Are car subscription services the future of car ownership?
- Car subscription services are a cheaper option to vehicle ownership
- The subscription service can last up to a few years, depending on the agreement with the service provider.
Car subscription services are not very different from car rental services. The process provides a car on loan for a specific amount of time, be it for personal or company use, and returning it eventually. For some, not owning a car gives them the flexibility to change vehicles as they wish and not be burdened by all the payment, paperwork and servicing needed as compared to owning a vehicle.
Over the years, car subscription services have also evolved thanks to technology. For short-term rentals, many would still browse online for the best rental deals from established rental companies. However, when it comes to car subscription services, the process is made even easier through mobile applications. Some car subscription services even allow the unlocking, starting and fueling of the car made through their apps.
According to a study by Zion Market Research, the global car subscription market size was nearly US$5.4 billion in 2022 and is predicted to increase to approximately US$99.4 Billion by 2030, recording a CAGR of nearly 35.3% from 2023 to 2030.
The study also stated that flexibility and cost-efficiency of car subscription services are among the factors that are driving the trend. Younger adults are also drawn to the affordable monthly instalments including insurance costs and maintenance costs along with roadside assistance.
A report by Deloitte refers to car subscription services as Vehicle-as-a-Service. It states that by 2025, more than €22 billion of new annual auto financing will shift to the subscription segment and it’s up for grabs for new players in the European Union. The report pointed out that today, the new players in the industry are attracting attention with their subscription models. This is because they are able to acquire customers easily due to their digital maturity as compared to traditional car rental companies.
At the same time, in countries like Singapore, the cost of owning a vehicle is one of the highest in the world. Vehicle owners need to apply for a permit to own a vehicle. Not only are these permits expensive, but they also limit the number of years a vehicle can be on the road.
When looking at the costs of maintaining a vehicle, most car subscription services will cover almost all costs of vehicle maintenance. Electric vehicles, which are also gaining popularity in Singapore, would be an ideal leasing choice instead of ownership given the depreciation of the vehicle’s battery and value after several years.
Car subscription services in Southeast Asia
In Southeast Asia, Carzuno has become a leading car subscription services provider in countries like Singapore and Thailand. Founded in April 2021 by two automotive enthusiasts, Carzuno’s mission is to offer all the benefits of car ownership, but none of the hassle.
A Carzuno car subscription comes with insurance, servicing, 24/7 roadside assistance and taxes included. Pricing is fully transparent, and subscribers need to pay only one flat monthly fee. Subscription durations are flexible, ranging from one to 24 months. Carzuno aims to provide its subscribers with a 100% digital experience where they can use a credit card to subscribe to a wide variety of cars in less than three minutes and get the vehicle delivered to their doorstep within 24 hours.
Carzuno has also integrated its subscription services with other digital service providers. For example, in Singapore, Carzuno has partnered with Carousell Singapore, a classifieds and recommerce marketplace to offer car subscription services.
“Combining Carousell’s reach of 1 in 3 Singaporeans as monthly active users with our large fleet and variety of 50 car models, we are excited to give Singaporeans more flexibility and freedom in driving the car of their choice,” said Kim Jonsson, Carzuno CEO.
Apart from Carzuno, another popular car subscription service is Malaysia’s GoCar Subs. The on-demand car-sharing platform allows users to book a car by the minute, hour, or day via its app. With a fleet of over 1000 vehicles, GoCar was recognized by Frost & Sullivan’s Best Practices Award as Car-Sharing Company of the Year 2022 (Malaysia).
“The most successful players today are new entrants with a customer-centric focus, a superior customer experience and a convenient digital journey featuring a multi-brand solution,” stated Deloitte’s report.
Globally, Hertz My Car is one of the fastest-growing car subscription service provider. The US-based car subscription service is already known for its car rental services and now provides a generous monthly mileage allotment, an excellent selection of cars, and plenty of locations throughout the country.
An opportunity for car manufacturers
Interestingly, some vehicle manufacturers are also now looking into car subscription services to boost their vehicle sales. Manufacturers like Nissan and Renault are already offering certain models for subscription in Malaysia.
The most famous manufacturers offering subscription services currently are Porsche and Volvo in the US. While reports state that Porsche’s program is pricey, its loans are flexible from just one day to an entire month, and subscribers can keep a single car for up to three months at a time. On the other hand, Volvo’s subscription service is a 24-month lease that includes full insurance, maintenance and other add-on insurance items like tire and wheel protection.
Car subscription services are becoming an increasingly preferred choice when it comes to vehicle ownership. With technology enabling greater accessibility to vehicle management and tracking services, consumers are also attracted to the flexibility that comes with the services.
There is no denying that vehicle sales will continue to grow, but in terms of vehicle ownership, the industry is definitely seeing a difference. As Deloitte’s report puts it, vehicle subscription models are here to stay, promising to transform the vehicle finance and ownership market.
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