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2021

Car Subscription Market

Car Subscription Market Size, Share, Competitive Landscape and Trend Analysis Report, by Service Provider, Vehicle Type, End Use and Subscription Period : Global Opportunity Analysis and Industry Forecast, 2020-2027

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Author's: Omkar Bachal | Lalit Janardhan Katare
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Car Subscription Market Statistics 2020-2027:

The global car subscription market was valued at $3,550.4 million in 2019, and is projected to reach $12,090.6 million by 2027, registering a CAGR of 23.1%. Europe was the highest revenue contributor, accounting for $1,465.9 million in 2019, and is estimated to reach $4,491.6 million by 2027, with a CAGR of 21.7%.

Car subscription is mode of service which is new model of ownership with fixed periodic recurring fees that mainly covers the insurance as well as maintenance expenses of the car. The car subscription mainly opts normally for the duration of minimum 1 month to the maximum 2 years. The car subscription is midpoint service solution between the car rental and car leasing services, which having benefits over these two modes of services. Moreover, car subscription also includes the multiple switches of the subscribed car and additional vehicle expenses such as insurance and maintenance are taken care by the service provider.

Car-Subscription-Market-2020-2027

OEM and their captives are integral part of the global car subscription market; however, independent service provider is strategically involved in partnership and product development to gain the competitive advantage. COVID-19 health crisis has significantly impacted the overall market activities as commute restrictions across the globe and lower consumer confidence.

Factors such as flexibility, affordability, and convenience of car subscription, and benefits over leasing is expected to drive the growth of the market. However, well-established and dominance of vehicle leasing, rental, and sharing market, and the leasing model is cost-efficient compared to subscription schemes, which hinder the market growth. Entering into strategic partnership with automakers to gain competitive advantage, development of strong digital platform to operate the services effectively, and expansion of dealer network to better reach or effective provide services are some of the factors that are expected to foster the market growth. 

The North America car subscription market is expected to grow at a significant rate during the forecast period, owing to rise in need for urban mobility solution in a more efficient way, technological advancements, and increase in concerns over safety of the vehicle & driver. The key market players are adopting various strategies to strengthen their market presence. They are also continuously involved in product development to attain the changing requirement of the end user and gain competitive advantage. For instance, in September, 2020, Porsche Cars North America, Inc. introduced a monthly single-vehicle subscription (SVS) program in Los Angeles, Phoenix, Atlanta, and San Diego. This program powered by Clutch Technologies offers members access to a single Porsche model for 1 or 3 months for an all-inclusive fee.

The U.S. is one of the leading consumers in the North America car subscription market as majority of the market participants are catering in the U.S. and several startups are also present in the country, owing to the growing popularity and changing consumer sentiments. The car subscription service providers from the U.S. are introducing attractive car subscription offerings to increase the product demand in the near future. For instance, car subscription provider SIXT+ offers lucrative discounts on the subscription of 3 months, 6 months, and 1 year programs. However, government laws & regulations are creating hurdle for the service providers, but are estimated to drive the market growth in the future. For instance, in 2019, 4 states in the U.S., including Massachusetts, Indiana, North Carolina, and New Jersey have introduced bills dealing with car subscription services, although two states enacted measures. In addition, Indiana state has passed HB 1237 and extended the ban on car subscription programs till 1st May, 2020. Moreover, North Carolina endorsed SB 557, minimizing the alternate highway tax on vehicle subscriptions.

The global car subscription market is segmented into service providers, vehicle type, end use, subscription period, and region. Depending on service providers, the market is bifurcated into OEM/captives and independent/third party service provider. By vehicle type, it is divided into IC powered vehicle and electric vehicle. On the basis of end use, it is categorized into private and corporate. By subscription period, it is divided into 1 to 6 months, 6 to 12 months, and more than 12 months. Region wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA.

The key players operating in the car subscription market are Daimler AG, Drover Limited, Facedrive Inc., Fair Financial Corp., OpenRoad Auto Group, Porsche AG, Primemover Mobility Technologies Pvt Ltd., The Hertz Corporation, Toyota Motor Corporation, and Volvo Car Corporation. 

Key Developments

  • In November 2020, the Hertz Corporation expanded its Hertz My Car monthly vehicle subscription service nationwide to all corporate airport and neighborhood locations.
  • In September 2020, Toyota Motor Corporation launched GR Yaris and added to the car subscription offerings of KINTO ONE.
  • In August 2020, Porsche AG introduced new service line as monthly Single-Vehicle Subscription program in Los Angeles, Atlanta, Phoenix, and San Diego.
  • June 2019, The Hertz Corporation introduced vehicle-subscription service with its transportation needs. Hertz My Car is available in Atlanta, Georgia and Austin, Texas.
  • In April 2018, Drover Limited entered into a partnership with BMW Group to provide car subscription service to its models, including BMW 1 Series, 2 Series, 3 Series, 4 Series, 5 Series, and the Mini Hatch.

Benefits over leasing are propelling the growth of the car subscription market 

Vehicle leasing is a cost-effective solution over car subscription service in the long run; however, car subscription has bunch of benefits over car leasing. Car subscription is associated with multiple switches of the subscribed vehicles under the certain prefixed terms, which is not provided in the car leasing service. Moreover, car leasing incurred various costs such as maintenance cost, repair cost, insurance cost, license fees, and taxes. However, in car subscription, these all costs are handled by the service providers. Moreover, the agreement duration is long in the car leasing; however, it is not longer than 2 years generally which enables the short durational usage and changing the vehicle easily. These benefits over car leasing service are anticipated to spur the demand for car subscription service in the recent years.

Car Subscription Market
By Service Provider
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Independent/Third Party Service Provider Segment is projected as the most lucrative segment

Entering into strategic partnership with automakers to gain competitive advantage 

Car subscription end users are preferring the authorized vehicle providers for reliability vehicles. Moreover, automotive manufacturers are introducing its own car subscription service vertical along with development of partner chain to cater the untapped markets. Changing consumer sentiments toward vehicle subscription as they adopt the service from the particular vehicle brand provider, market participants of car subscription market need to undergo strategic partnership to attain the long-term business opportunities and gain competitive advantage in the car subscription market. For instance, in 2019, Hyundai Motor India has launched subscription model operating in six cities across India as part of the partnership with Revv.

Car Subscription Market
By Vehicle Type
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Electric vehicle segment is projected as the most lucrative segments

Development of strong digital platform to operate the services effectively

In the recent years, end users of car subscription services utilize and operate the services through the offline as well as online platforms. In the era of digital technology, end users are more inclining toward online business platform, owing to its operational efficiency and time-effective output. Additionally, market players are developing the websites and mobile application to cater to the changing need of end users and effective fulfillment of the requirement. For instance, car subscription market players such as Drover Limited, Facedrive Inc., Fair Financial Corp., OpenRoad Auto Group, and Porsche AG have well developed website and mobile applications to fulfill the business operations through online digital platform. Changing service offering outlook and increasing internet penetration across the globe sour the demand for strong digital online presence. This shifting trend toward online platforms creates requirement for well-developed website and mobile application to operate the business activities effectively. To attain the changing consumer need, market players need to develop its own website and mobile application with additional features to cope up with the immense competition from the leading players.

Car Subscription Market
By End Use
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Private segment is projected as the most lucrative segments

COVID-19 impact analysis

The global impacts of the COVID-19 already hit the market significantly in 2020, and it is expected to affect the car subscription market momentum in 2021. The spread of the COVID-19 pandemic has negatively impacted the global car subscription market, owing to commute restrictions and expected weak financial performance of the market players in 2020. The economic impact of the pandemic has been witnessed by the organizations preparing strategic cost-saving plans. Organizations with vehicle assets are considering sale and leaseback options to improve cash flow. 

Car Subscription Market
By Subscription Period
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6 to 12 Months is projected as the most lucrative segments

The major risk factors of the car subscription market participants are supply chain execution, regulatory & policy changes, meeting the safety measures, dependency on labor, working capital management, and liquidity & solvency management. For the car subscription market, the year 2020 was a negative performing year, owing to the negative demand and supply outlook from the COVID-19 crisis restrictions in end user. This momentum is anticipated to continue in the first quarter of the year 2021, however, market is expected to witness a small recovery by the end of the fourth quarter of the FY 2021. Commute restrictions and lower consumer confidence are the major factors for decrease in demand for car subscription in the COVID-19 health crisis duration. Demand from end users has reduced as there is limited operational activity. The overall consumer confidence level of these industries has declined, owing to operations with limited workforce capacity and inadequate health safety measures. This expected weak business performance directly impacts the overall service operations of car subscription. Service providers are expected to focus on the working capital management and there are very less chances for heavy investment in advanced technology.  

Car Subscription Market
By Region
2027
Europe 
North America
Asia-Pacific
LAMEA

Asia-Pacific would exhibit the highest CAGR of 27.1% during 2020-2027.

Key Benefits For Stakeholders

  • This study presents the analytical depiction of the global car subscription market analysis along with the current trends and future estimations to depict imminent investment pockets.
  • The overall car subscription market opportunity is determined by understanding profitable trends to gain a stronger foothold.
  • The report presents information related to key drivers, restraints, and opportunities of the market with a detailed impact analysis.
  • The current market is quantitatively analyzed from 2019 to 2027 to benchmark the financial competency.
  • Porter’s five forces analysis illustrates the potency of the buyers and suppliers in the industry.

Car Subscription Market Report Highlights

Aspects Details
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By SERVICE PROVIDERS
  • OEMs & Captives
  • Independent/Third Party Service Provider
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By Vehicle Type
  • IC Powered Vehicle
  • Electric Vehicle
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By End Use
  • Private
  • Corporate
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By Subscription Period
  • 1 to 6 Months
  • 6 to 12 Months
  • More than 12 Months
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By Region
  • NORTH AMERICA  (U.S., Canada, Mexico)
  • Europe  (Germany, UK, France, Spain, Rest of Europe)
  • Asia-Pacific  (China, India, Japan, South Korea, Rest of Asia-Pacific)
  • LAMEA  (Latin America, Middle East, Africa)
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Key Market Players

Toyota Motor Corporation, Drover Limited, Volvo Car Corporation, Facedrive Inc., Porsche AG, The Hertz Corporation, Fair Financial Corp, Primemover Mobility Technologies Pvt Ltd, OpenRoad Auto Group, DAIMLER AG

Analyst Review

Car subscription is the new era of car as a service offering, and it is center solution for the car leasing and car rental services. Car subscription is gaining momentum in the near future as it is having advantages such as short durational mobility solution, new era commute solution, and cost-effective for the vehicle expenses. Car subscription is accepted by majority of the urban commuter as it allows multiple switches for the vehicles and even less complex than leasing services.

The global car subscription market is highly fragmented due to presence of several market participants operating in the market. OEM and their captives have entered in this business model and become integral part of the business cycle. Independent or third-party service providers are mostly start-ups and has witnessed strategic partnership with automakers to provide effective services to the consumers. Moreover, the car subscription market participants are catering to their domestic markets as it relates to maintaining the large fleets and majority of the operations are preferred at the dealer end so there is no requirement of the direct presence of the market participants. In addition, India and ASEAN countries are expected to witness as a land of opportunities for the market players as majority of the consumers of these countries are millennial generation and they are more likely to attracted toward the car as service mode of ownership with additional benefits such as multiple swaps of the cars, which is prominent driving factor for such business model.

The global car subscription market is segmented on the basis of service providers, vehicle type, end use, subscription period, and region. Depending on service providers, the market is bifurcated into OEM/captives and independent/third party service provider. By vehicle type, it is divided into IC powered vehicle and electric vehicle. On the basis of end use, it is categorized into private and corporate. By subscription period, it is divided into 1 to 6 months, 6 to 12 months, and more than 12 months. Region wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA.

Car subscription is the new era of car as a service offering, and it is center solution for the car leasing and car rental services. Car subscription is gaining momentum in the near future as it is having advantages such as short durational mobility solution, new era commute solution, and cost-effective for the vehicle expenses. Car subscription is accepted by majority of the urban commuter as it allows multiple switches for the vehicles and even less complex than leasing services.

The global car subscription market is highly fragmented due to presence of several market participants operating in the market. OEM and their captives have entered in this business model and become integral part of the business cycle. Independent or third-party service providers are mostly start-ups and has witnessed strategic partnership with automakers to provide effective services to the consumers. Moreover, the car subscription market participants are catering to their domestic markets as it relates to maintaining the large fleets and majority of the operations are preferred at the dealer end so there is no requirement of the direct presence of the market participants. In addition, India and ASEAN countries are expected to witness as a land of opportunities for the market players as majority of the consumers of these countries are millennial generation and they are more likely to attracted toward the car as service mode of ownership with additional benefits such as multiple swaps of the cars, which is prominent driving factor for such business model.

The global car subscription market is segmented on the basis of service providers, vehicle type, end use, subscription period, and region. Depending on service providers, the market is bifurcated into OEM/captives and independent/third party service provider. By vehicle type, it is divided into IC powered vehicle and electric vehicle. On the basis of end use, it is categorized into private and corporate. By subscription period, it is divided into 1 to 6 months, 6 to 12 months, and more than 12 months. Region wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA.

Author Name(s) : Omkar Bachal | Lalit Janardhan Katare
Frequently Asked Questions?

The global car subscription market was valued at $3,550.4 million in 2019, and is projected to reach $12,090.6 million by 2027, registering a CAGR of 23.1% from 2020 to 2027.

COVID-19 helath crisis has direct impact on the global car subscription market, growing adoption of digital technology in transportation front and changing consumer sentiments towards vehicle ownership is expected to spur the demand for car subscription

The report sample for global car subscription market report can be obtained on demand from the website.

Adoption of electric vehicles as a car subscription services are gaining traction in the global market

Product Development, Expansion, Partnership, and Acquisition are the key strategies adopted by the key players of global car subscription market

The company profiles of the top ten players of the market can be obtained from the company profile section mentioned in the report. This section includes analysis of top ten player’s operating in the industry along with their last three year revenue, segmental revenue, product offerings, key strategies adopted, and geographical revenue generated

Based on the car subscription market analysis, Europe accounts to be highest revenue contributor in 2019. However, Asia-Pacific is expected to see a lucrative growth provides more business opportunities during the forecast period

By Vehicle Type, Electric Vehicle segment is expected to gain traction over the forecast period in global car subscription market

U.S., UK, and Germany has wirnessed as a key matured markets growing in the global car subscription market

The demand for mordern urban mobility solution to improve the operational efficiency; and increasing expansion activities of market players

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Car Subscription Market

Global Opportunity Analysis and Industry Forecast, 2020-2027