Car subscription: a multi-billion Euro market!

Car subscription: a multi-billion Euro market!

3 years ago

Share

Car subscription: a multi-billion Euro market! The importance of vehicle subscription is growing – up to 4 million new vehicle subscription contracts could be sold in 2030 in the EU-5 alone, leading to a multi-billion Euro market. The success of subscription models is fundamentally driven by changing customer demand from ownership to usage and towards direct & digitally enabled online vehicle shopping experiences – especially with the advent of electric vehicles. This opens up a market that has traditionally been protected by high market entry barriers based on an indirect dealer model for several new challengers from different industries. Initially, startups have shaped and led this market. Incumbent players are moving from a test-stage via white-label partnerships to either fully-fledged own products or even M&A activities and are driving market consolidation throughout Europe. Subscription models are here to stay! They provide a key puzzle piece for mobility providers in building Vehicle-as-a-Service models – if used as a strategic tool – to maximize vehicle lifetime value (VLV) by holding on to the vehicle for multiple lifecycles. CUSTOMER DEMAND FOR USAGE-MODELS WILL FUEL FURTHER GROWTH Vehicle subscriptions have constantly been increasing in importance over the last years. Fueled by the overall trend towards subscription in the consumer goods industry and the respective expectations of generations Y and Z, up to four million new vehicle subscriptions could be sold in 2030 in the EU-5 markets alone. Considering active contracts and used car subscriptions in addition, this leads to a multi-billion Euro market. The predicted success of this new model is based on shifting customer demands. The need to own a car is changing towards a need for mobility and the willingness to sign long-term contracts has been replaced by a requirement for flexible and usage-based models. In contrast to other mobility services such as car sharing, vehicle subscriptions cater to all these changes while still offering access to a personal, non-shared car. The five main reasons why customers choose subscription over more traditional forms of car ownership are as follows: » Short-term commitments: Instead of signing a multi-year leasing contract, customers can opt for minimum terms of as less as one month only. » Low waiting times: Particularly in times of chip shortage, waiting times for vehicles are long – subscription cars based on stock vehicles are oftentimes delivered right away. » Peace of mind: No license plate registration, no search for the right insurance, no worries about expensive repairs – customers only need to fuel up (or charge). » Simple contracting: While buying or leasing a car usually means lots of physical paperwork at the dealer, subscription vehicles can be ordered online in just a few minutes. » Low-risk exploration: Although consumers are increasingly curious about electric vehicles, many are not convinced enough to buy one yet. Subscriptions allow to test new technologies (or brands) with very little associated risk. BERYLLS POINT OF VIEW SNAPSHOT OF THE EUROPEAN AUTO SUBSCRIPTION MARKET https://www.linkedin.com/posts/dr-jan-dannenberg-7a60b6137_subscription-models-are-here-to-stay-4-activity-6857219138251739136-T4HA

You may also like