Dive Brief:
- Vehicle subscriptions could help speed electric vehicle adoption and enable automakers to make cars more affordable for consumers, a September report by Deloitte says.
- Lower maintenance requirements, software-defined architectures and better vehicle telematics make electric vehicles “particularly well suited” for vehicle subscriptions, the report says.
- In-house subscriptions can help get “more customers in the door” if they bundle needed services like maintenance and insurance with transparent, predictable costs and more flexibility for consumers, the report says.
Dive Insight:
Some automakers have experimented with vehicle subscriptions, but the model has not caught on. Unlike buying or leasing, vehicle subscriptions combine vehicle use, maintenance, insurance, telematics services and other offerings into a single monthly payment. That can make it easier and more affordable for car shoppers to get a new vehicle.
Audi, BMW, Cadillac, Ford and Mercedes-Benz have shuttered vehicle subscription programs at various times due to high costs and logistical challenges, as earlier programs often allowed customers to swap vehicles.
According to Car and Driver, keeping customers in one vehicle throughout the subscription may be key to ensuring such programs are viable.
More than a third of new car shoppers in the U.S. under 55 years old question if they need to own a vehicle, according to Deloitte.
“As the global trend toward urbanization progresses, young people living in cities are questioning traditional vehicle ownership and may be looking for alternative modes of transportation such as ride-sharing and micromobility,” the report says.
According to Deloitte, the average monthly vehicle payment was a record $733 in the second quarter of the year. But 80% of new car shoppers plan to pay less than $600 per month, including all services and insurance, the report says.
In addition to making vehicles more affordable and easier to access, automakers can “use subscription models to encourage their existing customers to ‘test drive’ their premium brands or their latest EV models,” the report says.
Vehicle subscriptions could also increase the supply of used EVs because the contracts are usually for shorter periods than leases or loans. That could make it easier for used car shoppers to get into an EV, the report says.
