5 Subscription Services Ushering New Ownership Models
Traditionally, there have been two ways of owning a vehicle: buying one or leasing one. But now you can subscribe to one.
Riding on the subscription craze that has engulfed e-commerce for some time (think beauty and lifestyle subscriptions boxes, razor blade subscriptions, and entertainment streaming services), the automotive world is starting to catch up. For the most part, these companies will bundle together access to a car, roadside assistance, maintenance services, and insurance all into one single payment. They also allow people to cancel at any time, making it a convenient service for those disinterested in long-term ownership.
Here are five car subscription services that are introducing the third wave of ownership:
1. Carma
Carma offers sedans with less than 30,000 miles, including Ford Focus, Honda Accord, Chevy Cruze, and similar models. There are three tiers to choose from starting at $299 per month with access to 500 miles (and 50 cents for every mile after that); $349 per month for 750 miles (and 40 cents for every mile after that); and $399 per month for 1,000 miles (and 30 cents for every miles after that). The Detroit-based company recently joined Detroit Techstars Mobility.
2. Flexdrive
Flexdrive is a joint venture between Cox and Holman Automotive Group Inc. The technology for Flexdrive was developed in 2014 by Cox Automotive and was at first a subscription option for Uber drivers, promoted in partnership with Uber. But then it grew and was piloted at a handful of dealerships in Atlanta and Austin, and evolved into a joint venture with Holman in early April of this year. Holman wants to take it nationwide, working with other dealership groups, according to a published report. Customers are able to subscribe for one week or up to several months, and can also skip their subscription for a week if they don’t plan on using the vehicle. The only thing the subscription does not cover is gasoline.
3. Book By Cadillac
For a flat monthly fee of $1,500, General Motors Co.-owned Book by Cadillac gives members access to popular Cadillac vehicles without the commitment of leasing, financing, or buying. The service is app-enabled and on-demand, allowing access to the latest Cadillac models. The vehicles are delivered and picked up via white-glove concierge to a members’ requested location and exchanged at his or her leisure. Subscribers can swap cars up to 18 times per year, as often once per day.
4. Clutch
Clutch, backed in part by the Cox Innovation Fund, is a white-label service for dealers. Formed in 2014, the company has just under 600 consumers in Atlanta driving roughly 650 vehicles, representing 19 automotive brands. And while subscribers can switch from one vehicle to another, customers don’t actually pick a vehicle. Rather, the website promoting the app has customers take a survey and from there a car is suggested to him or her. As members flip cars, Clutch learns “what their interests are and what they like in color and brand,” Vince Zappa, Clutch president said in a published report. And dealerships “move from a transactional relationship to an ongoing relationship,” Zappa added.
5. Canvas
Canvas, the startup formerly known as Breeze, was bought by Ford Motors Co. in December 2016. San Francisco-based Canvas started offering monthly subscription options to Bay Area customers in early May. “There are plans to roll this out to other cities eventually, possibly later this year,” Ford Credit Communications Manager Margaret Mellott previously told Auto Finance News. Breeze’s original business model was short-term leases on hybrid vehicles for rideshare drivers looking to supplement income. Breeze ceased operations in July 2016, and Co-Founder Ned Ryan now serves as chief executive of the rebranded company Canvas. “This is part of our work to enable future financing and mobility solutions for Ford,” Mellott said. “For Ford Credit, Canvas is a laboratory to incubate ideas, develop and test fast prototypes, and improve them through iterations.”
