Vehicle subscription

Vehicle subscription is a service where a customer pays a recurring fee for the right to use one or more automotive vehicles. Some vehicle subscriptions offer insurance and maintenance as part of the subscription fee; other subscriptions allow the subscriber to switch between different vehicles during their subscription period. Industry commentators consider vehicle subscription to be an alternative to owning or leasing a vehicle.[1][2]

Vehicle subscriptions have been available since at least 2014. Clutch Technologies, a start-up, launched a subscription service for consumers in Atlanta in mid-2014; Flow Automotive Companies was the first automotive dealership to offer a subscription service, launching Drive Flow in Winston Salem in 2016, using Clutch's technology platform.[3] 2017 saw several automotive manufacturers announce and launch subscription services, including Book by Cadillac, Porsche Passport, Care by Volvo and Canvas (backed by Ford Motor Company).[4] By 2018, a number of startups and automotive dealership companies had launched subscriptions in multiple markets.[5]

Definition

Vehicle subscriptions are a type of subscription business model where a customer pays a periodic fee for the use of one or more vehicles. The difference between a vehicle subscription and buying a vehicle is that the subscription service retains ownership of the vehicle. While vehicle subscriptions and traditional automotive leases both involve recurring payments, many subscription services offer more flexibility in terms of minimum term and the ability to swap between vehicles.[1] The main difference between vehicle subscriptions and vehicle or car rental is that most subscriptions are designed to offer full-time possession of a vehicle such that the subscription replaces the customer's primary vehicle, whereas rental involves the effort of procuring vehicles for specific dates or trips.[6]

Vehicle subscriptions have been variously been identified as part of the "sharing economy" or part of the "subscription economy".[7][8] Vehicle subscriptions have also been classified as a form of "transportation-as-a-service" and as a form of "mobility-as-a-service".[9][10]

Common features

Edmunds.com observes that there is a wide variety in the types of vehicle subscriptions that are available, such that many different customer needs can be met across the various services. Most vehicle subscriptions allow customers to pay a flat periodic fee, typically on a monthly basis. Whereas some subscription offerings have no minimum term (e.g., Book by Cadillac), others do have a minimum term (e.g., Care by Volvo launched with a two year minimum term). Vehicle subscriptions include flat-rate, no-haggle pricing. Prospective customers typically sign-up using an app. The monthly fee may include insurance, maintenance and roadside assistance. Some services include a mileage limit and some offer unlimited mileage. Several services, such as Porsche Passport and Book by Cadillac, offer the option to swap between different types of vehicles. Some services offer unlimited swaps and some restrict the number of swaps.[1][2][11][4]

Types of providers and their business models

Vehicle subscriptions are offered by several different categories of company. Each category is pursuing a slightly different business model.

Automotive manufacturers

Several automotive manufacturers and brands offer or have announced vehicle subscriptions, including Porsche, Volvo, Cadillac, Hyundai and Ford. These services offer subscribers vehicles from a single brand or, in the case of Volvo, a single vehicle. While initial launches have tended to focus on one or two cities,[12][13] there is evidence that the manufacturers will eventually offer their services more broadly: Care by Volvo was immediately available across the and Book by Cadillac has expanded beyond its original launch market of New York City.[14][15]

The manufacturers have announced various objectives for these programs. Volvo has described the objective of Care by Volvo as to provide convenience by offering access, insurance, maintenance and support within a single package.[16] Cadillac has described the objective of Book by Cadillac as being to grow the number of Cadillac drivers, particularly those who are new to the brand.[17] Porsche has described their Passport service as a way to cater to customers with highly varied lives.[9] Ford has described Canvas as a way to grow the number of Ford drivers while also controlling the number of used vehicles hitting automotive auctions.[10]

Automotive dealerships

A number of automotive dealerships have launched vehicle subscriptions focused on the markets where they have stores. For example, the Jeff Wyler Automotive Group offers a subscription service, Wyler Fastlane, in their home market of Cincinnati. The services offered by these dealerships typically include vehicles from several different brands offered by their stores, allowing customers to drive a wide variety of vehicles.

Dealerships have talked about using subscription to meet customer needs better and to expand their role in serving drivers. Flow Automotive has talked about allowing customers to drive different types of cars as their lifestyle demands. The managers of Park Place Select in Dallas talked about transforming from a dealership to a "full-fledged transportation service".[18]

Inride, in the Greater Washington DC / Baltimore area, launched in the summer of 2018 by auto dealer Alex Perdikis, as the very first vehicle subscription service in the Washington DC area. [19]

Start-ups and corporate-backed ventures

A large number of start-ups have been created to offer vehicle subscription services. One early pioneer in the vehicle subscription space was Joule, which won the a TechCrunch Seattle pitch competition in 2015.[20] Other USA-based start-ups include Carma, which is a graduate of the Techstars incubator program, and Condor.[21][22] Several vehicle subscription start-ups have been founded in Europe, including Wagonex and Drover, both from the United Kingdom, and Dribe and Bilabonnement, both from Denmark.[23][24][25][26] In 2017, Gurgaon based startup Revv, launched Asia's first monthly multi-brand car subscription program Switch, across 11 cities in India.[27][28][29][30]

Start-up Clutch Technologies has operated a subscription service in Atlanta since 2014. However, Clutch's primary business is to provide software for dealerships, manufacturers and others to offer subscriptions.[3][31]

Several established companies have created new business units that are offering vehicle subscriptions. In the USA, Cox Enterprises launched Flexdrive.[32] In Europe, LeasePlan, a vehicle leasing company, will offer subscriptions with their CarNext.com platform.[33][34]

Other providers

Zipcar is offering a version of vehicle subscription, dubbed Zipcar Commuter, that provides dedicated possession of a vehicle from Monday to Friday.[35]

List of vehicle subscription services

Name Parent Company Type Location Active/Closed
Bilabonnement n/a Start-up Denmark Active
Book by Cadillac General Motors Manufacturer New York City, Dallas and Los Angeles, USA[14] Active
Borrow n/a Start-up Los Angeles, CA[36] Active
Canvas Ford Manufacturer San Francisco and Los Angeles, USA[37] Active
Care by Volvo Volvo Manufacturer USA[15] Active
Carma n/a Start-up Chicago, Columbus, USA[38][4] Active
CarNext LeasePlan Corporate venture European markets Active
Cocooned Cocoon Vehicles Ltd Corporate venture United Kingdom[39] Active
Condor n/a Start-up Detroit, USA[40] Active
Clutch n/a Software platform / start-up Atlanta, GA Active
Drive Flow Flow Automotive Companies[3] Dealership Winston Salem and

Raleigh, USA[41]

 Active
Drive Germain Germain Motor Company Dealership Columbus, USA[5] Active
Dribe n/a Start-up Denmark Active
Drive Options Bernie Moreno Companies[42] Dealership Cleveland, USA[43] Active
Drover n/a Start-up United Kingdom[44] Active
Flexdrive Cox Automotive, Holman Enterprises Corporate venture Atlanta, Austin and Philadelphia / New Jersey, USA[45] Active
Currux n/a Start-up Texas, USA[46] Active
Flexigo Cars Cocoon Vehicles Ltd Corporate venture United Kingdom[47] Active
FlexWheels Warren Henry Auto Group[48] Dealership Miami, USA[49] Active
inride [50] Koons of Silver Spring, Inc. Dealership/Start-up Greater Washington DC and Baltimore area Active [51]
Ioniq Unlimited+ Hyundai Manufacturer California, USA Active
Joule n/a Start-up Seattle, WA[52] Closed
Lux.Car H & H Automotive[53] Dealership Omaha, USA[54] Active
MotorEnvy MotorEnvy Start-up New York, New Jersey, Connecticut, USA Active
Park Place Select Park Place[55] Dealership Dallas, USA[56] Active
Porsche Passport Porsche Manufacturer Atlanta, USA[13] Active
Subscribe & Drive Cocoon Vehicles Ltd Corporate venture United Kingdom[57] Active
Switch Revv Start-up Bangalore, Hyderabad, Chennai, Mumbai, Pune, Delhi NCR, Chandigarh, Jaipur, Visakhapatnam, Mysore & Coimbatore in India[58][59] Active
Wagonex n/a Start-up United Kingdom[60] Active
Wyler Fastlane Jeff Wyler Automotive[61] Dealership Cincinnati, USA[62] Active
YoYo n/a Start-up San Francisco, CA Closed
ZipCar Commuter Avis Budget Group Other Boston, Chicago, New York, Philadelphia, San Francisco, Seattle, and Washington, D.C in the USA; Toronto, Canada[35] Active

References

  1. 1 2 3 "What Are Car Subscription Services? | Edmunds". Edmunds. Retrieved 2018-03-28.
  2. 1 2 "What is a Car Subscription Service?". Retrieved 2018-03-28.
  3. 1 2 3 Journal, Fran Daniel Winston-Salem. "Flow Automotive offers chance to flip cars using Drive Flow with Clutch". Winston-Salem Journal. Retrieved 2018-03-28.
  4. 1 2 3 "A guide to car subscriptions, the alternative to buying and leasing". Roadshow. 2018-03-19. Retrieved 2018-03-28.
  5. 1 2 Sandler, Emma. "5 Subscription Services Ushering New Ownership Models". Auto Finance News. Retrieved 2018-04-02.
  6. ↑ Bonnington, Christina (2017-12-02). "You Will No Longer Lease a Car. You Will Subscribe to It". Slate. ISSN 1091-2339. Retrieved 2018-03-28.
  7. ↑ "How The Sharing Economy Will Impact Car Ownership In The Immediate Future - Condor". Condor. 2017-12-13. Retrieved 2018-03-28.
  8. ↑ "Why buy or lease, when you can subscribe?". NY Daily News. Retrieved 2018-03-28.
  9. 1 2 "Your Next Car Might Be A Subscription". Fast Company. 2018-03-02. Retrieved 2018-03-28.
  10. 1 2 Wayland, MIchael (November 27, 2017). "Vehicle subscription services expand". Automotive News.
  11. ↑ jeff.youngs (2017-12-11). "Vehicle Subscription Services Emerge as New Car Ownership Model". J.D. Power Cars. Retrieved 2018-03-28.
  12. ↑ "Introducing BOOK by Cadillac, a Bold New Luxury Vehicle Subscription Model". media.gm.com. Retrieved 2018-03-28.
  13. 1 2 Inc., Porsche Cars North America,. "Porsche Launches New Sports Car and SUV Subscription Program". www.prnewswire.com. Retrieved 2018-03-28.
  14. 1 2 "BOOK by Cadillac Luxury Vehicle Subscription Service to Be Introduced in Los Angeles and Dallas". media.gm.com. Retrieved 2018-03-28.
  15. 1 2 "Care by Volvo: Click, Subscribe and Drive the new XC40 starting at an all-inclusive $600 per month". www.media.volvocars.com. Retrieved 2018-03-28.
  16. ↑ "5 questions for the Volvo XC40's US product planner". Autoweek. Retrieved 2018-03-28.
  17. ↑ "Caddys of Conquest: Book by Cadillac Subscription Service Expands to Dallas and L.A." Retrieved 2018-03-28.
  18. ↑ "Dealership to Offer 1st Car Subscription Service in Texas". NBC 5 Dallas-Fort Worth. Retrieved 2018-03-28.
  19. ↑ https://www.prnewswire.com/news-releases/inride-launches-as-the-first-subscription-car-service-in-the-dc-area-300686725.html
  20. ↑ "Puppies and cars: Meet the winners from Seattle's TechCrunch pitch off". GeekWire. 2015-06-26. Retrieved 2018-03-28.
  21. ↑ "Introducing the Techstars Mobility Class of 2017 - Techstars". Techstars. 2017-07-17. Retrieved 2018-03-29.
  22. ↑ "400 Bad Request". etradewire.com. Retrieved 2018-03-29.
  23. ↑ "Wagonex claims car subscription service is 'UK first'". www.am-online.com. Retrieved 2018-03-29.
  24. ↑ "Drover picks up £5.5M funding for its car subscription marketplace – TechCrunch". techcrunch.com. Retrieved 2018-03-29.
  25. ↑ "Nyt bilkoncept: Var det noget med en Lamborghini på abonnement?". Berlingske Business (in Danish). 2018-01-05. Retrieved 2018-03-29.
  26. ↑ "Bil på abonnement. Er du klar?". borsen.dk (in Danish). Retrieved 2018-03-29.
  27. ↑ ANI (2017-05-19). "Revv launches first car subscription platform 'Switch'". Business Standard India. Retrieved 2018-04-07.
  28. ↑ "With Revv's multi-brand car subscription, you could drive a new car every month". The Financial Express. 2017-05-17. Retrieved 2018-04-07.
  29. ↑ "Revv Launches Multi-Brand Car Subscription Platform Switch". News18. Retrieved 2018-04-07.
  30. ↑ "Planning to buy a car? Just rent it for Rs 25,000 per month from this startup". Moneycontrol. Retrieved 2018-04-07.
  31. ↑ "Clutch Technologies - About Clutch". Clutch Technologies. Retrieved 2018-05-10.
  32. ↑ Treece, James (July 22, 2017). "Who will order car subscriptions?". Automotive News. Retrieved March 28, 2018.
  33. ↑ Frank (2018-02-13). "CarNext.com offers leases and subscriptions on used LeasePlan cars". Fleet Europe. Retrieved 2018-03-28.
  34. ↑ "LeasePlan targets subscription model for new and used cars as profits rise". www.fleetnews.co.uk. Retrieved 2018-03-28.
  35. 1 2 "Zipcar Rolls Out Dedicated Weekday Vehicle for Commuters | Zipcar Press Center". www.zipcar.com. Retrieved 2018-03-28.
  36. ↑ "Borrow Info". BORROW. Retrieved 2018-03-28.
  37. ↑ Muller, Joann. "Ford Explores Alternatives To Car Ownership With Canvas Vehicle Subscription". Forbes. Retrieved 2018-03-28.
  38. ↑ Car, Carma. "Carma | Month-to-Month Car Subscription". www.carmacar.com. Retrieved 2018-03-28.
  39. ↑ "Cocooned Car Subscriptions - A new way to short term car lease | Cocoon Vehicles Ltd". www.cocoonvehicles.co.uk. Retrieved 2018-08-31.
  40. ↑ "Condor Detroit - About Us". Condor. Retrieved 2018-03-28.
  41. ↑ "Drive Flow - Homepage". Drive Flow. Retrieved 2018-03-28.
  42. ↑ "Drive Options - Drive Options - About us". Drive Options. Retrieved 2018-03-28.
  43. ↑ "Mercedes or Maserati? Bernie Moreno brings luxury car subscriptions to Northeast Ohio". cleveland.com. Retrieved 2018-03-28.
  44. ↑ "Flexible Car Subscriptions - A New Way To Get A Car | Drover". www.joindrover.com. Retrieved 2018-03-28.
  45. ↑ "Locations". Flexdrive Car Subscription. Retrieved 2018-03-28.
  46. ↑ "Currux - Car Subscription Service Platform". currux.com. Retrieved 2018-08-20.
  47. ↑ "Flexigo Cars". www.flexigocars.uk. Retrieved 2018-07-03.
  48. ↑ FlexWheels. "FlexWheels Officially Launches its Subscription Vehicle Service for Greater Miami & Broward Areas". www.prnewswire.com. Retrieved 2018-03-28.
  49. ↑ "Flex Wheels - Homepage". Flex Wheels. Retrieved 2018-03-28.
  50. ↑ https://www.prnewswire.com/news-releases/inride-launches-as-the-first-subscription-car-service-in-the-dc-area-300686725.html
  51. ↑ https://www.inride.com/
  52. ↑ "Startup Spotlight: Joule wants to disrupt car ownership with 'vehicles as a service' model". GeekWire. 2015-11-12. Retrieved 2018-03-28.
  53. ↑ "Lux.Car - About Clutch". Lux.Car. Retrieved 2018-03-28.
  54. ↑ writer, Cole Epley / World-Herald staff. "New-to-Omaha Lux.Car program will deliver a new ride whenever you want – for $975 a month". Omaha.com. Retrieved 2018-03-28.
  55. ↑ Tewart, Mark (2018-03-14). "Can Offering Car-Subscription Service Options Benefit Dealers?". CBT Automotive Network. Retrieved 2018-03-28.
  56. ↑ "Park Place Select - Park Place Select auto subscription". Park Place Select. Retrieved 2018-03-28.
  57. ↑ "Subscribe and Drive". www.subscribeanddrive.co.uk. Retrieved 2018-07-03.
  58. ↑ "Switch - by Revv". www.switchbyrevv.com. Retrieved 2018-04-07.
  59. ↑ "Revv Self Drive Car rentals". www.revv.co.in. Retrieved 2018-04-07.
  60. ↑ "Wagonex". www.wagonex.com. Retrieved 2018-03-28.
  61. ↑ Matarese, John (2018-01-19). "New Wyler service gives you a new car each month". WCPO. Retrieved 2018-03-28.
  62. ↑ "Wyler Fastlane - Wyler FastLane car subscription". Wyler Fastlane. Retrieved 2018-03-28.
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