It's still Day 1 for vehicle subscriptions

Industry

Jeff Bezos is fond of declaring it’s still “Day 1” for Amazon. Staying in “Day 1” means you can do more for your customers — it requires you to experiment patiently, accept failures and double down when you see customer delight.

Why is this relevant? In a July 13 editorial, “Subscriptions don’t pay off but worth the try,” Automotive News called time on vehicle subscriptions, stating, “The early results from the Great Auto Subscription Experiment are in, and … they’ve been canceled.”

At Clutch and Cox Automotive, we couldn’t disagree more with this statement. After years of delivering customer delight, we’re convinced there is scope for correctly designed vehicle subscription offerings and new services for vehicle owners that use the same technologies. In short, the Great Auto Subscription Experiment is far from over.

While some consumers enjoy the car-buying process, many tell us they are frustrated by it. Some enjoy maintaining their vehicles, but others see it as a hassle. And most either take on a new car payment with care or just try not to think about it. What if there was a more integrated solution to address all of these concerns?

The subscription value story is different for every consumer. The most appealing aspects are that maintenance is included, the car is managed for you, the commitment is flexible, and one simple price covers everything but fuel. Based on these factors, around half of consumers tend to be interested in subscription, a result confirmed by thousands of consumers across multiple surveys over several years.

Consumer research is all very well, but what happens in practice when consumers try a vehicle subscription? In short, they love it, and we have seen glowing reviews across various service providers to prove it.

Just as we struggle to calibrate what can be achieved in a short period, some are often too quick to judge what will or will not work. In fact, the brief history of vehicle subscription has and continues to deliver numerous successes.

Porsche’s continued futuristic perspective is setting a new consumer-centric standard for the industry, introducing new flavors of its Porsche Drive program, which now includes multivehicle subscription, single-vehicle subscription and rental. Volvo saw increased demand for its all-in-one Care by Volvo program in August and announced the expansion of the service in the U.K. In addition, in Missouri, Jim Butler Auto Group’s single-vehicle subscription program driveBlackTie has become a cash-positive business.

A challenge for nonbelievers is that the full set of facts is not publicly available. We’re aware of more than five auto manufacturers interested in adding new subscription services as well as new entrants seeing serious levels of investment. Meanwhile, those that find success and profits in subscription are not necessarily keen to share the secrets of their success. Finally, it can be hard for outside observers to differentiate between experiments and early movement toward scaling.

In fact, we strongly believe the interest in simple subscription and user-friendly rental products will only continue to grow. In particular, we’ll start to see the gradual rollout of more mass-market options using the single-vehicle model at price points compelling to a wide consumer range, making it easier for consumers to acquire the transportation they need during times of uncertainty.

Ultimately, subscription still needs to be proved at scale. We believe this will happen in two ways:

1. Providers are starting to design subscription and flexible lease offerings that are simple to sell and operate, appealing to subscribers interested in keeping one vehicle for a sustained period. Most services will employ used vehicles and use data to pick the right vehicles, avoiding steep depreciation or expensive maintenance needs.

2. New subscription products will come to market that complement rather than replace vehicle ownership. Dealers and auto manufacturers will offer services that replicate many of the attractive features of “full-time” subscriptions, eliminating friction and hassle. Getting a vehicle serviced should be as simple as pushing a button in an app. Access to different types of vehicles for occasional needs should be equally simple. Everything should be digital, on demand, delivered to the consumer and be tailored to the consumer’s needs.

That’s why we believe it’s still Day 1 for subscriptions. And that is why at Clutch, we never stop innovating.

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