May 22, 2024
Vehicle Subscription Market

Vehicle Subscription Market is estimated to Witness High Growth Owing to Increased Adoption of Subscription-based Mobility Services

Vehicle subscription services allow users to drive multiple vehicles by paying a monthly fee that covers insurance, maintenance, and other costs. The concept combines the flexibility of short-term rentals with the convenience of long-term leases. Customers can switch vehicles whenever required without worrying about maintenance or repairs. With traffic congestion on the rise and younger generations showing a declining interest in car ownership, this model provides an attractive alternative to traditional leasing and financing options.

The Global Vehicle Subscription Market is estimated to be valued at US$ 4.52 Bn in 2024 and is expected to exhibit a CAGR of 34.% over the forecast period 2024 To 2031.

Key Takeaways

Key players operating in The Vehicle Subscription Market are Arval BNP Paribas, Avis Budget Group, Carvolution, EZOO., LeasePlan, Lyft Inc., Mercedes-Benz Mobility, Orix, SIXT, The Hertz System, Inc., Volkswagen, Volvo Car Corporation, Flexdrive , Cluno GmbH, Myles , MARUTI SUZUKI INDIA LIMITED, Autoflex, General Motors, Upshift, inc., LMP AUTOMOTIVE HOLDINGS, INC. The growing emphasis on viable shared mobility solutions combined with vehicle manufacturers offering subscription programs directly represent major opportunities in the market. Technological advancements including usage-based insurance, integrated digital platforms and self-driving capabilities will further fuel demand.

Market Drivers

Rising millennial preference for access over ownership is a key driver boosting the vehicle subscription market. The average age of vehicles in major markets is also rising as people hold onto their cars longer instead of upgrading, signaling a shift towards subscription-based usage model. Decreased infrastructure and distribution costs associated with the digital nature of subscriptions makes it an affordable solution for OEMs looking to expand customer base. The COVID-19 pandemic has accelerated the trend towards contactless mobility solutions like subscription which allow flexible usage without long-term commitments.

Current challenges in the Vehicle Subscription Market
The vehicle subscription market is still in a nascent stage and faces various challenges. One of the major challenges is lack of awareness and understanding about the subscription model among consumers. Many people are still accustomed to the traditional ownership model and need to be educated about the benefits of subscribing vehicles. Another challenge is the short tenure of subscriptions which makes it difficult for customers to develop long term attachment with vehicles. Infrastructure readiness is also an issue as subscription requires seamless access mechanisms which are still being developed. Setting up a sustainable financial model is a task due to lack of revenue data. Partnerships across the value chain need to be strengthened and processes need to be standardized to scale this market.

SWOT Analysis
Strength: Offers flexibility of driving multiple vehicles without long term ownership commitments. Provides all inclusive rental packages covering insurance, maintenance etc.

Weakness: Short term tenures make it difficult to build brand loyalty. Lack of standardized processes across providers complicates experience.

Opportunity: Younger generations showing preference for access over ownership provides large market potential. Growth of shared mobility paves way for subscription services.

Threats: Regulatory uncertainty in certain markets. Increased competition from traditional rental firms adopting flexible models.

Geographical regions
North America currently accounts for the largest share of the global vehicle subscription market in terms of value due to high adoption rates in the US. The presence of major providers and developers of subscription platforms along with flexible regulations drive growth.

Asia Pacific is expected to be the fastest growing regional market stimulated by lower vehicle ownership rates and well developed shared mobility infrastructure in major countries like India and China. Young urban populations are increasingly adopting new access based mobility solutions.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it