Car subscription is often misunderstood in the context of car rental, with some even go so far as to label it as the same service under a different name.

Comparing Car Subscription and Car Rental

At first glance, the differences between car subscription and car rental are subtle but important.

In addition to the difference in the length of time, car subscription and car rental also cater to different types of customers and vehicle types.

Vehicle as a Utility

Car rental typically serves customers who need a vehicle for a specific practical purpose, such as business travel, leisure travel, or special occasions. The rental vehicles are usually standard models and are available for short-term rentals.

These customers prioritize practicality, functionality, and reliability over style or prestige when selecting a rental car and will value features such as fuel efficiency, cargo space, and easy-to-use technology over more premium amenities like leather seats or high-end audio systems.

For car rental companies, understanding the "vehicle as a utility" persona is crucial for offering the right mix of vehicles and services to meet their needs.

This may include a range of practical and reliable vehicles at affordable prices, streamlined rental processes, and convenient pick-up and drop-off locations. By catering to this persona, car rental companies can attract and retain customers who value practicality and functionality in their rental cars.

Vehicle as a Service

On the other hand, car subscription targets customers who need a vehicle for more regular or ongoing transportation needs, and is more closely aligned with that of traditional car ownership.

While rental car customers may prioritize practicality and affordability, car subscription customers may have more specific preferences for the type of vehicle they want to use.

Subscription customers are often looking for more flexibility and convenience, and prefer a wider range of models, including luxury or high-end vehicles, and are typically available for longer-term commitments.

Benefits of a Hybrid Car Subscription and Rental Approach

Adopting a hybrid subscription and rental approach can benefit car rental companies by diversifying revenue streams, expanding the market opportunity, and improving vehicle utilization rates.

Revenue stream diversification

By offering both subscription and rental options, a car rental business can tap into two different customer segments and generate additional revenue streams.

Subscription customers provide a more predictable and stable revenue stream, while rental customers provide a more flexible and spontaneous source of revenue.

Enhanced Customer Loyalty

By offering a hybrid approach, car rental businesses can offer customers greater flexibility and convenience in choosing how they access vehicles.

This can lead to increased customer loyalty as they are more likely to choose the same rental company for both short-term and long-term transportation needs.

Expanded Customer Base

A hybrid car subscription and rental approach can attract a wider range of customers, including those who may not be able to afford to buy a car or do not want the commitment of car ownership.

This can help rental businesses reach a broader customer base and attract new customers who value flexibility and convenience.

Improved Fleet Management

By offering a hybrid approach, rental businesses can better manage their vehicle fleet. Subscription customers typically have more predictable usage patterns, allowing for better fleet planning and management.

Rental customers can help fill in any gaps in demand, ensuring that rental businesses can maximize their vehicle utilization rates.

Demands of Fleet Electrification

As the rate of electric vehicle adoption continues to climb, there will be a fundamental shift in the operational requirements for fleet and rental companies as the high volume, fast turnover business model typical of car rental businesses is at odds with the infrastructure demands of an electric vehicle fleet.

Limited access to charging infrastructure

Certain high demand locations such as airports may have limited access to charging infrastructure. Car rental businesses may need to invest in charging stations, which can be costly, or rely on third-party charging companies to provide charging services, which may be unreliable.

Downtime for charging

It's typically not practical or reasonable to require a car rental customer to return their vehicle with a fully-charged battery.

Electric vehicles require downtime for charging, which means that some vehicles may be unavailable for rental for extended periods.

This can impact the high turnover demand of the car rental business, as it may take longer to get the vehicles ready for the next rental.

Longer charging times

Electric vehicles take longer to charge than traditional vehicles, which can cause delays in the rental process.

This can impact the car rental business's ability to meet customer demand, especially during peak periods.

Easing the Demand with Car Subscription

Offering car subscription alongside car rental can address some of the challenges associated with transitioning to an entirely electric fleet for a car rental businesses.

Car subscription can sustain high utilization rates and larger electric fleets without requiring a comparable rise in charging infrastructure for several reasons.

The primary reason is that the longer duration for car subscription customers means they can charge the vehicle at home or work at their convenience, this reduces the need for the car rental business to invest in additional charging infrastructure.

Effectively, an electric vehicle is generating revenue for your business while it charges on a subscription basis more often than a vehicle utilised on a rental basis.