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Monthly Car Subscriptions Are Gaining In Popularity As Alternatives To Car Ownership Grow

February 20, 2019 Ray Schneeberger

millennial monthly car subscriptions

The monthly subscription market is on fire right now, with growth of more than 100% per year since 2011. Business experts are becoming subscription evangelists, arguing that it is the way of the future for businesses that want to stay relevant. Car companies agree and are getting on board with subscription services that satisfy cultural and business needs. For many, car ownership has been delayed or become less desirable, with bike or ride-shares taking its place. The car subscription target demographic, primarily Millennials and Generation Y, may find the ease and turn-key quality of a monthly subscription car service appealing. Additionally, car companies want other revenue streams not linked to buying or manufacturing.

Bundled Services Can Increase Car Subscriber Volume And Car Subscription Revenue

By charging one price for maintenance, insurance and the car itself, many car companies are able to lure subscribers by taking care of the more onerous incidentals that could be discouraging outright car ownership for some. In a recent article addressing the lack of cars among certain demographics, a carless city dweller was quoted saying, “I’d have to worry about insurance, repairs, [and] finding a trustworthy mechanic.” By offering simple choices and easy to understand pricing, a car subscription can alleviate these concerns and address shifts away from ownership in consumer purchase behavior. For instance, Care by Volvo, one of the more well-known car subscription plans, includes factory-scheduled maintenance, plus wear and tear items (like replacement wiper blades, brake pads and rotors), and a premium, pre-arranged insurance plan. Most other car subscription plans, from luxury to less so, offer similar.

Called “essential bundles” in the subscription business world, add-ons can serve to further a customer’s comfort when agreeing to a significant subscription. A recent Inc. article explains, “The economics of bundling makes a lot of sense to both the subscriber and the business — it provides more value to the subscriber while giving the business an efficient new subscriber acquisition source. Additionally, it provides another point of value to retain an existing subscriber to the original offering.”

The Car Subscription Model Can Be A Win For Car Enthusiasts

Car Subscription Model Car Enthusiasts

Touted as a service primarily for those who aren’t interested in spending a lot of time dealing with their cars, the subscription model can also be desirable for people who really like cars, as subscriptions sometimes allow the chance to try out a variety of different models without the burden of trade-ins or waiting until the end of a long lease. The Access by BMW subscription plan, currently just a pilot program in Nashville, has no limits on how often you can exchange a car and includes no requirement to sign a contract for a certain amount of months. While users pay significantly more for this service than some of the other car subscriptions plans, the chance to drive a multitude of high-end luxury cars may be worth it for some subscribers.

User Friendly Digital Access And Concierge Services Make The Car Subscription Process Easier

Although similarities between monthly car subscriptions and traditional leases exist, with some car subscription services acting as a kind of micro lease, car subscription services are a thoroughly modern product, with intuitive apps and user-friendly web access. Many car subscription apps allow customers to customize their individual plans, select the cars they would like and receive the necessary approvals quickly so they can begin their services as soon as possible. A concierge service is also sometimes available to answer questions and personalize the car subscription experience. In the case of Care by Volvo, the concierge is described as a personal point of contact who carries subscribers through the subscription process, while BMW’s concierge delivers cars directly to subscribers. The differences in services are often reflected in the price of the car subscription plans.

Car Subscription Services Will Continue To Evolve And Innovate As They Negotiate For Market Share

Car Subscription Services Innovate market share millennials

There are many different kinds of car subscription models, including third-party lenders that aren’t affiliated with a specific carmaker. Canvas and Fair, among several others, are all-inclusive monthly car subscriptions offering a range of pricing, car models and makes, with no locked in contracts. These may be more appealing to the younger market who are accustomed to relying on subscription services for all their needs. Fair in particular, which operates from an app exclusively and has very accessible price points, may be a winner with Gen Y and Millennial subscribers.

As with many nascent subscription services, car subscription programs are being described as embryonic, and still adapting to market demands. Lincoln plans to alter their service, after finding that scaling renewals was more difficult than they had anticipated. This will likely mean closer partnerships with dealers. This continuing evolution is reflective of a subscription marketplace stacked with users who know what they want, and companies whose adaptability may be the ticket to lasting success.

Reimagining Your Subscription Marketing Win? 

Contact Digital Media Solutions today.

About the Author

Ray Schneeberger

Ray Schneeberger is the Vice President of Sales at Digital Media Solutions (DMS), the fastest-growing independent digital performance marketing company. In this role, Ray oversees business development for the company’s Subscription Marketing team. DMS helps its clients accelerate growth by deploying diversified and data-driven customer acquisition solutions that deliver scalable, sustainable and measurable marketing results. DMS performance marketing solutions connect the right consumers with the right offers at the right time to achieve the marketing objectives of our clients. DMS is continually innovating to provide new and emerging media and technology solutions that minimize waste and maximize results across the most competitive industries. Since its inception, DMS has demonstrated incredible year-over-year growth which has earned recognition on the Inc. 5000 list in 2014, 2015, 2016, 2017 and 2018.

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