Global Car Subscription Market Size and Share Outlook - Forecast Trends and Growth Analysis Report (2024-2032)

Car Subscription Market Analysis

Factors such as growing consumer preference for flexible ownership, convenience, and avoidance of long-term commitments; supportive technology enables subscription management and customisation through digital platforms. Moreover, increased urbanisation, changes in mobility trends, and trends toward sustainability and electric vehicle growth add to the growth of the car subscription market. This is a cost-effective solution, with the lure of trying models varying that significantly creates demand in this market.

Car subscriptions offer flexible terms compared to traditional leasing or purchasing; thus, they attract customers who prefer short-term commitments. The subscribers will enjoy a hassle-free experience where maintenance and insurance, among other services, fall under one umbrella. The customers will be attracted by the variety of vehicle models that shall be made available and also the frequency at which they can switch cars without any kind of long-term commitment.

Car Subscription Market Trends

Mobility as a Service

A key trend of car subscription market is the surge in popularity of mobility as a service and the growing demand for flexible subscription models are some of the major market trends. Most service providers offer customers the option to switch between vehicles during their subscription period, along with other benefits like hassle-free booking, the convenience of digital payments, and 24-hour customer assistance. As a result, these solutions are being preferred over options like car leasing, purchasing, and renting.

The top subscribed vehicles under USD 30,000 as of June 2024 have varied preferences among subscribers with different subscription lengths. This list is topped by the MG MG3, which had an average subscription length of 176 days, while that for the Mitsubishi Outlander stretches to 210 days, hinting at higher demand or lower supply. Following closely is Chery's Omoda 5 and Polestar 2, which had 207 days and 196 days on average, respectively.

Adoption of Electric Vehicles

With the surge in adoption of electric vehicles owing to the growing focus on sustainability, several automakers are offering the provision of EV car subscriptions to their subscribers, which can boost the car subscription market value. This is further supported by growing electrification trends and the rapid development of EV charging stations particularly in developed economies.

In 2023, around 14 million new EVs were registered globally, bringing the total number of electric cars on the roads to 40 million. Electric vehicles accounted for about 18% of all car sales that year, up from 14% in 2022 and a notable increase from just 2% in 2018. These trends indicate that the electric vehicle market is experiencing robust growth as it continues to develop. Additionally, battery electric vehicles made up 70% of the overall electric car inventory in 2023. This has further led the market players to invest readily in EV subscription models.

Industry News

August 2024

Kia India has announced the launch of a flexible ownership plan, Kia Subscribe, and have also expanded its lease service to 14 major cities.

August 2024

Autonomy, a provider of EV subscriptions, announced that it is launching Autonomy Data Services (ADS), a new SaaS business, which can assist with its subscription offerings.

Opportunities in Car Subscription Market

One of the key trends in the market is represented by "experience-based subscriptions." The core idea behind such services does not involve only offering access to vehicles but rather curated driving experiences. Such subscriptions, for example, may include specially designed road trips, access to high-performance or luxury vehicles for special events, or bundling such services as driving lessons and access to exclusive events. This trend meets the demand of customers for not just a car, but memorable, personalised driving experiences, combination of automotive fun and lifestyle enhancement, bolstering the growth of the car subscription industry.

Kia's Cerato takes an average of 179 days to dispose of, while the Suzuki Swift and Toyota Corolla both come in at 155 days. The average time taken by MG's ZS model stands at 204 days, followed by Hyundai's i30 at 165 days. However, Hyundai Accent sets the shortest subscription duration at just 85 days. That reflects the varied appetite for subscriptions across the under-USD 30k market-a healthy mix of the budget and feature-rich variety of options and carves a key trend of the market. Tesla has an average of 85 days, in line with its premium electric vehicle proposition targeted at a niche audience seeking high levels of technology. Suzuki and Mitsubishi follow with sound performances for an average duration of 99 and 100 days, respectively, which suggests consistent demand. This means longer-term subscriptions are very favourable for Volkswagen, averaging 115 days.

Car Subscription Market Restraints

The market presents several challenges such as cost issues and the devaluation of the fleet of vehicles. Car subscription services tend to be more expensive on a month-to-month basis compared to other methods of leasing or purchasing cars, which may turn off people who remain budget-conscious. Subscription plans typically bundle costs like insurance, maintenance, and sometimes roadside assistance, which can lead to a monthly fee that is 20-30% higher or more compared to a standard lease or loan payment. As per car subscription industry analysis, a monthly subscription for a Nissan Kicks might be about USD 499, whereas a comparable lease could start at around USD 370 per month. Similarly, a subscription for a Tesla Model 3 could be approximately USD 999 monthly, compared to about USD 500 for leasing the same car.

Not all car subscription services are yet widely available, meaning that in some areas, the market is still quite limited in terms of market penetration. It exposes providers to the risks of vehicle devaluation and should be efficiently managed to keep fleets profitable.

Market Dynamics

The strategic launch of car subscription services by automakers to expand their market reach and increase their revenue stream also provides impetus to the industry growth. The rising cost of vehicle ownership due to factors like surging fuel prices and increased maintenance and insurance costs is expected to further enhance the appeal of vehicle subscriptions, allowing consumers to access luxury and premium brands without actually buying them. This in turn will open up car subscription market opportunities.

In 2023, based on the Loopit Vehicle Subscription Utilisation Index, Chery, at the topmost, did an average of 116 days, which shows that it has earned considerable consumer loyalty and satisfaction. Coming second is MG, averaging 114 days of subscription duration, which indicates strong consumer preference and satisfaction. Kia, on average, demonstrates appeal among subscribers of cars at 104 days. Its closest rivals are Toyota, at 83 days, and Hyundai, at 84 days. Polestar, with an average of 79 days, is perhaps suggesting that this premium positioning could attract people seeking short-term experiences.

Car Subscription Industry Segmentation

“Car Subscription Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Based on the subscription period, the market is divided into:

• 1 To 6 Months
• 6 To 12 Months
• More Than 12 Months

On the basis of service providers, the car subscription market is bifurcated into:

• OEMs 
• Captives And Independent/Third-Party Service Provider

On the basis of vehicle type, includes:

• Electric Vehicle 
• IC Powered Vehicle

Based on end use, the market is categorised into:

• Private 
• Corporate

On the basis of region, the market is further segmented into:

• North America
• Europe
• Asia Pacific
• Latin America
• Middle East and Africa

Car Subscription Market Share

By Subscription Period Insights

The 6 to 12-month period holds the largest market share, mainly due to its flexibility and cost-effectiveness. This duration is popular among consumers as it offers a balance between long-term leases or purchases and very short-term rentals. A 6 to 12-month subscription enables users to try out different vehicle types, including electric models, while avoiding the higher monthly costs often associated with shorter subscriptions, like those lasting 1 to 6 months.

By Service Providers

The independent/third party service provider occupies a significant car subscription market share due to the low upfront payment for their car subscription services compared to OEMs and captives. Their subscription catalogue includes economical cars which are preferred by the majority of customers who want an affordable alternative to buying and leasing. Moreover, their subscribers have access to cars from multiple brands, which provides them with more choices compared to OEMs.

By Vehicle Type Insights

Vehicles powered by internal combustion (IC) engines hold a substantial market share due to the widespread availability and affordability of IC models. Although interest in electric vehicles (EVs) is increasing, most car subscription services still mainly feature IC vehicles, as they generally have lower upfront costs and a wider variety of models, which can enhance car subscription market revenue.

Subscriptions for electric vehicles have also experienced significant growth in recent years and are expected to have a CAGR of 34.6% in the forecast period due to rising consumer focus on sustainability and government initiatives promoting the adoption of lower-emission vehicles. In response to this change, many car subscription services are expanding their offerings to include a large selection of EV options, enabling customers to try EVs without the full commitment of ownership.

By End Use Insights

Corporate subscriptions represent the largest share of the market and are expected to grow at a CAGR of 32.5% between 2024 to 2032 as companies opt for car subscription services as a more cost-effective alternative to traditional leasing options. As per the car subscription market dynamics and trends, corporate clients benefit from short-term vehicle access, offering flexibility without the long-term commitments typically associated with vehicle purchases or leases. Many businesses are implementing subscription models for their company vehicles, employee commuting, and various travel needs, allowing them to optimise transportation expenses and minimise asset ownership risks.

Car Subscription Market Regional Insights

Europe Car Subscription Market Dynamics

The car subscription industry in Europe is expected to grow at a CAGR of 26.8% due to changing customer preferences, especially the young demographic, from vehicle ownership to affordable vehicle subscription services. Countries such as the UK and Germany are expected to be at the forefront of the market with CAGRs of 20.6% and 19.5% in the forecast period, boosting the demand of car subscription market.

There is also a growing provision of flexible subscription models in the region based on the requirements of customers and the capacity for customisation. With the advent of digitalisation, market players in the region have developed online platforms and applications for car subscriptions to facilitate ease of service. Subscription services are also gaining robust popularity in the corporate sector for business travel, creating a positive outlook for the market.

North America Car Subscription Market Outlook

North America is experiencing considerable growth with a CAGR of 23.5% fuelled by an increased emphasis on flexible mobility options, appealing to consumers seeking alternatives to traditional car ownership. This region benefits from robust digital infrastructure and a supportive regulatory environment that encourages vehicle leasing and subscription services, contributing to the car subscription demand.

The USA is expected to have a CAGR of 18.7% between 2024 to 2032.  A survey conducted among US customers stated that around 33% of car owners in the United States have expressed interest in giving up their current vehicles to consider alternative services. This indicates a strong market potential for car subscription services.

Asia Pacific Car Subscription Market Drivers

Emerging environmental awareness encourages car subscriptions of electric vehicles, which align with sustainability objectives and are fuelling the car subscription demand growth. Japan and Australia are expected to lead the market growth in the region with CAGRs of 22.3% and 20.4% respectively.

Moreover, government bodies in China, India, and Thailand, are actively encouraging the adoption of electric vehicles (EVs) by implementing incentives, investing in infrastructure, and establishing regulations. For example, India's Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) initiative offers subsidies and tax incentives to support EV production. The country also constitutes around 4.1% global market share.

Latin America Car Subscription Market Trends

In Latin America, the market is primarily fuelled by an increasing demand for affordable mobility options and a low rate of car ownership among younger populations. Brazil is expected to lead the market growth with a CAGR of 31.6% in the forecast period and increase the car subscription industry revenue.

With rising costs related to car ownership in urban centres, driven by higher taxes and fuel prices, car subscriptions offer a more flexible solution in the region. Furthermore, economic instability in some Latin American countries makes subscription services more appealing, as they enable consumers to handle predictable expenses without incurring substantial upfront costs.

Middle East and Africa Car Subscription Market Growth

The regional market growth is fuelled by urban development and investments in transportation infrastructure. In countries such as the UAE and Saudi Arabia, car subscription services are designed to meet the needs of both residents and expatriates who value the convenience of monthly payment options, which can boost the car subscription market expansion.

Furthermore, the significant expenses associated with vehicle maintenance and insurance in these areas render car subscriptions a viable choice for short-term usage. The growing emphasis on diversifying economies beyond oil, particularly in Gulf nations, is also fuelling the market growth.

Innovative Startups in Car Subscription Market

Several startups are engaging in strategic partnerships with car manufacturers, insurance firms, and technology companies to enhance their market reach.  The wide geographic coverage and availability in more cities or regions enable these new providers to offer their services to more customers. Moreover, the offering of 'green' options as Electric or Hybrid vehicles is also expected to be attractive since the road transportation increasingly shifts to the environmentally friendly modes of transport.

Finn

Founded in Germany, Finn offers flexible car subscription services in both the United States and Germany. The startup in the car subscription market focuses on providing a wide range of vehicles, featuring a simple digital onboarding process and no upfront payment, making it a convenient alternative to traditional car ownership. Subscription terms vary from six months to one year and include services like maintenance and insurance. This streamlined model is especially appealing to urban customers who want vehicle access without the long-term commitments of ownership or leasing.

Zoomcar

Established in India, Zoomcar is primarily known for its car-sharing platform but has also ventured into the car subscription market, expanding its reach to various cities across the country. Recently, Zoomcar raised USD 92 million to enhance its car subscription services, aiming to offer consumers flexible vehicle access without the burdens of long-term ownership. By partnering with OEMs such as Hyundai and Mahindra, Zoomcar provides a wide selection of vehicle subscriptions, allowing customers to switch cars or modify their subscriptions based on their needs.

Competitive Landscape

Key players in the market are focussing on advanced technology, especially telematics-based, GPS-enabled, and its integration into the mobile app that further enhances the service being offered. Several companies are offering a range of subscription plans with variants of terms, such as monthly, quarterly, and annually, plus the option to frequently switch vehicles is a certain competitive differentiator. They are also providing other competitive features include door-to-door delivery, 24/7 customer support, and the option for subscribers to manage their subscriptions using their mobile app. These not only ensure customer satisfaction but also aid in gaining customer loyalty, pushing the market revenue.

Key Industry Players

Mercedes Benz Group AG is a multinational automotive company that was founded in 1926 and headquartered in Stuttgart, Germany. The company offers innovative and fuel-efficient automobile solutions and car subscription models to its customers.

AB Volvo, incorporated in 1927, is an automobile manufacturer in the car subscription market with its headquarters in Gothenburg, Sweden. The company provides transportation and infrastructural solutions such as cars, trucks, buses, and power solutions, among others.

Toyota Motor Corporation, a provider of automotive, was established in 1937 and is currently based in Aichi, Japan. The company manufactures minivans, buses, trucks, and speciality cars and offers car subscription services, among others.

Other car subscription market players include Dr. Ing. h.c. F. Porsche AG, The Hertz Corporation, Carly Car Subscription Pty Ltd, OpenRoad Auto Group, Cazoo Ltd. (Cluno GmbH), Wagonex Limited, and Onto Holdings Limited, among others.

Recent Developments

January 2024

Finn, a Munich-based startup operating a new car subscription platform, announced that it has increased its valuation to USD 658 million with a €100 million raise, a Series C. To put a fine point on that sustainability emphasis- 40% of Finn's car inventory is electric today, but 80% will be by 2028.

April 2024

Helixx Technologies announced that it has started accepting registrations in Southeast Asian region for its EV and van subscription service, with its insurance and maintenance services as low as $0.25 per hour.

Price Range of Key Indicators of Global Car Subscription Market

Vehicle Depreciation Rates: It includes the speed at which cars shed their value. Subscription prices are thus affected and are meant to provide for vehicle depreciation in their pricing models.

Fleet Maintenance Costs: The overall cost of maintaining and servicing the fleet affects the subscription price of the services.

Insurance Costs: Changes in the insurance premiums of the fleet affect the pricing of car subscriptions. 

Operational Costs: Overhead costs include staffing, infrastructure, and technology that add to the pricing of subscription services, impacting the industry revenue.

Market Competition: The competitive pricing strategy in the car subscription market may be an influential driving force behind overall pricing dynamics, a reason providers may use price adjustments to attract or retain customers. 

Regulatory Costs: These would include adherence to local and national regulations, such as emission standards or safety features, which could impact cost structures and, consequently, the pricing of subscriptions.

Fuel Prices: A change in fuel prices, particularly for traditional internal combustion engine cars, would affect the costs of subscriptions and, therefore, the strategy that would be adopted in their pricing.

Key Indicators of Demand of Car Subscription

Urbanisation affects car subscription demand forecast as urban areas expand and the need for flexible and convenient transportation options grows.

Increasingly, the preference for convenience and flexibility over ownership is driving the demand for car subscription services.

High mobile application and digital platform adoption rates facilitate easier access to and management of car subscriptions for consumers, impacting market opportunities.

Growing consciousness and concern for the environment raise demand for subscriptions of electric and hybrid vehicles.

Good economic conditions tend to raise consumer spending, which makes car subscriptions a viable alternative to owning cars.