How car subscription software will impact auto sales
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How car subscription software will impact auto sales

George Skentzos
November 11, 2021

Car subscription is still a relatively new concept. Although vehicle subscriptions have been available from certain service providers for some time, it is only recently that this segment of the automobile industry has really started to take off and register on the radar of motorists across the country. The question on many industry watchers’ lips now is this: Exactly what effect are subscription vehicles likely to have on auto sales in the coming years? Although we don’t have a crystal ball on hand, we’re going to attempt to answer this question by looking at some of the biggest factors currently at play.

Why the car subscription market may have a major impact on future auto sales

There are several factors in play right now that could help to generate a significant rise in the demand for car subscription services.

  • Changing perspectives on car ownership – For anybody over 50, owning a car was a major milestone in their younger life, a sign of maturity and success that was of great importance. However, interest in car ownership has waned in recent generations, and how it is perceived has changed dramatically. Regardless of gender, both men and women are seeing private vehicles as less of a status symbol and more as a practical necessity for some, but not all, people. This more prosaic attitude towards the motor vehicle has already led to a downturn in private car sales and a drop in the number of young people who hold a full driving licence.

  • Financial uncertainty – In a world where full-time employment is far from guaranteed and rapid economic changes are becoming more and more commonplace, a new car purchase is viewed by many as an unnecessary and overly burdensome expense. While many people still have a need or a desire for personal transportation, they do not wish to make a major capital investment in it. They are also less than keen to commit to meeting the ongoing running expenses for a private vehicle, especially when they are not sure exactly how long they will need one for.

  • General shift to the subscription model of consumption – Not so many years ago, people would probably have found the idea of a car subscription service rather far fetched and difficult to understand. But today, in a world where software, music, movies, online education and many other goods and services are frequently purchased with a subscription, it is far easier for people to see the benefits that this business model has to offer where cars are concerned.

 

These are the main factors that many experts believe will help car subscription services to become a disruptive force in the automobile industry in the future. But what benefits do these subscription services have to offer that address the above-mentioned factors and what makes these services more attractive than the alternatives? Primarily, leasing, renting or buying?

Why a subscription vehicle service is appealing today

It’s easy to understand how financial uncertainty would make people less interested in parting with a large sum of money for a car; and it’s a simple fact that younger generations are not as enamoured with car ownership as their parents and grandparents were. What we need to consider now is how car subscription services overcome these issues and, in the process, appeal to today’s consumers.

  • No long-term commitment – Previously, leasing a car was the only practical alternative to buying one but leases often involve a multi-year commitment, making them an unappealing option to those who are worried about financial uncertainty. Renting offers a short-term alternative, but not many rental companies will let their customers keep a vehicle for months, or even years, at a time. Car subscription companies fill a hole in the market by offering vehicles that can be used for as long as required, with no obligation to make a long-term commitment in advance.

  • Ability to change vehicles whenever desired – As people have become less interested in the idea of car ownership for its own sake, they have become more concerned with the practical advantages that their chosen mode of transportation has to offer. A car subscription service allows them to change the type and size of car they drive as often as desired, to suit their changing needs and circumstances. This is a far more convenient private transportation solution as far as many modern drivers are concerned. Without any emotional attachment to the vehicles they drive, they are free to use an SUV on a weekend camping expedition, a smart saloon for business trips and a people carrier for extended family holidays.

  • No ongoing maintenance costs – Unlike vehicle leasing, car subscriptions normally include all running costs apart from fuel. This is a major plus point for people who are just not sure what their personal finances will look like in a few months' time, let alone in a few years' time. It makes it easier to budget for a private car and much easier to cut back on running costs should it ever become necessary.

For many people all over the world, subscription vehicles are becoming a very appealing alternative to car ownership and this trend looks set to continue in the coming years.

Steps that auto manufacturers and dealers can take to mitigate the impact 

There is really only one practical step that auto manufacturers and dealers can take to mitigate the impact car subscription services may have on their businesses, and that is to offer these services themselves. Some manufacturers have already started to do just this, and more are sure to join them in the future. If you are a car dealer or manufacturer and you would like to diversify into this growing market, our car subscription software will help you to get off to the very best start possible. 

If you would like to learn more about Loopit and how our software can revolutionise your business, get in touch with us today and speak to one of our experts. We would be more than happy to arrange a free demonstration at a time that’s convenient for you so that you can see for yourself just how Loopit can help your business. 


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About the author
George is the Head of Marketing and Customer Experience at Loopit. Having originally started his career as a motoring journalist and founding team member for one of Australia's top automotive startups, George has a strong passion for automotive, business and growth marketing.
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