The Automotive Industry Transforms Through Subscription Models

From autonomous vehicles to electric cars, through the decline of traditional sedans and digital transformation, the automotive industry urgently needs to reinvent itself.

Market disruptors like Tesla with its direct sales model are challenging the established franchise model of dealerships. This technological and commercial revolution has paved the way for an even deeper transformation of consumption habits.

Consumers now have a new alternative to buying or leasing a car: automotive subscription. This innovative solution meets the expectations of customers seeking flexibility and simplicity.

Mass Adoption by Premium Manufacturers

Since this pioneering launch, about twenty manufacturers have already taken the leap and integrated subscription into their commercial strategy:

European premium manufacturers:

• Porsche with Porsche Passport
• Audi and its Audi Select service
• Volvo Care by Volvo
• BMW Access

Mainstream manufacturers:

• Volkswagen We Share
• Nissan Switch
• Renault Mobilize

This rapid adoption is explained by exceptionally encouraging forecasts for the car subscription market.

A Revolutionary Value Proposition

The concept of automotive subscription has what it takes to seduce consumers by removing the traditional barriers that characterize purchasing or leasing.

This new approach radically transforms the customer experience by offering a particularly attractive "all-in-one" solution.

An Integrated, No-Surprise Service

In exchange for a fixed and transparent monthly fee, everything is included in the subscription offer:

• Vehicle registration
• Unlimited use of the car
• Extended manufacturer warranty
• Comprehensive insurance
• Preventive and corrective maintenance
• 24/7 roadside assistance
• Concierge services (delivery, pickup)

Maximum Flexibility and Simplicity

Thanks to the development of new technologies and digital platforms, paperwork is minimized and cancellation conditions remain flexible.

Moreover, the customer can often change models whenever they want, thus adapting to the evolution of their personal or professional needs.

This flexibility represents a major competitive advantage over traditional automotive financing solutions.

Comparison with Traditional Solutions

Criteria	Car Subscription	Classic Leasing	Purchase
Commitment	Short term (1-12 months)	Long term (24-48 months)	Permanent ownership
Flexibility	Vehicle change possible	Rigid, penalties	Resale necessary
Included services	All-inclusive	Partial	Owner's responsibility
Cost predictability	Complete	Partial	Unpredictable
Depreciation	Not concerned	Limited risk	Full risk

Automotive subscription fundamentally differs from classic leasing, as subscribers are not locked into a rigid long-term contract and usage costs are more predictable and transparent.

This automotive usage revolution opens new perspectives for both manufacturers and consumers, redefining the codes of a sector in full transformation.

Automotive Subscription: The Birth of a New Ecosystem

The launch of subscription services has reshaped the landscape in the automotive industry, leading to the repositioning of traditional players and the emergence of new entrants.

A new ecosystem has been created, fundamentally transforming relationships between different actors in the automotive value chain.

This revolution touches all links in the industry: from manufacturers to dealerships, through tech startups that facilitate this digital transformation.

Automotive Manufacturers: Towards "Product as a Service"

Automotive manufacturers see it as an interesting way to diversify their revenue sources, reach new targets, and strengthen ties with their customers.

The objective is to exploit the product as a service (XaaS) and thus capture the lion's share of the customer's mobility needs, instead of limiting themselves to a single sale.

This approach allows them to:

• Generate recurring revenue rather than a one-time transaction
• Maintain a continuous relationship with the customer throughout the vehicle's lifecycle
• Collect valuable data on usage habits
• Optimize fleet management through connected technologies

Manufacturer	Subscription Brand	Strategy	Positioning
Ford	Canvas	Distinct brand identity	Accessibility and simplicity
Cadillac	Book	Premium service	American luxury
Volvo	Care	All-inclusive approach	Safety and sustainability
Porsche	Passport	Luxury and flexibility	Performance and prestige
BMW	Access	Premium mobility	Technological innovation
Mercedes	Collection	High-end experience	Elegance and tradition

Traditionally, automotive manufacturers first test the market regionally before extending their offer, like Nissan and Renault in India.

This cautious approach allows them to:

• Validate the business model on a restricted perimeter
• Adjust the offer based on customer feedback
• Optimize operational processes before large-scale deployment

Dealerships: Renewing the Business Model

For automotive dealerships, subscription services are an interesting opportunity to monetize new or used vehicles on a recurring basis.

In some cases, they can add value by offering related services such as insurance and maintenance.

In the digital age, where consumers increasingly turn to online platforms to buy their cars, this is an opportunity for dealerships to renew their business model.

The advantages for dealerships include:

• Guaranteed recurring revenue over the subscription duration
• Increased customer loyalty
• Optimized inventory turnover through vehicle returns
• Revenue source diversification with ancillary services

This strategy allows dealerships to:

• Leverage their local expertise in customer service
• Create personalized packages adapted to regional needs
• Develop partnerships with insurers and service centers
• Exploit their existing network to offer proximity services

Tech Startups: The Ecosystem Facilitators

The rise of the subscription industry has also brought new players, such as tech startups that market software and subscription management platforms.

These companies facilitate the implementation of such services via technology that relies on artificial intelligence.

This technology provides predictive analytics and allows managing the entire subscription program.

The proposed technological solutions cover:

• Subscription management: billing, renewals, cancellations
• Predictive analytics: price optimization, demand forecasting
• Fleet management: real-time tracking, predictive maintenance
• Customer experience: mobile apps, online portals
• System integration: connection with existing ERP and CRM

These startups bring several added values:

• Specialized technical expertise in subscription models
• Rapid deployment through turnkey solutions
• Platform scalability to support growth
• Continuous innovation with regularly enriched features

The role of these technological facilitators becomes crucial to:

• Democratize access to subscription services for players of all sizes
• Standardize processes and improve operational efficiency
• Accelerate digital transformation of the automotive industry
• Create connected ecosystems between all value chain actors

Conquering New Customers Through Subscription

Vehicle subscriptions are intended to attract customers who do not necessarily represent the traditional customer profiles of automotive manufacturers and dealerships.

This customer acquisition strategy relies on a profound transformation of consumption behaviors, particularly visible among new generations who favor access over ownership.

A Specific Target: Millennials and Enthusiasts

Indeed, automotive subscription targets a specific customer segment divided into two main categories:

Profile 1: Pragmatic Millennials

• Millennials and other consumers who need a vehicle but are not necessarily interested in ownership
• This generation primarily seeks flexibility and simplicity in their mobility solutions
• They value user experience and convenience over patrimonial investment

Profile 2: Automotive Enthusiasts

• Enthusiasts who find the possibility of driving several different models and changing easily attractive
• These customers appreciate variety and the opportunity to test different automotive technologies
• They see subscription as a way to access high-end vehicles without long-term commitment

This specific target prioritizes usage and experience over possession, marking a fundamental break with traditional consumption models.

A Solution Adapted to New Mobility Needs

Automotive subscription is therefore an ideal solution for consumers who want simple, economical, and hassle-free temporary mobility solutions, with easy cancellation and return policies.

This approach responds to several specific expectations of the modern market:

Operational advantages:

• Administrative simplicity: no complex financing procedures
• Contractual flexibility: possibility to adjust according to needs
• All-in-one service: maintenance, insurance, and assistance included
• Pricing transparency: fixed and predictable monthly cost

Financial advantages:

• No substantial startup capital required
• Avoidance of vehicle depreciation risks
• Mobility budget control with "all-inclusive" monthly fee
• Tax optimization for professionals

It's an ideal choice for customers who don't want to deal with the tedious procedures of owning, renting, or leasing a car.

Moreover, it doesn't require substantial startup capital while adding convenience and flexibility with the "all-inclusive" monthly fee and modular commitment according to needs.

This new model is undoubtedly a privileged path for the automotive industry to renew itself and attract new customers.

It allows manufacturers to diversify their revenue sources while building loyalty among customers who might otherwise turn to non-automotive mobility alternatives.

Automotive subscription also represents an opportunity to collect valuable data on usage habits, enabling optimization of future offers and development of personalized services.

Impact on the Automotive Ecosystem:

The growing adoption of automotive subscription transforms the entire value chain:

• For manufacturers: revenue diversification and direct customer relationship
• For dealerships: evolution towards a service and advisory role
• For consumers: facilitated access to premium and flexible mobility
• For the environment: optimized vehicle utilization and reduction of the overall automotive fleet

This transformation is part of a broader usage economy logic, where value shifts from ownership to service access.

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Sources:

• (*) Forbes
• (**) Automotive Subscription Services 2020 Global Market Report.