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]

Not to be confused with Carsharing.

Vehicle subscriptions have been available since 2010 when Rima Braden of Autosource, LLC offered a short-term flexible auto acquisition program from his dealership in Honolulu, Hawaii that he coined "Flexlease". Rebranded as "Carousel" in 2013, the program was restricted to the city and county of Honolulu and remains in operation today. In 2014 flexdrive, now jointly owned by Cox Automotive and Holman Enterprises, launched.[3] 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.[4] 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).[5] By 2018, a number of startups and automotive dealership companies had launched subscriptions in multiple markets [6] and flexdrive became the first U.S.-based car subscription company to support dealerships and fleet operators stateside and globally through its partnership with Dribe in Denmark.

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.[7]

Vehicle subscriptions have been variously been identified as part of the "sharing economy" or part of the "subscription economy".[8][9] Vehicle subscriptions have also been classified as a form of "transportation-as-a-service" and as a form of "mobility-as-a-service".[10][11]

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 Carousel, 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][12][5]

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, Mercedes Benz, BMW, Lexus 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,[13][14] there is evidence that the manufacturers will eventually offer their services more broadly: for example Care by Volvo was immediately available across the country and Book by Cadillac has expanded beyond its original launch market of New York City.[15][16]

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.[17] 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.[18] Porsche has described their Passport service as a way to cater to customers with highly varied lives.[10] 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.[11]

In May 2020 the BMW Group started their own vehicle subscription service in MINI Subscribe. MINI Subscribe is currently available in major German cities such as Munich and Hamburg, offering a range of models including the iconic MINI Cooper, MINI Cooper SE and the MINI Cooper Countryman.

Automotive dealerships

A number of automotive dealerships have launched vehicle subscriptions focused on the markets where they have stores. 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. Examples:

  • The Jeff Wyler Automotive Group offers a subscription service, Wyler Fastlane, in their home market of Cincinnati.
  • Flow Automotive
  • Park Place Select in Dallas[19]
  • Inride, in the Washington DC/Baltimore area
  • Carousel, based in Honolulu, Hawaii
  • Portfolio by OpenRoad, based in Vancouver, British Columbia, launched in November 2018

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, Borrow,[21] a subscription service focused exclusively on electric vehicles, and Mobiliti.[22][23] Several vehicle subscription start-ups have been founded in Europe, including Wagonex, Cocoon Vehicles and Drover, from the United Kingdom, and Dribe and Bilabonnement, both from Denmark.[24][25][26][27] In 2017, Gurgaon based startup Revv, launched monthly multi-brand car subscription program Switch across 15 cities in India.[28][29][30][31]

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

The German company like2drive GmbH was founded in February 2018 as part of the Fleetpool Group.[35][36][37][38]

Cluno, a multi-brand car subscription service operating in Germany, was founded in October 2017.[39][40][41]

A car subscription service in Czech Republic, called Driveto Klub, was launched in October 2018 by Driveto.[42] Driveto was founded in Prague in 2017 and started as an online aggregator of operating lease offers. The majority of the start-up is owned by Miton, an online investment group from Jablonec nad Nisou.

Australia's car subscription services[43] include Carbar, launched in late 2016, and HelloCars and Carly, both launched in early 2019. As registered Victorian and NSW motor dealers, Carbar and HelloCars subscription vehicles are owned and operated by their respective companies while Carly utilises peer-to-peer customer vehicles offered in partnership with sister company DriveMyCar Rentals Pty Ltd.

CARIFY, the biggest car subscription platform in Switzerland, was founded in September 2019 by Sergio Studer and Raffael Fiechter.[44]

Vehicle subscription has also begun to flourish in the Middle East, with Invygo launching the region's first car subscription app in March 2019.[45]

Car subscription software providers

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.[4][46]

Blinker Subscriptions was launched in Australia in August 2019 and provides car subscription software to car dealerships, car subscription companies and other related businesses to operate their own vehicle subscription service. During the COVID-19 pandemic, Blinker Subscription experienced a 52% increase in enquiries from car dealerships looking to introduce a car subscription model during the shutdown.[47]

Other providers

Zipcar is offering a version of vehicle subscription, dubbed Zipcar Commuter, that provides dedicated possession of a vehicle from Monday to Friday.[48]

List of vehicle subscription services
Name Parent Company Type Location Active/Closed
Book by Cadillac General Motors Manufacturer New York City, Dallas and Los Angeles, USA[15] Active
Borrow[21] n/a Start-up Los Angeles, CA[49] Active
Canvas Ford Manufacturer San Francisco and Los Angeles, USA[50] Active
Care by Volvo Volvo Manufacturer USA[16] Active
Carbar Carbar Holdings Pty Ltd Start-up Melbourne, Australia[51] Active
CARIFY n/a Start-Up Zurich, Switzerland[52] Active
Carly Collaborate Corporation (ASX:CL8) Start-up Sydney, Australia[53] Active
Carma n/a Start-up Chicago, Columbus, USA[54][5] Active
Car Subscriptions Cocoon Group Ltd Corporate venture United Kingdom[55] Active
Carousel n/a Start-up Honolulu, Hawaii-USA Active
Cluno n/a Start-Up Munich, Germany[56] Active
Cocooned Cocoon Vehicles Ltd Corporate venture United Kingdom[57] Active
Condor Mobiliti Start-up Detroit, USA[58] Active
Drive Flow Flow Automotive Companies[4] Dealership Winston-Salem and

Raleigh, USA[59]

 Active
Drive Germain Germain Motor Company Dealership Columbus, USA[6] Active
Drivemate n/a Start-up Thailand Active
Driveto Miton[60] Start-up Czech Republic[61] Active
Drive Options Bernie Moreno Companies[62] Dealership Cleveland, USA[63] Active
Drover n/a Start-up United Kingdom[64] Active
Currux n/a Start-up Texas, USA[65] Active
flexdrive Cox Automotive & Holman Enterprises Corporate Venture Atlanta, Austin, Chicago, Dallas, Minneapolis, Philadelphia, New Jersey, Phoenix, Rhode Island, Sacramento, South Florida, Virginia [66] Active
Flexigo Cars Cocoon Vehicles Ltd Corporate venture United Kingdom[67] Active
Flexed Autohorn Fleet Services Corporate venture United Kingdom[68] Active
FlexWheels Warren Henry Auto Group[69] Dealership Miami, USA[70] Active
HelloCars Innovate Automotive Pty Ltd Dealership Sydney, Australia[71] Active
inride Alex Perdikis / Koons of Silver Spring, Inc. Start-up/ Dealership Silver Spring, MD & Greater Washington D.C. and Baltimore area Active
Invygo[72] n/a Start-up United Arab Emirates and Saudi Arabia[73][74] Active
Joule n/a Start-up Seattle, WA[75] Closed
Lux.Car H & H Automotive[76] Dealership Omaha, USA[77] Active
MINI Subscribe BMW Group Manufacturer Munich, Germany Active
Mobiliti[78] n/a Start-up Metro Detroit, Austin, North Jersey, Central PA, USA Active
MotorEnvy MotorEnvy Start-up Connecticut, New Jersey, New York and Pennsylvania Active
Park Place Select Park Place[79] Dealership Dallas, USA[80] Active
Porsche Passport Porsche Manufacturer Atlanta, USA[14] Active
Car Subscriptions by STL Short Term Leasing Ltd Corporate venture United Kingdom[81] Active
Skip's Flex Skip's Start-up New York, New Jersey, Pennsylvania, Connecticut and Delaware[82] Active
Subscribe & Drive Cocoon Vehicles Ltd Corporate venture United Kingdom[83] Active
Switch Revv Start-up Bangalore, Hyderabad, Chennai, Mumbai, Pune, Delhi NCR, Kolkata, Ahmedabad, Kochi, Mangalore, Chandigarh, Jaipur, Visakhapatnam, Mysore & Coimbatore in India[84][85] Active
Turn Autogravity Start-up Greater Los Angeles, CA and San Diego, CA Active
Wagonex n/a Start-up United Kingdom[86] Active
Wyler Fastlane Jeff Wyler Automotive[87] Dealership Cincinnati, USA[88] Closed
ZipCar Commuter Avis Budget Group Other Boston, Chicago, New York, Philadelphia, San Francisco, Seattle, and Washington, D.C in the USA; Toronto, Canada[48] Active
Arabeep[89] n/a Startup Middle East [90] Active

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