Loopit, the leading car subscription enablement platform for the automotive industry, encourages dealers, leasing and rental companies to consider car subscription as a new and profitable revenue stream to meet strong consumer demand in the UK which is currently outstripping access and supply.
A UK study commissioned by Loopit involving 1,500 participants substantiates the growing appeal of car subscription services over ownership. It reveals that 71% of consumers aged 21-55 would consider car subscription for their next car with a further 90% agreeing that car subscription should be offered as a standard alternative alongside leasing and financing options.
As well as this, the same study also demonstrates a strong link between electric vehicle adoption and car subscription, with 87% of respondents who currently drive an electric vehicle saying they would consider car subscription over other forms of car ownership.
Furthermore, the study cites that 66% of consumers aged 21-55 would consider selling their current car and subscribing while they wait for their new car to arrive, highlighting that car subscription is not always a direct replacement for traditional car ownership but rather a welcome new mobility option for consumers.
This shift in mindset comes at a time when car subscription is still in its infancy in the UK and not readily available, which presents tangible opportunities for those in the trade to expand their service offering. It is an interesting, fast-evolving space with consumer demand increasing exponentially on a global level.
It is a mood that reflects the rapid change in consumer habits over the last 10 years, with consumers becoming ever more used to subscription services, such as TV channel subscriptions, music platforms, and more. Similarly, consumers are also looking for more affordable and flexible means of mobility with car subscription providing the ideal solution, especially so during the current cost of living crisis.
The automotive sector faces unprecedented change, against a backdrop of technological and economic uncertainty, as well as supply chain issues. This is further feeding demand for car subscription.
Long-term commitment and contractual obligations from loans, leases and PCP schemes present financial burden, making the car subscription option a more affordable and appealing alternative to a growing number of savvy customers who prefer a more flexible solution. The current financial pressures facing many households further amplifies this. Car subscription makes all aspects of taking delivery of a new car easier with a package that is often inclusive of insurance, maintenance, servicing and tax, with a single monthly payment. It makes budgeting for mobility simple, without any upfront deposits.
In contrast, the online car retailer, Cazoo, recently announced it would be exiting from car subscription as part of a major cost-cutting strategy to save £200m to help reverse heavy losses after a hefty 95% collapse of its shares. Cazoo’s decision was mainly due to other unrelated factors including the pandemic and supply chain issues affecting its ailing retail sales, rather than a failure of car subscription.
Andrew Mortimer, Executive Chairman at Loopit UK says, “Cazoo’s departure has left a gapping hole in the UK market for dealers, leasing and rental firms to fill. If anything, Cazoo has laid the foundations for such businesses to thrive with car subscription presenting a golden opportunity for them to ‘seize the moment’. But, it’s not just the void left by Cazoo. The data in the UK consumer study supports the market trend and is factual evidence of demand.”
He adds: “"The market conditions, especially during this unprecedented cost of living crisis, have created a perfect storm for car subscription to thrive as consumers seek out new mobility options that are more flexible and offer less of a long-term financial burden compared to traditional means of car ownership.”
Scope for growth in car subscription in the UK, and around the world, is immense. Loopit says it receives around 50 consumer enquiries each day across Australia, Europe, Asia Pacific and North America seeking out car subscription service providers despite not directly serving or targeting this market segment.
"It's a unique problem to have," says Andrew Mortimer. "Consumers seeking out local car subscription providers are finding their way onto the Loopit website, so we've created a new subscriber experience that directs these enquiries to our existing providers across the Loopit network out of necessity."
Among Loopit's global network of car subscription providers are rental car giant SIXT and Australia's largest national car subscription provider, Motopool.
Car subscription has the potential to unlock new revenue streams, new customers and new channels for profit, with dealers, leasing and rental firms being best placed to take advantage due to their infrastructures. Loopit makes implementation of car subscription easy for dealers to be ready for the next shift in demand with its ‘subscription in a box software solution’.
Loopit says it has now achieved 30 consecutive months of net new subscriber growth collectively across its global network of car subscription providers, which is each month since the company launched in 2018.
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