100K Users Expected to Join Car Subscriptions by Yearend
Car subscription programs — which allow for an alternative “third wave of ownership” that differs from traditional financing and leasing — are expected to support 100,000 to 150,000 cars in service by yearend through various OEM pilot programs, said Kimberly Henderson, assistant vice president of strategy for the marketing agency Ansira.
The agency works with nearly every OEM and typically is in charge of audience targeting for innovative programs such as car subscriptions. Although 100,000 units is a drop in the bucket compared with the 17.2 million new vehicle sales reported in 2017, it’s still the early days for these programs. However, in the next decade “subscriptions could account for as much as 7% to 10% of the vehicle sales market,” Henderson told Auto Finance News.
Much like the introduction of leasing in the auto finance space, Henderson said consumers could take a while to adapt to the idea of subscription programs. “Leasing came into fruition in the ’40s and really took hold in the ’60s, so that’s seven decades to get to the 30% leasing penetration [rate we have today],” she said.
Currently, marketing is directed almost exclusively at the luxury markets, she added, with price tags reaching $1,000 per month or more in programs such as Access by BMW, Mercedes-Benz Collection, and Porsche Passport. Car subscriptions can reach mass market consumers, she said, but OEMs have to be able to market and display the total cost of mobility services versus the total cost of ownership, which includes insurance, servicing fees, gas, and more.
“When those are able to line up and be equal or in the same ballpark,” Henderson said. “Then subscriptions really have a future.”
For further insights into the auto finance space join the Auto Finance Summit 2018, which will take place Oct. 24-26 at Wynn Las Vegas. For more information, visit www.autofinancesummit.com. To register for the event, click here.
