While car subscription is clearly defined as a flexible alternative to traditional car ownership, there is a misconception that the term can be used interchangeably with rental and leasing, but that is not the case.
While it may share common traits with all of the aforementioned alternatives, it is the unique combination of all these value propositions that define car subscription as a distinct business model.
What's the difference?
The four value propositions that define car subscription as a distinct business model are preferred choice of vehicle, exclusive access, all-inclusive, and flexibility. Let's take a closer look at each of these propositions and how they compare to traditional ownership, rental, leasing, and car sharing.
Preferred choice of vehicle
With car subscription, customers have the flexibility to choose the car they want from a range of available models.
This allows them to drive the latest and most advanced models that they might otherwise choose to own, as well as luxury vehicles that might not be affordable for purchase.
In contrast, traditional ownership requires the customer to purchase a vehicle, which may not always be the preferred choice due to budget constraints or availability.
Rental and car sharing services usually have a limited selection of vehicles with a preference toward practicality and affordability, and customers may not always get their preferred choice.
Leasing allows some level of choice, but the options are usually limited to a specific make and model.
Car subscription offers exclusive access to the vehicle, which means the car is available to the customer for their exclusive use during the subscription period.
This eliminates the hassle of having to share a vehicle with others, as is the case with car sharing.
It also provides more privacy and security compared to rental, where the vehicle may have been used by several other customers before. The temporary basis of rental means it's often inconvenient to treat a vehicle as your own, by installing child seats, or carrying tools.
Traditional ownership and leasing also provide exclusive access, but with ownership, there is the added responsibility of maintenance, insurance, and depreciation, which can be a burden for some customers.
Car subscription provides an all-inclusive package, which means that the customer pays a single monthly fee that covers all expenses related to the vehicle, such as insurance, maintenance, and roadside assistance.
This eliminates the need to worry about unexpected expenses that may arise with traditional ownership, rental, or leasing.
With traditional ownership, the customer is responsible for all costs associated with the vehicle, including repairs and maintenance, insurance, and registration fees.
With rental, the customer pays for the rental fee and any additional expenses, such as insurance and fuel. Leasing provides some level of inclusivity, but the package is usually limited to maintenance and repairs.
Car subscription provides flexibility in terms of the duration of the subscription and the ability to switch to a different vehicle or terminate the subscription.
This means that customers can change their vehicle as their needs change, without the hassle of buying, selling, or trading in a vehicle.
In contrast, traditional ownership requires the customer to commit to the vehicle for a long period, which can be problematic if their needs change.
Rental and car sharing provide flexibility in terms of the duration of use, but the choice of vehicle may be limited.
Leasing also provides flexibility, but the customer is usually committed to the lease for a fixed period, and there may be penalties for early termination.