Introduction

Car subscriptions, also known as short-term flexible contracts, have been gaining popularity in recent years. However, many original equipment manufacturers (OEMs) are now pulling back from this format. In this article, we will explore the reasons behind this shift and examine how some specialists are still making car subscriptions work.

The Decline of Car Subscriptions

Autocar reached out to seven OEMs offering subscription products and found that four did not respond, one could not provide an answer, and another had stopped offering cars through subscriptions. Volvo, which was previously a strong advocate for car subscriptions, stated that while it still believes in the concept, its focus has shifted due to a change in sales model. The Association of Fleet Professionals also confirmed that none of its members were currently sourcing vehicles through subscriptions.

The Case of Cazoo

Cazoo, an online used car retailer, was expected to drive the growth of car subscriptions after acquiring several European subscription companies. However, the company closed its subscription arm in June 2022. One of the main criticisms of car subscriptions is their higher cost compared to conventional leasing options. To illustrate this point, Autocar compared the prices of a Nissan Qashqai on a 12-month subscription contract versus a 36-month leasing contract. The leasing option was consistently cheaper.

Subscription Success Stories

Despite the challenges faced by car subscriptions, some specialists have managed to make the model work. Mycardirect, launched in 2020 by industry veteran Duncan Chumley, offers both new and used cars on subscription. Chumley reports consistent yearly growth and reveals that subscriptions account for more than 30% of their fleet. He acknowledges that car subscriptions are still relatively unknown but sees potential for growth, especially among business customers who use subscriptions to test electric vehicles before committing to a long-term lease.

The Insurance Challenge

One of the main obstacles for car subscriptions is the lack of insurance coverage. Many providers do not include insurance in their subscription packages, making it less appealing for individuals without company policies. However, Chumley notes that the insurance industry is catching up with vehicle subscriptions, and some companies specialize in providing insurance for this market.