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
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
CUSTOMER DEMAND FOR
USAGE-MODELS WILL FUEL
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
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to sign long-term contracts has been replaced
by a requirement for flexible and usage-based models.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
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