The Role Of Car Subscription In the Future of Car Dealership Showrooms

Car subscription services are transforming the future of dealership showrooms, offering more flexible car ownership alternatives. In this article, Loopit Head of Product Growth explains how subscriptions services can potentially drive more consistent revenue streams for dealers, streamline customer experiences, reduce inventory burdens, and adapt to evolving consumer preferences for convenience and customization.

Nima Idel

Head of Product Growth
 @ Loopit.co

Published on 

June 23, 2023

  ·  

Last updated on 

June 23, 2023

Key Takeaways

As we accelerate into the future of the automotive industry, traditional concepts of car ownership are being steadily replaced by more flexible, service-oriented models. One such transformative approach is the car subscription model - a game-changer set to redefine how customers interact with car dealerships and experience mobility. This model replaces the commitment of buying or leasing with a flexible service offering that allows customers to switch between car models as their needs change. 

This shift towards car subscription services brings about implications  for car dealerships, particularly their showrooms, which have always been the touchstone of the car buying process. In this article, we unpack the challenges and opportunities for dealerships in this new era, the impact of subscription models on future dealership showrooms, and the crucial role of technology in shaping this change.

Challenges and Opportunities for Dealerships

Transitioning to a car subscription model brings several challenges and opportunities for traditional dealerships. A key challenge lies in the shift in revenue models. Moving from substantial one-time sales to recurring, potentially smaller, transactions requires significant adjustments in financial planning and strategy. Further, as customer retention becomes paramount in a subscription model, dealerships must enhance their customer service and support mechanisms, ensuring they deliver value continuously.

On the other hand, the subscription model opens new doors of opportunities for dealerships. The continuity of subscription relationships allows dealerships to develop deeper connections with customers, fostering loyalty and enabling opportunities for upselling or cross-selling. 

The Inherent Advantages of Dealerships For Car Subscription Success 

Dealerships are uniquely positioned to succeed in the burgeoning car subscription market, thanks to a multitude of inherent advantages.

  • Extensive Vehicle Inventory: Dealerships have direct access to a large and diverse inventory of vehicles, which they can offer to subscribers who value the ability to switch between different vehicle models.
  • Remarketing Expertise: Dealerships have significant experience in remarketing vehicles, from selling turned-in lease vehicles to used and trade-in vehicles. This expertise can be beneficial for managing vehicle lifecycle in a subscription model, optimizing utilization, and ensuring efficient fleet management.
  • Existing Customer Base: Dealerships can leverage their existing customer base, including those who failed to qualify for finance, offering car subscriptions as an alternative. This enables customer retention and provides a new avenue that aligns with customers' financial capabilities.
  • Established Brand Recognition: The brand recognition and reputation for customer success that dealerships have built over time can be instrumental in promoting their car subscription offerings.
  • Low Startup Costs: Dealerships can make use of their existing lead pool to start their subscription business, reducing the initial need for heavy investment in a new website or marketing campaigns.
  • 'Bricks and Clicks' Approach: As the subscription business scales, dealerships can optimize their in-showroom opportunities and simultaneously expand their online subscription sales strategy.
  • Existing Networks and Relationships: Dealerships can utilize their existing networks to streamline service and maintenance operations, leading to higher operational efficiencies and cost-effective practices. This is crucial in the car subscription landscape where regular maintenance and servicing are key components.

Impact of Car Subscription on the Future Dealership Showroom

Car subscription services are poised to significantly reshape dealership showrooms. As customers start to view vehicles as a service rather than an asset, we may witness a decrease in the variety of models on display. Instead, the focus will likely shift towards showcasing technology and delivering superior customer service. There are four main changes that we can expect to see in dealership showrooms as car subscription services become more ubiquitous. 

  1. Reduced Model Display: The trend towards viewing vehicles as a service rather than a possession may lead to fewer models on display in showrooms, as customer focus shifts from ownership to usage.
  2. Customer Experience and Technology Focus: Dealerships might need to invest more heavily in technology to enhance service offerings and the overall customer experience. This includes digital interfaces for easier vehicle selection and advanced in-car technologies that subscribers can experiment with in the showroom.
  3. Branding and Experiential Marketing: Showrooms may transition into experiential marketing hubs, using space to create immersive, brand-aligned experiences. This could involve interactive displays, lifestyle spaces, and technology demonstrations to engage and attract customers.
  4. Interactive Centers: Future showrooms could evolve beyond merely facilitating transactions, transforming into interactive centers that embody the brand's values and technological capabilities, thus fostering deeper customer engagement.
About the author
Nima is the Head of Product Growth at Loopit. As a product leader, Nima brings over 15 years of experience enabling and creating digital product experiences for leading brands including Qantas, Telstra, Vodafone and BP.
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