A new type of business model is on the rise. Subscriptions. With Spotify, Uber and Netflix already famous in their respective industries, is the future of car ownership also moving toward subscriptions?
So what exactly is car subscription, and how does it work? Car subscription is where you pay a monthly recurring fee to access a car, rather than buying, leasing or taking out a loan. The monthly fee of your car subscription includes insurance, registration, maintenance, tyres, and road-side assistance, all you need to pay for is your fuel. Through a car subscription, you also have the ability to switch cars as your needs change. For example, if you need a bigger car to move house – no problem! Switch your car to a bigger SUV or people mover to accommodate your move, and switch back when you’re done.
As car subscription works on a no lock-in monthly contract basis, you can cancel anytime with just 30 days notice. Once you no longer need your car subscription, you simply hand the car back at the end of your contract period.
With the recent success and popularity of not only subscription businesses, but also sharing services such as; car sharing, music sharing and office sharing, it is evident the demand for ownerless products is rapidly rising. This newfound success is directly affecting the concept and value of traditional asset ownership, particularly when it comes to larger items such as a house or cars. Retail giants are becoming increasingly worried about what the future holds, as the newer generations move towards purchasing less and valuing experiences more.
According to research conducted by Goldman Sachs, millennials are a renter generation. Only 15% of millennials stated owning a car as extremely important. Compared to previous generations, millennials are delaying major life decisions such as car ownership or marriage until they are ready or in some cases, just avoiding them completely. With a preference for accessibility, rather than the burden of ownership, these new decision-makers are already making an impact in the traditional car ownership model.
Millennials want choice and freedom. Purchasing a car ties you down. Hidden fees, unexpected repairs and unaffordable maintenance costs can deplete hard-earned savings account into nothing in just a few weeks. Using a car subscription service, such as Carly, allows individuals to live life as it should be – with freedom and flexibility. It is impossible to predict the future, so why tie yourself down with large investments like a car?
With subscription services having grown by 100% in recent years and showing an increase in sales from 57 million in 2011 to 2.6 billion in 2016, car subscription definitely seems to be the future of mobility.