BERLIN: It’s pretty common nowadays to subscribe to a streaming service to listen to music or have a flat-rate on your smartphone's mobile data. But what about subscribing to a car?
Some car makers are at least experimenting with this type of sales model, where fixed monthly fees for individual models or an entire product range are aimed to entice customers and ease over their transition to this service.
“The car industry has to act and find a way to make its products more attractive and win over customers, even in the age of autonomous driving,” says Professor Ferdinand Dudenhoeffer from the University of Duisburg-Essen. But he says he’s not completely convinced with what’s on offer so far.
The small scale that companies are starting out with shows how uncertain these manufacturers still are. With Porsche’s Passport program, for example, customers can sign up for the “Launch” and “Accelerate” packages to access various Porsche models and trade their car at any time with the app. The program offers a monthly subscription and enables vehicle changes, unlimited mileage and on-demand access to up to 22 Porsche models, according to the manufacturer.
But there’s still two snags: For one, these packages cost between US$2,000 and US$3,000 a month. And second, they’re only available in Atlanta, USA.
On the other side of the Atlantic, sales executives from BMW and Mercedes announced in January that they want to test out subscription models for the first time this year. But whether and when these services will be launched in countries like Germany remains open.
Cadillac meanwhile has announced it will run trials of its Book subscription service in Europe in the Munich metropolitan area this year. For a still unspecified monthly fee, customers will have access to nearly a dozen models ranging from the Escalade SUV to the Corvette. Users select a Cadillac model from their smartphone, while a concierge service will bring the vehicle over to the customer’s chosen location, said Cadillac spokesperson René Kreis.
Volvo is launching its own flat-rate subscription service called Care for its XC40 SUV, chief executive Hakan Samuelsson says. For a fixed monthly rate, customers will drive a new Volvo every 24 months. No additional costs for insurance, repairs or winter tyres will apply. The service is “the mobility model for the current age,” according to Samuelsson.
Still, Dudenhoeffer considers these types of offers to be marketing campaigns. “But in the leasing business, these ideas are not new,” he says.
Services that offer a spontaneous change from a convertible to an SUV or a sports wagon might sound good, but they’re usually not cheap, he says. "Customers can get their dream car much cheaper from a leasing dealership if needed."
These subscription offers should also not be confused with leasing, because there are no similarities other than a monthly payment, says marketing expert Franz-Rudolf Esch. With leasing, the focus is on the car model, while a flat rate subscription allows for a selection from among all of a manufacturer’s models as well as the shift to a new model when it’s released. Those are clear advantages that customers pay a high price for, he says.
A trial subscription with Porsche is thus nearly three times as expensive as leasing a Boxster. Still, manufacturers would be well advised to try out these kinds of concepts, according to experts.
“These are only trial balloons that we are seeing today,” says Dudenhoeffer. “But the future will be cars on demand and it will be exciting.”
