It’s difficult to compare car subscription services to ownership because the ‘value’ lies in the individual’s requirements and personal situation. For most, car subscription is not considered a bargain as you will never own the vehicle you drive. However, for others, ownership is no longer an all-consuming aspiration it use to be either because you simply can’t afford a new car or you simply prefer the alternative options that were not available in earlier years.
So… in simple terms, how do they compare?
Many consumers find the conventional car-buying experience to be a hassle. They dislike the sales pressure and the hidden fees and if a car loan is involved, its slow, complex and involves a lot of paperwork.
Moreover, as the recent pandemic revealed, ownership can be risky — if financing a vehicle and your situation changes dramatically (i.e. job loss or financial instability) cancellation comes with severe fees. The residual loss in buying a car is also another painful risk owners take on, and it discourages individuals from changing their vehicle as often as they’d like.
Car subscriptions, on the other hand don’t require a down payments only a monthly fee, and you can switch cars easily or cancel the subscription anytime, giving you the flexibility and freedom that’s not common with traditional car ownership. From that perspective, it’s an attractive proposition offering convenience and a minimal commitment.
The downside of car subscription though, is you won’t be the first person to drive the car – although it will be in excellent condition and have low kilometres. You will also not be allowed to smoke in the car or transport your pets unless it’s a service animal and you may have to pay excess wear and tear if you don’t adhere to the terms and conditions of the contract.
What’s the verdict?
According to Forbes Magazine, study after study reveals Baby Boomers consider owning a car a necessity, while the Millennials and Gen Z’s, don’t put it high on their list of things to do. Alas, with patterns of ownership changing, the car subscriptions model will indeed shape the future of mobility –
- individuals who are in Australia travelling and need a car from 1 to 24 months, or anything in between will use subscription rather than hiring a car as the latter will prove costly for such a lengthy amount of time.
- individuals who want a new car as soon as possible, will try car subscription given the ongoing chip shortage that has plagued the automotive industry.
- young families who need a second car for certain times of the year but don’t want the hassle of maintenance, registration and depreciation will use car subscription when they need it.
- families who have a variety of requirements in a car will use car subscription as way to constantly be able to switch from the 5-seat sedan for the daily commute to an 8-seat family van for weekend soccer games or to a rugged SUV for a road trip holiday.
- individuals who find it impossible to choose a vehicle that ticks all the boxes will like the idea that with car subscription they are no longer shackled to a single car and can have access to an entire fleet on demand.
- individuals who want to do something good for the environment, will reduce their carbon emissions by using a car subscription service only when they need access to a car.
- individuals who are in Australia travelling and need a car from 1 to 24 months, or anything in between will use car subscription rather than rent a car which could prove costly for such a lengthy amount of time.
- businesses wanting to try out new technologies, bridge wait times for new cars, and have a complete overview of costs will use car subscription as an attractive supplementary option.
- businesses who want to avoid long-term contracts that are difficult and costly to get out of in today’s unpredictable environment will see car subscription as a perfect alternative to leasing.
So, let’s round this up, for those individuals or businesses with the money and who are happy to wait for a new car or like the status of ownership, will by all means always do so and car subscription is not for them. However, for those who like the idea of access to a variety of car options that comes with low financial liability and customised duration and terms – the concept of car subscription (with no hidden fees, and everything exactly as it seems) will be a hassle-free alternative.