[PraNeel]

Originally Posted by smartcat

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.

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.

Smartcat you stole the words out of my mouth. I have several times gone to Zoomcar site and have toyed with this idea of subscribing out my car, but the fine print and EMI puts me off every time.
Moreover, when I see the condition of Zoomcar vehicles and the way they are driven, I understand why many such services can't be started in our country.
People need to understand that even though they have rented the car still it belongs to someone else. Though I sincerely wish that we get there some day, when our public properties are respected by the masses.

[AutoSphere]

Although the subscription model may take some time to pick-up, for car enthusiasts there is another related model called "Fractional Ownership" which could be a solution when a group of persons want to jointly own an automobile. The reasons could be :
* To keep expenses low
* To be able to jointly own a car that individually they may not be able to afford/justify
* Or some other reasons..

Old news of 2016 but interesting ...

A couple of weeks ago, Ford Motor Company somewhat quietly announced that next month, it’s beginning a leasing pilot program in Austin that will enable three to six people to lease a Ford Vehicle together.

It’s not alone in thinking about fractional car ownership. Audi is similarly trying out a fractional car ownership program called Audi Unite that allows up to five people to own a car together. (It launched, and remains exclusively available, in Stockholm, Sweden.)

A nascent startup in London called Orto is also entering the business of fractional car ownership...

https://techcrunch.com/2016/01/27/ca...wnership-work/

[Altocumulus]

Originally Posted by katchkamalesh

Considering the current pricing of the subscription and lease plans, owning a vehicle makes more financial sense even if one takes loan for the entire ex-showroom price.

P.S. I have not taken into account the residual value of the leased car which the user needs to pay at the end of tenure if he/she wants to own the car.

I think leasing still makes sense if you just take the rental (finance lease). Your total outgoing will be around 10L (based on the maruti leasing site numbers for just monthly rental). On top of that you would be saving tax not only on the monthly rentals but also on maintenance and petrol, driver, etc. Also the residual value is generally 15-20% of the funded amount so that wouldn't be more than 2L and you can sell the car 4.45L. If you do the maths you will save more than 3L in leasing.

I took a lease from Orix for my Ritz for 4 years. At the end of the lease my effective total outgoing is 4.8L including residual and deducting tax savings for a car costing 5.53 OTR. Now I am selling the car for 3.4L so effectively losing 25% in 4 years which I think is pretty good.

[volkman10]

Lexus to en-cash on the Subscription model,

More and more automakers are looking for new ways to appeal to consumers. Though car subscriptions have features similar to traditional car loans and leases, they have some unique features which appeal to buyers: lack of long-term commitment, all-inclusive pricing, and low-hassle ordering and delivery.

The Subscription services are being piloted to iron out the probable issues:

Automakers are testing their subscription programs out in limited markets, so they can learn from their customers – what works, what doesn’t, what price point is appropriate, what risks they face

Lexus, the luxury division of Japanese automaker Toyota, is also getting in on the subscription economy. In December, Lexus will launch a car subscription for its new Lexus UX Compact US 200 and UX250.

‘When the UX goes on sale in December of 2018, there will be a new option in addition to the usual purchase and lease processes. For the first time in the history of Lexus, the UX will be offered through a subscription service

Link

[dileepcm]

Originally Posted by Jeroen

With the exception of my eldest son, they are not interested in cars. To them just a form of transport. Nothing to get exited about, purely about how to get from A to B, depending on your need you choose what suits your needs terms of speed, comfort, cost, convenience etc.

Adding my two cents to follow the above statement. I completely agree on the point that cars have become a lot more A to B movers than anything else as there is not a lot of relations being built for the most part between men and machines anymore.

In my view, this is happening also because of the fact that the level of modernization and automation have grown so much thus killing the opportunities of people in getting closer to their machines. With electric cars getting around, the distance will become even bigger.

How? Well, newer cars have a lot less maintenance to do, a lot less mechanical fixing to do and so on. Newer generation cars simply do not require opening bonnets. If at all it is needed, road side assistance will do it for you.
So you have a lot less chances to build a relation with your cars. This simply means that your car is nothing more than an A to B mover.

So if the idea is to do A to B, A lease or subscription car makes perfect sense.

On a related note, one of my colleagues was a bit surprised that I was able to change the tire on my own during my last road trip to Norway (Thanks to Machindra days back in Kerala)

[katchkamalesh]

Originally Posted by rdst_1

I don't know if the calculations that you have done are for an operating lease or not, which is what the subscription model is based on.

It seems to me that your calculations are based on the current prevalent leasing model in India which is different from a subscription model.
For example, for a car running around 80k in 5 years, the maintenance cannot be as low as 50k.

For the calculation I have taken the plan where Maruti takes care of maintenance, insurance aspects. There is also another plan that Maruti provides wherein the customer has to pay for maintenance and insurance.

The point I forgot to add in my previous post is that I have considered the leasing plan where there is a cap of 1000 km/month which translates to 12,000 km/year. So, for a fair comparison, I have also considered that the privately owned vehicle will also have a mileage of 60,000 km at the end of 5 years.

You have misunderstood the cost of maintenance, 50k quoted here is for the maintenance of a privately owned vehicle and not for a leased vehicle. (May be I should have made it more clear)

Originally Posted by Altocumulus

On top of that you would be saving tax not only on the monthly rentals but also on maintenance and petrol, driver, etc.

I have taken those aspects into account here.

Since maintenance is already included in the package, I have not considered any additional tax benefit. Also since vehicle allowance and medical allowances have been done with during this budget, I do not think that we will be able to get any tax benefits on salary paid to driver and money spent on fuel and tolls.

You should also be aware that the taxes on these monthly rentals can be as high as 35% for individual lease. Also Maruti states that "Registration and road tax is not included in monthly lease rental" I am not sure as to what they mean by this.

Do they mean to say that the customer has to take care of these charges as well? if that is the case then owing a vehicle is a no brainer unless one likes to try new cars every 2/3 years,

[HKap]

I believe BMW is rolling this out as a pilot in some cities in the US. The service will have slabs and you are allowed unlimited exchanges for cars in the slab. So you could drive a 340i Monday-Friday but pick up a X3 for a weekend trip. However, you would need to subscribe to a higher slab to get your hands on a M3 or i8. You have no costs other than fuel as the subscription includes insurance, maintenance etc. If my memory serves me right, these subscriptions start at approximately USD 2200 per month. Compared to leasing a BMW, this is way more expensive. I believe you can lease a fully loaded 340i for around 500-600 per month + insurance (another 300 or so). My math suggests that this will be approximately twice as expensive as leasing a car. The only advantage being that you could in theory drive a different car every day.

If this takes off, I believe there is a huge market for an Uber like app for car subscriptions. After paying upwards of 2000 USD per month, why should I not have the option of switching brands every few weeks. This might also completely change the business model for used car dealers.

Interesting times ahead.

[rdst_1]

Originally Posted by katchkamalesh

You have misunderstood the cost of maintenance, 50k quoted here is for the maintenance of a privately owned vehicle and not for a leased vehicle. (May be I should have made it more clear)

Also since vehicle allowance and medical allowances have been done with during this budget, I do not think that we will be able to get any tax benefits on salary paid to driver and money spent on fuel and tolls.
Also Maruti states that "Registration and road tax is not included in monthly lease rental" I am not sure as to what they mean by this.

Do they mean to say that the customer has to take care of these charges as well? if that is the case then owing a vehicle is a no brainer unless one likes to try new cars every 2/3 years,

1) No, I understood your point correctly. I have pointed out that for a 80k run private vehicle maintenance costs are higher than 50k because it would usually include at least a clutch, suspension and tyre change.
50k would only cover the basic oil change services these days.

2) People who are self-employed can take tax benefits on salary paid to driver etc. In fact, if one buys a car, they only get tax benefits on the depreciation component in the first year and have to maintain a lot of logs and receipts. The operating lease makes it much easier as you can claim the whole amount as expense and also easier to not have to maintain multiple receipts etc.

3)If they haven't included the registration and road taxes, then they aren't offering a good plan and hence won't find many takers for it, like you have suggested.

[shobhit.shri]

Late to the party, but I would add why I like the subscription model.

1. Zero liability: I think people are underplaying the hassle of maintaining a car. Considering the service stories here for just about any manufacturer, if I can get a car without the associated hassle, why not?
2. Total cost of ownership might still be lower: If you include the interest paid on loan, opportunity cost of money and the risk of low resale value, car ownership become significantly more expensive than just the sale price.
3. Better division of labor: Manufactures build and maintain the car, banks own the financial risk and you drive and pay. isn't it beautiful .

The days of maintaining a car immaculately and driving it for ten years are over for most people. Looks like subscription is an idea whose time has come and they just need to sort out the details.

[Altocumulus]

Originally Posted by katchkamalesh

I have taken those aspects into account here.

Since maintenance is already included in the package, I have not considered any additional tax benefit. Also since vehicle allowance and medical allowances have been done with during this budget, I do not think that we will be able to get any tax benefits on salary paid to driver and money spent on fuel and tolls.

Like I mentioned in the previous post my calculations are based on finance lease. Not fleet management which you have taken into account.

The vehicle allowance which has been taken off in the budget are for privately owned cars which 1800/2400 for fuel and maintenance and 900Rs for driver. That is different from car lease. In lease the car is in the name of the company, not the individual. Allowances depend on organizations. Like in my present organization anually it is Rs108000 for fuel (for petrol, diesel is different), car repair is 21000, insurance is 30000 and toll is 18000. Previous organization was No limit for petrol and maintenance and 12000 per month (Rs 96000 pa) for driver but no benefit in insurance.

Also which 35% tax is this. Initially it was VAT+ST which now is GST. Effective difference is not much I believe specially for people taking a new lease now compared to ones who had taken before GST.

However this is going off topic. In the topic of subscription, I guess it does make sense for a second car as a beater car, where you can take a small car for daily use. I think since this is new, it is expensive now, but over time it will get cheaper. But the fear of misuse still remains. Actually not a fear, I am sure people will misuse the vehicle and slowly people wont like to take that car.

[katchkamalesh]

Originally Posted by Altocumulus

Also which 35% tax is this. Initially it was VAT+ST which now is GST. Effective difference is not much I believe specially for people taking a new lease now compared to ones who had taken before GST.

The figure of 35% was just an indication.

I was referring to this document.

I understand that the taxes were reduced in oct 2017 and now it comes down to 18.85% to 31.85%.

I agree that it might be beneficial for the employees whose employers offer this scheme. But for a majority of the people, atleast with the current pricing, it does not make any financial sense. Hope they lower the rates.

[prithm]

I don't see a reason why this would succeed in Indian scenario, but as mentioned by others, the current generation does not want ownership nor responsibility of maintaining a vehicle on a long term basis. Its just a shift in thought process and easy access to resources.

As they say "Change is the Only Constant".

Infact, one of the primary reason for hatch backs being popular among younger generation and flooding of cars with age of 2-5 years is mainly because of this school of thought.

Good starting salary package, easy loans, cheaper cars drive this generation's ownership model.

Subscription to me is alternate to loan with the opportunity to upgrade versions as when it pleases and throw maintenance in someone else's plate.

[biller777]

One thing to note is that these subscription based cars will be marked as commercial vehicles. So all the grievances associated with commercial vehicles will start applying. Eg. State entry tax (if you travel out of state), cantonment area entry tax (I stay in Pune within the cantonment limits. There is a Rs.200 entry fees which cars like ola/uber have to pay).

Secondly, car variants. I recently hired a Creta Zoomcar for my Himachal Pradesh trip from New Delhi. I got the lower powered 1.4 engine variant. Basically, these type of services usually opt of for either the cheapest or at the most, mid level level variants. So be prepared for an under powered and a minimal spec vehicle. Atleast in an Indian scenario.

[NTO]

I might have a different opinion on this topic. I am a person who falls in love which what drives me around. Be it my two wheeler or four wheeler, I make sure they are in the best of the condition possible and even a scratch on them makes a scar in my heart.

That said, I can never go ahead and rent a car. Something I drive down everyday should be my own and I will be in a relationship with it as long as I own it.

[venkyhere]

subscription model will kill the following satellite industries :
1. aftermarket audio/cosmetics/wraps/stickering
2. aftermarket wheels/tyres/suspension/racechip/remap
3. aftermarket lighting
4. aftermarket seat upholstery
2. car care - 3M and hundreds of others in coating business