and so on.

<span class="mw-page-title-main">Car dealership</span> Business which sells, buys, and trades new and/or used cars, trucks, SUVs, and vans

A car dealership, or car dealer, is a business that sells new or used cars, at the retail level, based on a dealership contract with an automaker or its sales subsidiary. Car dealerships also often sell spare parts and automotive maintenance services.

<span class="mw-page-title-main">Auto mechanic</span> Occupation

An auto mechanic is a mechanic who services and repairs automobiles, sometimes specializing in one or more automobile brands or sometimes working with any brand. In fixing cars, their main role is to diagnose and repair the problem accurately and quickly. They often have to quote prices for their customers before commencing work or after partial disassembly for inspection. Their job may involve the repair of a specific part or the replacement of one or more parts as assemblies. Basic vehicle maintenance is a fundamental part of a mechanic's work in modern industrialized countries, while in others they are only consulted when a vehicle is already showing signs of malfunction.

<span class="mw-page-title-main">LA Auto Show</span> Annual US auto show

The Los Angeles Auto Show, also known as the LA Auto Show, is an auto show held annually at the Los Angeles Convention Center in Los Angeles, California, United States. It is open to the public for ten days, filling 760,000 square feet (71,000 m2) of exhibit space. Since 2006 the event is held in November or December.

Group 1 Automotive, Inc. is an international Fortune 300 automotive retailer with automotive dealerships and collision centers in the United States and the United Kingdom. Group 1 sells new and used cars and light trucks, arranges financial services, provides maintenance and repair services, and sells vehicle parts. As of 2021, the company employs over 13,000 people globally.

This article is about the automotive industry in Mexico.

<span class="mw-page-title-main">European delivery</span>

European delivery programs are arrangements that continental European automobile manufacturers make with their dealerships throughout the world, to attract consumers who will combine the purchase of a European-made automobile with a trip to Europe. These are typically aimed at the North American market, which constitutes the most profitable market for Audi, Mercedes-Benz, BMW, Volvo and Porsche.

In the automotive industry, the term Big Three is used for a country's three largest motor vehicle manufacturers, especially indicating companies that sell under multiple brand names.

<span class="mw-page-title-main">Automotive industry in China</span> Overview of the automotive industry in China

The automotive industry in China has been the largest in the world measured by automobile unit production since 2008. Since 2009, annual production of automobiles in China accounted for more than 32% of worldwide vehicle production, exceeding both that of the European Union and that of the United States and Japan combined.

The Herb Chambers Companies, usually shortened to Herb Chambers, is one of the largest automotive dealership in New England and is the North America's 17th largest dealer group.

The Sytner Group Ltd is a car dealership company headquartered in Leicester, United Kingdom.

<span class="mw-page-title-main">Automotive industry in Pakistan</span> Overview of the automotive industry in Pakistan

The automotive industry in Pakistan is one of the fastest-growing industries in the country, growing by 171% between 2014 and 2018. It accounts for 4% of Pakistan's GDP and employed a workforce of over 3.5 million people as of 2018. Pakistan is the 35th largest producer of automobiles. Its contribution to the national exchequer is nearly Rs. 50-billion. Pakistan's auto market is among the smallest but fastest growing in Asia. 269,792 cars were sold in 2018, but this number declined to 186,716 in 2019 due to austerity measures. In the 1990s and early 2000s, Pakistan had many Japanese cars. With the launch of the first Auto Policy in 2005, Pakistan launched its first indigenous car, Adam Revo. However, after the 2008 elections, the dollar started depreciating, and due to bad governance, many automakers began to halt production, with some exiting Pakistan. Currently, the auto market is dominated by Honda, Toyota, and Suzuki. However, on 19 March 2016, Pakistan passed a second "Auto Policy 2016-21," which offers tax incentives to new automakers to establish manufacturing plants in the country. In response, Renault, Nissan, Proton Holdings, Kia, SsangYong, Volkswagen, FAW, and Hyundai have expressed interest in entering the Pakistani market. MG JW Automobile Pakistan has signed a memorandum of understanding (MoU) with Morris Garages (MG) Motor UK Limited, owned by SAIC Motor, to bring electric vehicles to Pakistan. NLC signed an agreement with Mercedes Benz to manufacture Mercedes Actros trucks in Pakistan. Pakistan has not enforced any automotive safety standards or model upgrade policies. A few older vehicle models, including the Bolan and Ravi, continue to be sold by Suzuki. On 8 July 2021, Jolta Electric launched the production of electric motorcycles.

AutoCanada Inc. is a North American multi-location automobile dealership group currently operating 82 franchised dealerships, consisting of 28 brands in eight provinces in Canada as well as a group in Illinois, USA. AutoCanada currently sells Chrysler, Dodge, Jeep, Ram, FIAT, Alfa Romeo, Chevrolet, GMC, Buick, Cadillac, Ford, Infiniti, Nissan, Hyundai, Subaru, Audi, Volkswagen, Kia, Mazda, Mercedes-Benz, BMW, MINI, Volvo, Toyota, Lincoln, Acura, Honda and Porsche branded vehicles. In addition, AutoCanada's Canadian Operations segment currently operates 3 used vehicle dealerships and 1 used vehicle auction business supporting the Used Digital Retail Division, 11 RightRide division locations, and 10 stand-alone collision centres within our group of 25 collision centres. In 2022, our dealerships sold approximately 100,000 vehicles and processed over 900,000 service and collision repair orders in our 1,367 service bays generating revenue in excess of $6 billion.

The First Hawaiian MotorCon is an annual auto show held every year between the middle week of March and the first week of April in Honolulu, Hawaii. The event takes place at the Hawaii Convention Center, whose location site was once the location of a Chevrolet dealership, Aloha Motors. The event, affiliated with the Motor Trend regional auto show circuit since 2000, is produced by the Hawaii Automotive Dealers Association (HADA) and sponsored by First Hawaiian Bank, with the Honolulu Star-Advertiser serving as the media sponsor. The recent event, going into its 42nd year, was planned for March 27-29, 2020. Hawaii Governor David Ige announced at his press conference March 17, that he is closing the Hawaii Convention Center for 30 days to limit social contact in light of recent community spread of Covid-19 virus infections. The auto show was cancelled for 2020, but will return for February 2022.

<span class="mw-page-title-main">Yanase (car dealership)</span> Japanese car dealership

Yanase & Co., Ltd. is a retailer of new Chinese, European, and North American vehicles and used cars in Japan. As of the year 2002, Yanase had the rights of exclusive retailer of Mercedes-Benz, Volkswagen, Audi, BMW, Volvo, Saab, Cadillac, Chevrolet, Chrysler, Jeep, Dodge and Smart vehicles to Japanese consumers. It is part of the Itochu group.

Lynk & Co is a Chinese-Swedish automobile brand owned by Geely Automobile Holdings. Founded in Gothenburg, Sweden, in 2016, the focus of the brand is on internet connectivity, innovative purchasing models and targets a young professional demographic.

<span class="mw-page-title-main">Android Automotive</span> Android operating system version for car infotainment systems

Android Automotive is a variation of Google's Android operating system, tailored for its use in vehicle dashboards. Introduced in March 2017, the platform was developed by Google and Intel, together with car manufacturers such as Volvo and Audi. The project aims to provide an operating system codebase for vehicle manufacturers to develop their own version of the operating system. Besides infotainment tasks, such as messaging, navigation and music playback, the operating system aims to handle vehicle-specific functions such as controlling the air conditioning.

References

  1. 1 2 3 "What Are Car Subscription Services? | Edmunds". Edmunds. 10 January 2018. Retrieved 28 March 2018.
  2. 1 2 "What is a Car Subscription Service?" . Retrieved 28 March 2018.
  3. ↑ "Autotrader - page unavailable". autotrader.com. Retrieved 7 March 2019.
  4. ↑ Journal, Fran Daniel Winston-Salem. "Flow Automotive offers chance to flip cars using Drive Flow with Clutch". Winston-Salem Journal. Retrieved 28 March 2018.
  5. 1 2 "A guide to car subscriptions, the alternative to buying and leasing". Roadshow. 19 March 2018. Retrieved 28 March 2018.
  6. ↑ Sandler, Emma. "5 Subscription Services Ushering New Ownership Models". Auto Finance News. Retrieved 2 April 2018.
  7. ↑ Bonnington, Christina (2 December 2017). "You Will No Longer Lease a Car. You Will Subscribe to It". Slate. ISSN   1091-2339 . Retrieved 28 March 2018.
  8. ↑ "How The Sharing Economy Will Impact Car Ownership in the Immediate Future – Condor". Condor. 13 December 2017. Retrieved 28 March 2018.
  9. ↑ "Why buy or lease, when you can subscribe?". Daily News. New York. Retrieved 28 March 2018.
  10. 1 2 "Your Next Car Might Be A Subscription". Fast Company. 2 March 2018. Retrieved 28 March 2018.
  11. 1 2 Wayland, Michael (27 November 2017). "Vehicle subscription services expand". Automotive News.
  12. ↑ jeff.youngs (11 December 2017). "Vehicle Subscription Services Emerge as New Car Ownership Model". J.D. Power Cars. Retrieved 28 March 2018.
  13. ↑ "Introducing BOOK by Cadillac, a Bold New Luxury Vehicle Subscription Model". media.gm.com. Retrieved 28 March 2018.
  14. ↑ Inc., Porsche Cars North America. "Porsche Launches New Sports Car and SUV Subscription Program". PR Newswire. Retrieved 28 March 2018.{{cite web}}: |last= has generic name (help)
  15. ↑ "BOOK by Cadillac Luxury Vehicle Subscription Service to Be Introduced in Los Angeles and Dallas". media.gm.com. Retrieved 28 March 2018.
  16. ↑ "Care by Volvo: Click, Subscribe and Drive the new XC40 starting at an all-inclusive $600 per month". media.volvocars.com. Retrieved 28 March 2018.
  17. ↑ "5 questions for the Volvo XC40s US product planner". Autoweek. Retrieved 28 March 2018.
  18. ↑ "Caddys of Conquest: Book by Cadillac Subscription Service Expands to Dallas and L.A." Retrieved 28 March 2018.
  19. ↑ "Dealership to Offer 1st Car Subscription Service in Texas". NBC 5 Dallas-Fort Worth. Retrieved 28 March 2018.
  20. ↑ "Puppies and cars: Meet the winners from Seattle's TechCrunch pitch off". GeekWire. 26 June 2015. Retrieved 28 March 2018.
  21. ↑ "Goodbye car ownership". Archived from the original on 22 August 2022. Retrieved 27 March 2023.
  22. ↑ "Borrow". joinborrow.com. Retrieved 27 March 2023.
  23. ↑ "Introducing the Techstars Mobility Class of 2017 – Techstars". Techstars. 17 July 2017. Retrieved 29 March 2018.
  24. ↑ "Wagonex claims car subscription service is 'UK first'". am-online.com. Retrieved 29 March 2018.
  25. ↑ "Drover picks up £5.5M funding for its car subscription marketplace – TechCrunch". techcrunch.com. Retrieved 29 March 2018.
  26. ↑ "Bil på abonnement. Er du klar?". Dagbladet Børsen (in Danish). Retrieved 29 March 2018.
  27. ↑ "Elmo secures £2m investment for EV subscription business". www.smarttransport.org.uk. Retrieved 30 March 2021.
  28. ↑ ANI (19 May 2017). "Revv launches first car subscription platform 'Switch'". Business Standard India. Retrieved 7 April 2018.
  29. ↑ Treece, James (22 July 2017). "Who will order car subscriptions?". Automotive News. Retrieved 28 March 2018.
  30. ↑ Frank (13 February 2018). "CarNext.com offers leases and subscriptions on used LeasePlan cars". Fleet Europe. Retrieved 28 March 2018.
  31. ↑ "LeasePlan targets subscription model for new and used cars as profits rise". fleetnews.co.uk. Retrieved 28 March 2018.
  32. ↑ "Netflix für Autos: Neuwagen bei Like2drive ab 200 Euro im Monat". computerbild.de (in German). Retrieved 5 June 2020.
  33. ↑ "Cluno, the Munich-based 'car subscription' service, raises €7M Series A". TechCrunch. Retrieved 8 November 2018.
  34. ↑ "Driveto.cz spouští dlouhodobý pronájem aut bez závazku a bez papírování" . Retrieved 19 February 2019.
  35. ↑ Bruce, Mike (28 August 2019). "Why more of us are 'subscribing' to cars … not buying them". The New Daily. Retrieved 6 September 2019.
  36. ↑ Ehrbar, Stefan. "Autos kann man jetzt auch abonnieren: BMW und Volvo steigen in neues Geschäftsfeld ein". Luzerner Zeitung (in German). Retrieved 3 December 2020.
  37. ↑ Müller, André. "Die Mobiliar setzt auf den Berner Autovermieter Carvolution". Neue Zürcher Zeitung (in German). Retrieved 3 December 2020.
  38. ↑ "Mobilezone bietet in einigen Läden neu Auto-Abos von Carvolution an". www.suedostschweiz.ch (in German). Retrieved 3 December 2020.
  39. ↑ "Lidl Schweiz bringt das Auto-Abo - Lidl Schweiz". corporate.lidl.ch (in Swiss High German). Retrieved 3 December 2020.
  40. ↑ "Langzeitmiete statt Kauf - Anbieter geben bei Auto-Abos Gas". Schweizer Radio und Fernsehen (SRF) (in German). 15 June 2020. Retrieved 3 December 2020.
  41. ↑ "🥇 ✔️ Auto Abo Schweiz - VERGLEICH 2020 ✔️ 🥇". Auto abonnieren (in German). Retrieved 3 December 2020.
  42. ↑ "Erstes Jungunternehmen profitiert von Baselländer Förderprogramm" . Retrieved 3 January 2020.
  43. ↑ "Dubai car subscription start-up secures $1m for GCC expansion" . Retrieved 7 June 2020.
  44. ↑ Loren, Webb (19 May 2020). "New car subscription software Blinker sees demand skyrocket in lockdown". Dynamic Business. Dynamic Business. Retrieved 28 May 2020.
  45. ↑ "Zipcar Rolls Out Dedicated Weekday Vehicle for Commuters | Zipcar Press Center". zipcar.com. Retrieved 28 March 2018.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.