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Car Subscriptions and Addressing Consumer Sentiments

If you are in the automotive industry, you have likely heard of car subscription services. If you have not, these services provide what is essentially a modified, short term lease. The customer pays a flat, monthly fee and can then use a car from a pre-approved pool of vehicles. If the customer is going out of town, they can easily pause their vehicle subscription and skip a month. If the customer has family visiting and needs to use an SUV rather than a sedan, the customer can easily swap out their vehicle on demand. Insurance and car registration is taken care of beforehand by the car subscription company. Additionally, if there are any maintenance issues, the car is serviced by the car subscription program, and a replacement car is provided to the customer.

One of the main benefits and allures of car subscription programs is their ease of use and hassle-free nature. Customers do not have to worry about unexpected maintenance bills or changing insurance premiums, and they can instead pay a predictable monthly subscription fee for their vehicle needs. Importantly, this convenience is also extended by the fact that many of these car subscription services operate via a customer-facing mobile app. Using the location services of a customer’s smartphone, car subscription companies are able to deliver vehicles directly to the customers location.

Important consumer sentiments

In order to best address this market and seize this market opportunity, it is important for dealerships, leasing companies, and other automotive groups to know what consumer needs and attitude shifts are behind this market trend. We noticed these needs and attitudes of consumers in the development of our white label car subscription app CarSwap. Below, we list some important consumer sentiments that are motivating the new car subscription market.

1.      There’s a difference between car ownership and “access to mobility”

According to a Cox Automotive study in 2018, 39% of people believed that “access to mobility is necessary but owning a vehicle is not”. This figure represents a growing trend, as this number is up four percentage points from a similar study by Cox Automotive in 2015. Car subscription services address this distinction, as they provide a mobility solution that does not require the pains and responsibilities of actual vehicle ownership. If your company plans to start its own car subscription program, it is important to remember this distinction. Car subscription programs must be careful to avoid any arrangement that locks the customer into a long-term commitment, as such arrangements will ignore the consumer needs that motivate the car subscription market.

2.      Get your price right

There have been a variety of car subscription services put into the market in the last couple of years, however, many of these services charge over $1,000 a month for a subscription membership. This price point is simply not palatable for young professionals who are looking for alternatives to car ownership and want something more accessible than on-demand services such as Uber or Lyft. According to data from Bernstein Research, today’s young professionals are burdened by student loans: 70% of recent college grads took out students loans to put themselves through school at an average of $25,000 per person. Additionally, many millennials are faced with frequent unemployment. In order to serve the needs of millennials, car subscription services must provide subscription packages for non-luxury vehicles that start at the $300-$400 per month price range.

3.      Keep everything on mobile and keep things simple

Millennials use mobile for everything - AirBnB for lodging, Venmo for payments, and Amazon's app for buying, well, almost every consumer good. According to Pew Research, 94% of U.S. millennials own a smartphone, which is well above the national average of 77%. This data, coupled with findings such as those from NerdWallet that 43% of millennials find car ownership a hassle, highlights an important requirement for car subscription services. If a car subscription service is to be successful, particularly among millennials, it is vital to have the entire experience on mobile with as little friction as possible. The less the consumer needs to do between deciding they want to join a car subscription service and actually receiving their first car, the better the car subscription service will be. For example, consumers should be able to use their phone to sign up for the car subscription service, verify their identify, and make their monthly payments. Additionally, the monthly fee should include insurance, maintenance, and at-home delivery solutions. All the consumer should have to do is tap to select the car they desire and start driving.


According to data from Business Wire, the car subscription industry will experience an average 71% compound annual growth rate between 2018 and 2022. If current market activity by technology companies and even OEMs in this space is any indication of the future of car subscriptions, the industry is sure to be a key driver of revenue growth for dealerships and leasing companies alike. To learn more regarding car subscription services, take a look at our article on the most important components of a car subscription mobile app or our overview of vehicle-as-a-service solutions.