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Old 10th April 2018, 10:06   #1
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Default Car Subscriptions - The next big thing?

The way consumers choose their next car might have more in common with Netflix than the traditional retail system that's defined the automotive industry for more than a century.

Auto Subscription are seeing strong interest in certain demographics, particularly millennials who want commitment-free flexibility and might never have purchased a new vehicle the customary way.

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A recent J.D. Power and Acxiom joint study reflected 59 percent said they "definitely would" or "probably would." Of that group, roughly 78 percent were in Generation Z, born in 1995 or later.
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The study found that 53 percent of Gen Z responders said they'd be interested in a subscription service.
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Young people already used to monthly subscriptions for everything from TV to clothes to food are driving much of the demand for vehicle subscriptions.
Customers can swap, upgrade or downgrade their cars at any time or cancel their contract altogether, with no finance-style long-term commitment or down payments.

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A plethora of vehicle subscription services being rolled out offer customers the ability to make all-in, month-to-month payments and the option to frequently switch vehicles as their needs change. Some let subscribers go from sports car to SUV to sedan in a matter of days; others limit swaps to a certain number of times per month or over the course of a year. A few operate more like short-term leases, allowing an upgrade after 12 months
BMW and Mini have launched a subscription service that rolls all the costs of car ownership into monthly instalments.

Payments, which start from 131 per week (equating to around 568 a month), include the costs of insurance and maintenance, as well as breakdown cover, as one bill.

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Volvo, Lincoln, Cadillac, Hyundai and Porsche, along with startups, auto lenders and dealership groups, have all been experimenting with some form of subscription service within the past year. BMW launched a pilot subscription plan in Nashville just last week (see story, Page 57), and Mercedes-Benz plans to launch pilots in two undisclosed cities in June.
Subscriptions seem good opportunities for automakers to prepare for a future of autonomous and electric vehicles.

If automakers want to break out into the mobility field, subscription services is something they could do to position themselves now.

Vehicles will become more expensive. Subscriptions could be used purely for affordability reasons.

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This new system of ownership illustrates the fast-changing new car market. Many industry experts predict that the rise of autonomous vehicles will see this type of finance superseded by subscription services that give users access to car-sharing schemes.

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Old 10th April 2018, 11:17   #2
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Default re: Car Subscriptions - The next big thing?

volkman10, you really have a genius for consistently pulling up new threads on the latest and greatest. This is an eye opener. In the west it could capture a significant share of the market given the largely uniform driver training standards and tests and civic sense of looking after the car and changing generations. This change in buyer behavior should not come as a surprise to any one. We have already witnessed two big buyer behavior changes in one generation. Earlier we saved and then bought cars or domestic appliances. Today most buy and then save (through EMIs). And then of course there is the buying off the net which is disrupting traditional retail. My dream of driving my own Rolls Royce albeit for a week might still come true. For now I make do with scale models
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Old 10th April 2018, 11:17   #3
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Default re: Car Subscriptions - The next big thing?

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Originally Posted by volkman10 View Post

Auto Subscription are seeing strong interest in certain demographics, particularly millennials who want commitment-free flexibility and might never have purchased a new vehicle the customary way.
The way I see relationships are turning out to be these days. But you are never meant to be in a relationship with an automobile, do you ? Living in an era of instant gratification, don't see a point really in keeping the same car for long. Between, how long is very long ? Some how I couldn't digest this concept. But, that's my personal opinion. I am 30, yet feel so old school

As a business model, this is a great one. How different is it from self drive rentals ? If monthly subscription rates are competitive, this is going to surely workout, big time.

Last edited by BLACKBLADE : 10th April 2018 at 11:29.
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Old 10th April 2018, 11:46   #4
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Default re: Car Subscriptions - The next big thing?

I think it’s a great idea. This way, I get to drive new cars frequently without the hassles of maintenance or insurance. I welcome this initiative.

That said, there always be that one car which will always be in my garage.
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Old 10th April 2018, 12:38   #5
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Default re: Car Subscriptions - The next big thing?

I do not think automobile subscription will catch on like Netflix or Amazon Prime. Consumption of content is different from consumption of depreciating & deteriorating (with time) consumer goods like automobiles.

From the manufacturer point of view:

Let's say Tata Motors launches this subscription service. Let's say they produce 10,000 cars per month that costs them Rs. 500 crores to manufacture. In the current "for sale" model, the entire amount + profits comes back into the company in 3 months. But with a subscription model, only a tiny percentage of amount spent by Tata Motors reaches their coffers. To survive and produce more cars, Tata Motors needs to take on huge amount of debt - which will eventually kill the company.

From the consumer point of view:
  • No ownership pride. For many, cars are emotional purchases.
  • Much higher monthly costs (interest paid by manufacturer is passed on to consumer too)
  • Trust deficit. Would you trust a manufacturer (who is short on cash) to maintain your car?
  • Lack of options when it comes to car color and features

If you need figuring out how much a consumer has to pay per month for a mainstream car, check Zoomcar's subscription service. It is much cheaper to own a car.
https://www.zoomcar.com/zap/subscribe

Car Subscriptions - The next big thing?-zoomcar.jpg

Last edited by smartcat : 10th April 2018 at 12:40.
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Old 10th April 2018, 12:46   #6
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Default re: Car Subscriptions - The next big thing?

Subscription is probably not very far out in the future. I read a report a few weeks back that in the capital region in Finland, the number of driving licence applications from youngsters is falling, while the population in these areas is rising. I think it shows that when circumstances are favourable (good public transport, easy access to cabs etc), youngsters are shying away from driving themselves.

I think these youngsters may be ready to subscribe to a service that lets them have a car at their disposal when needed. Taxi companies could then deploy autonomous cars and everybody will be happy.

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Old 10th April 2018, 13:14   #7
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Default re: Car Subscriptions - The next big thing?

This does not bode well for the automotive enthusiast, atleast as we know him (or her).

As someone said, where is the pride of ownership?
Where is the careful selection after multiple test drives and finding the one that "clicks"?

Most "subscription" would involve whatever the large subscription companies would want to ram down our throats, even if its a lifeless electric semi-autonomous pod.

Would you turn back and take a look at your "rental" for the day as you walk away? Would you feel a sense of bonding and gratitude towards it, after years of service, years of being through a lot of stuff together?

But I guess this is what the world wants now. The automobile has ceased to signify freedom, pride, an expression of oneself.

Subscribing to a car is like subscribing to a dog. Sure, you can bring one home to pet one for a while because you wanted to "experience" it, and when it wants to go out and poop you return it to the "agency".
For today's commitment phobe generation, this might work very well, but I guess I will hold on to my car (and hug it if I could).
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Old 10th April 2018, 13:20   #8
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Default re: Car Subscriptions - The next big thing?

It's a very interesting idea and it is already in operation in various countries in some different shapes and formats. I do not think it is making an impact at all at the number of cars sold to date, but of course that might change.

As mentioned, a lot of young people, especially in Western Countries, are simply not that interested in owning a car anymore. They have various alternatives already and this is just one more.

There are a few companies operating here in the Netherlands that offer Mobility services. Basicly, you tell them where you want to go and how and they will make the arrangements, by bus, metro, train or by car, or even by plane.

We have seen other vehicle subscriptions around Europe as well. E.g. bicycles, some succesfull and some not. Amsterdam a couple of decades already had a project called White-Car. Similar to a bicycle scheme, but then with electric cars all over Amsterdam. You needed to subscribe to the service and then you could pick up one and leave it at various charging stations around the city centre. It never really took off, to early for it's day.

One of the reasons why this could be a very interesting thread is what it might do to the automotive industry at large. As long as it remains small, not much. But say for argument sake, 15% or more of the vehicle in a large town is actually on a subscription it will have a big impact. Fewer cars and most likely model/options etc are becoming less relevant or at least much more standardized. Car makers will be forced to sell fewer cars at lower (bulk) prices.

But first it needs to properly take off. Something I dont see happening in India any time soon, but I might be wrong.

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Old 10th April 2018, 19:14   #9
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This just expands on the concept of operational leasing of a car, something I am very interested in.
And you could have various permutations and combinations and eventually, even car companies themselves running such enterprises. It would need a drastic change in mentalities and also a more mature and responsible society for such an endeavour to be succesful, especially if it expands into the territory of rental cars. If I could have the option of a Zoomcar anytime, anywhere I want, I would never buy a car, only if, the car is maintained immaculately. The maintenance part of the business has to be flawless for such an idea to succeed.
When the first and only time, I used Zoomcar on my visit to Pune, it was such an amazing experience. Apart from a little dirty interiors, I just loved the freedom I had and the time and money I saved. Now just imagine if I can have the same throughout my life. That would definitely be a dream come true for someone like me. Automated driving, in the future, would just be a cherry on the top.

P. S. - I feel the less regulated rental services of Goa do a much better job than Zoomcar. The cars are well maintained and also cheap to rent. So, much better policies, soecifically pertaining to such businesses would definitely help such endeavours get a better foothold than bunching them with the commercial category vehicles.
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Old 10th April 2018, 19:36   #10
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Default re: Car Subscriptions - The next big thing?

I came across this service recently which is much similar to subscriptions -

https://www.mobiliti.com/

{quote}
NOT READY TO LEASE OR BUY?
NOW THERE’S ANOTHER OPTION.
Drive the car you want, on your own timeline, for one monthly fee—no time commitment, no costly up-front investment, with insurance included.
{quote}

Of course, this is US only.
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Old 10th April 2018, 20:16   #11
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Default re: Car Subscriptions - The next big thing?

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Originally Posted by volkman10 View Post
Auto Subscription are seeing strong interest in certain demographics, particularly millennials who want commitment-free flexibility and might never have purchased a new vehicle the customary way.
For me, it is something very similar to people who avoid marriages, kids and the associated commitments, responsibilities and issues, but go to various prostitutes for their very basic needs. They don't know the value of a family and this new "car subscribers" don't know the value of a car. As simple as that.
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Old 10th April 2018, 21:50   #12
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An Auto subscription (personal contract purchase) is the most popular option of "owning" a car, here in the UK. Some key benefits include getting the latest model, flexibility to decide on ownership after the tenure or change to a different car as desired, etc. While the overall costs would be higher than traditional ownership, I still feel there will be takers in India, purely for the convenience and flexibility.
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Old 10th April 2018, 22:06   #13
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Originally Posted by romeomidhun View Post
For me, it is something very similar to people who avoid marriages, kids and the associated commitments, responsibilities and issues, but go to various prostitutes for their very basic needs. They don't know the value of a family and this new "car subscribers" don't know the value of a car. As simple as that.
I think such a comparison is taking it too far.
Have people who subscribed to Prime Videos or Netflix stopped watching TV shows or movies. No, they haven't. They prefer not having to watch ads and primarily take control of what they want to watch, when they want to watch.

Similarly, people who would like to subscribe to such a car service (like me), would like to have the convenience of not having to worry about maintenance and other headaches that come with owning a car. Hell, I for one, don't even like driving one and would prefer to be driven around or for autonomous driving to become the norm. And there are many others like me, for whom a car is akin to an appliance that does a job required to make my life easier.

Why do people prefer to shop online these days? Because it is more convenient.
Society changes over time. We went from being hunters, to gatherers, to farmers. I can say that you are afraid of commitment and hardwork because you don't grow your own food. But society has changed and that is alright.

Comparing owning a piece of depreciating asset to cultivating relationships is just nuts, IMHO. Everyone has different views and needs even when it comes to families. I personally find developing friendships far more rewarding than blood-relationships. So, if I don't marry, or don't want to have kids, doesn't necessarily mean I am afraid of responsibilites or commitments. Maybe it means I just don't need an immediate family because my friend circle is that great.
Just like I wouldn't feel the need to own a car if my needs are being met by a subscription service.
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Old 10th April 2018, 22:24   #14
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Default re: Car Subscriptions - The next big thing?

Going with the trend, here is BMW's pilot on Auto Subscription.

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BMW pilots a $3,700-a-month service that lets you drive any model you want, will let drivers get access to a fleet of cars, whether they feel like driving a 5-series sedan to the office or using a faster M2 coupe for the weekend.

The $2,000 fee (plus a $575 joining cost) includes delivery by a concierge, use of the car, insurance, roadside assistance, maintenance and unlimited switches between models
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drivers can order a car via an Access By BMW app. A second tier, for $3,700 a month gives access to the powerful M-series. Buying a top-of-the-range 2018 BMW M5 Sedan all-wheel-drive would cost more than $110,000
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Porsche launched its own two-tier subscription service in Atlanta last November, with a top price of $3,000

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We're conquesting a target group, and engaging them with a brand, who do not want to commit to a three-year lease. They just want to go month-by-month and are willing to spend for that
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Old 10th April 2018, 22:45   #15
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Default re: Car Subscriptions - The next big thing?

I initially thought this is a silly idea but then I saw another side of it.

People who live in extreme weather conditions in places like colder regions of USA, they could benefit from this and not be forced to buy an SUV. With this subscription service, one can drive a coupe/convertible/sedan during summers and switch to an AWD Sedan or SUV during winter.

This would be a perfect but at current prices its still not viable for most folks but I could see this working if the prices are adjusted more favorably.
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