The Current State of Car Subscription Services in the United States: A 2023 Analysis

Discover the evolving landscape of car subscription services in the USA in 2023. This article uncovers the latest trends, key players, and future implications in this rapidly shifting sector of the auto industry.

George Skentzos

Head of Customer Experience

Published on 

June 21, 2023


Last updated on 

June 21, 2023

Key Takeaways

The automotive landscape is shifting, with car subscription services in the United States now accelerating into the mainstream. This new model of "cars-as-a-service" has gained significant traction, changing the way individuals think about car ownership and use. This trend, just emerging a few years ago, has now shifted into high gear, boasting remarkable growth rates and pulling significant interest from both traditional automakers and emerging mobility startups.

The rise of car subscription programs isn't just a fleeting trend, with several factors steering this growth. The demand for flexibility and convenience in a fast-paced, technology-driven society; changing attitudes towards car ownership; and the advances in digital platforms for subscribing and managing subscriptions are all significant factors that are fuelling this trend.

As we delve deeper into the data and trends, we'll discover the current landscape of car subscriptions in the United States - specifically which regions are showing the most significant demand and the leading players in the market. 

Most popular locations in the United States demanding car subscription services 

To gauge the demand for car subscription programs in the United States, Google Trends data offers a revealing snapshot of emerging patterns. One pattern that stands out involves the regions with the highest searches for car subscription services in the United States with the following five states being clear leaders in car subscription demand:

  1. New Jersey
  2. Georgia
  3. Maryland
  4. Pennsylvania
  5. California

Interestingly, a report from Forbes Advisor echoes a similar trend but from a different perspective. According to Car Ownership Statistics 2023, these states rank among the most expensive for car ownership in the country. Not only are the costs associated with purchasing or leasing a car steep, but the ongoing expenses like insurance premiums and repair costs are a key driver. 

These cost factors highlight the value of the new car subscription model stands, particular with its all-inclusive offerings. Car subscription services typically include insurance costs within the subscription fee, eliminating the need for separate, often high, insurance payments. In addition, many car subscription services also cover routine maintenance and repair costs. This means subscribers don't have to worry about sudden, unplanned expenses from car breakdowns or necessary repairs. The combination of these factors provides compelling evidence of why the interest in car subscription services is growing particularly fast in these high-cost states.

Residents in these states appear to be embracing car subscription services as a response to the high costs of car ownership. This connection suggests that the rising interest in car subscription services is tied closely to modern motorists looking for affordable and flexible alternatives to the traditional and often costly model of car ownership.

Top car subscription providers in the United States

Though the exact origins of car subscription programs are hard to pinpoint, early adopters included the likes of OEM automaker offerings such as Book by Cadillac and Care by Volvo who both entered back in 2017. More OEMs have followed the lead in the U.S market due to recognising their key unique advantages including:

  • Existing Infrastructure: OEMs already have the manufacturing facilities, supply chains, and dealership networks in place, which are essential for launching and scaling a car subscription service.
  • Brand Recognition: OEMs have strong brand identities and customer loyalty, which can be leveraged when introducing new services. Customers may feel more comfortable subscribing to a service backed by a well-known and trusted brand.
  • Vehicle Access and Control: OEMs have direct access to their vehicles, allowing them to offer a variety of models and easily switch out cars for subscribers. They also have the ability to control the maintenance and quality of the vehicles.
  • Financial Capability: Launching a new business model like car subscription requires substantial upfront investment. OEMs, typically being large, established companies, are more likely to have the necessary financial resources.
  • Existing Customer Base: OEMs have a ready pool of potential customers among their existing car owners, which can help them acquire subscribers for their new service.

However, in recent times, the market has seen the entrance of new incumbents and disruptors including dealerships, mobility startups like Fair and Autonomy, and rental car companies. These players are realizing that the demand for more flexible offerings such as car subscriptions can translate to benefits such as new revenue streams, customer retention and better fleet utilization. 

According to data from Google Trends, there have been seven key players leading the American car subscription market based on popular searches: 

  1. FlexCar 
  2. FINN
  3. Volvo
  4. Sixt 
  5. Autonomy 
  6. Hertz My Car 
  7. Go

The future of car subscriptions in the United States 

The culmination of market conditions such as changing consumer preferences and ecological impacts are being met by the flexible model of car subscription, calling for more automotive players to partake in the new market as a way to overcome future mobility challenges. 

Subscription-based ownership has and will continue to become a legitimate mainstream alternative to traditional leasing and rental, with more motorists valuing the low capital commitment and flexibility of subscription. 

Loopit estimates that subscription-based mobility services will account for closer to 30%of new car sales by 2030—or double the current estimates—representing a USD $80 Billion opportunity by the end of the decade.‍

As we navigate through a period of unprecedented change in the U.S. automotive retail landscape, it is becoming increasingly clear that car subscription services are poised to play a crucial role in the industry's future due to the following four factors. 

Consolidation of the Dealership Network

As dealership networks consolidate, they may find it easier to offer subscription services alongside traditional sales. This is because consolidated entities often have a wider variety of vehicles and can leverage economies of scale to manage a fleet of subscription vehicles more efficiently. Moreover, consolidated dealerships could enhance the accessibility of car subscriptions by offering these services across a broader geographic area.

Switch to the Agency Model

In the agency model, where dealers become agents for the trade of new vehicles without holding inventory risk, car subscription services can thrive. With less emphasis on maintaining a large, unsold inventory, dealers can focus more on managing a rotating fleet of subscription vehicles. This change could allow subscription services to offer a wider variety of cars, including the latest models, thereby increasing their appeal to potential customers.

Direct-to-Customer Business Model

The direct-to-customer approach opens up opportunities for manufacturers (OEMs) to offer subscription services directly, bypassing the dealership entirely. In this scenario, dealerships could transition into service providers that support the maintenance and logistics for these subscriptions. This shift could result in a more streamlined and efficient process for customers, as they can manage their subscription directly with the manufacturer, while still receiving service support from local dealers.

Proliferation of Electric Vehicles (EVs)

As EVs become more commonplace, they could become a significant component of car subscription fleets. Subscription services offer a low-risk way for consumers to try out EVs without committing to ownership. Moreover, given the rapid pace of EV technology development, consumers may prefer a flexible subscription that allows them to regularly upgrade to the latest models, rather than owning an EV that could quickly become outdated.

Each of these factors represents a substantial shift in the automotive retail landscape, and their convergence could pave the way for car subscription services to play an even more significant role in how Americans access and use vehicles in the years to come.

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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