Here's what you need to know about vehicle subscription services

While car subscription has seen global growth in recent times, many are still unfamiliar with the mechanics. In this article, we explain what is car subscription, the benefits of subscribing to a car, as well as the difference between car renting and car leasing.

George Skentzos

Head of Customer Experience

Published on 

October 21, 2021


Last updated on 

October 21, 2021

Key Takeaways

The car subscription market is still relatively new — but it’s expanding rapidly, both in Australia and right across the globe. For people who don't want to be stuck driving the same car for years, it's a great option that offers more flexibility than leasing and more control than renting. If you are considering offering a subscription vehicle service to your customers and would like to learn more about how this new ownership model works, you’ll find all the information you need in this guide.

What exactly is a vehicle subscription service?

Let’s start with a basic description of what a vehicle subscription service actually is. In simple terms, it’s exactly what it sounds like: customers pay a recurring subscription fee and, in return, they get to drive the vehicle of their choice. The exact benefits may differ from one service provider to the next but generally speaking, the only thing a subscription fee won’t cover is fuel. Everything else — maintenance, repairs, regular servicing, insurance — should be included in the subscription package and therefore covered by the monthly fee.

If you’re looking to offer your customers a vehicle subscription service, you will need to use a car subscription software, like Loopit, to keep track of payments and to make sure that every vehicle is carefully checked before and after it is used by a customer. This software will also allow customers to make secure online payments using a debit or credit card.

If all you wanted was a quick summary of the car subscription service model, that’s it. If, however, you’d like to know a little more about the unique benefits this ownership model has to offer and how it differs from more traditional alternatives, keep reading!

Everything you need to know about car subscription services

The easiest way to explain how a car subscription service works is to compare it to the current car ownership options from a customer’s perspective.

Subscription vehicle service versus rental service: the customers' viewpoint

With a vehicle subscription service, you pay a recurring fee for the exclusive use of a vehicle and return it once you're done with it. Sounds very similar to renting, doesn't it? But there are some key differences that make subscribing a far more attractive option for many drivers. 

  • Duration — Most car rental companies have an upper limit on the length of time it’s possible to rent one of their vehicles, and this is reflected in their higher pricing. This may be as short as a couple of days or perhaps a few weeks. With a subscription service, on the other hand, your duration will run for as long as you need it. Whether you choose to drive a single vehicle for the whole time or a variety of different makes and models, you can subscribe for as long as you require.
  • Choice — When you rent a car, you’re usually offered a category of car rather than a specific model. You may see a picture of a Toyota Hilux on the rental company’s website when you make your booking, but in the terms, they can reserve the right to provide you with this particular vehicle or an equivalent model. With a subscription vehicle service, you can choose the exact make and model of car that you wish to drive, and this typically more closely resembles a model you would otherwise buy.
  • Convenience — The idea of being able to drive a brand new car every few months is out of reach for even the most affluent car buyer. With a subscription service, you can swap your car for a new one whenever you feel like it, without having to pay a deposit or sign a new contract. Accordingly, vehicle subscription services are generally more convenient than rental services for drivers who like to change cars on a regular basis. Just like a mobile phone, most people prefer to regularly upgrade to the latest and greatest model rather than owning the same one indefinitely.

Car subscription service versus leasing for customers

A lease is far less flexible than a subscription service and could be more costly in some cases. The main differences between a subscription service and a vehicle leasing service are as follows:

  • Additional costs — A vehicle subscription service is usually all-inclusive. Everything apart from fuel and tolls is included in the recurring subscription fee. However, with a lease, you will normally have to arrange your own insurance and sometimes pay maintenance/servicing costs too.
  • Contract length — When you lease a new car, you normally have to commit to a long-term contract, up to 5 years in length, and budget for a balloon payment at the end of this term. With a subscription service, you can stop at any time.

If you would like to find out how you can use our software for car dealerships to launch a new vehicle subscription service in Australia or elsewhere, call 02 8278 9255 to speak to us now.

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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