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Car Subscription Market

Car Subscription Market: Information by Service Provider (OEM/Captives), Vehicle Type (IC Powered Vehicle, Electric Vehicle), End-use (Private and Corporate), and Region — Forecast till 2030

Published At : 10 Aug, 2022
Updated At : 19 Sep, 2022
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Market Snapshot
Base Year:
2021
Study Period:
2020-2030
CAGR:
23.1 %
Fastest Growing Market:
Europe
Largest Market:
North America

The global car subscription market size had a share of USD 2,952 million in 2021, which is expected to advance and reach USD 15,567 million with a CAGR of 23.1% during the forecast period. Car subscription is the next generation of car-as-a-service offerings and the central car leasing and rental services solution. Car subscription is a method of service that represents a new car ownership model with fixed recurrent fees that primarily cover insurance and maintenance costs. The period of a car subscription typically ranges from one month to a maximum of two years.

An automobile subscription is a service option that bridges the gap between car rental and car leasing, and it has advantages over both. In addition, a car subscription involves frequent vehicle swaps and additional vehicle expenses, like insurance and maintenance, for which the service provider is responsible. Original equipment manufacturers (OEM) and captives are vital to the global car subscription market. At the same time, independent service providers are strategically active in collaboration and product development to obtain a competitive edge.

Shortly, car subscriptions will grow in popularity because of their advantages, including short-term mobility solutions, new-age commute solutions, and reduced vehicle expenses. Most urban commuters favor car subscription since it permits many vehicle changes and is much simpler than lease services. Flexibility, affordability, and simplicity of car subscription and advantages over leasing are anticipated to boost global market expansion.

However, the well-established and dominant nature of the car leasing, rental, and sharing business and the fact that the leasing model is more cost-effective than subscription schemes inhibit the sector's expansion. Several factors are anticipated to contribute to the growth of the car subscription market, including the formation of strategic alliances with automakers to gain a competitive advantage, along with the creation of a robust digital platform to operate the services efficiently and the expansion of the dealer network to reach more customers or provide services more effectively.

Car Subscription Market Share

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Market Dynamics

Market Driving Factors

The Flexibility, Affordability, and Convenience of Car Subscription

A car subscription is a limited-period contract to own a car that doesn't charge the customer for maintenance or insurance. Moreover, according to the service provider-consumer contract, a car subscription permits many car swaps. In recent years, automobile subscription has gained traction as a hybrid option for car rental services and car leasing solutions, with various advantages over these two types of services. In addition, a car subscription permits flexibility in selecting and exchanging car models and a periodical duration ranging from one month to two years. Consequently, the millennial generation is drawn to the flexibility of car subscriptions, providing a cost-effective alternative for car-as-a-service in the short term. It is projected that the advantages of car subscriptions over car leasing and car rental services will soon increase the demand for car subscriptions.

Benefits Over Leasing to Bolster Market Growth

In the long term, vehicle leasing is less expensive than automotive subscription services. However, there are advantages to auto subscription over car leasing. Car subscription is related to multiple switching of subscribed vehicles under specific predetermined terms, which is not available with car leasing. In addition, car leasing incurs various expenses, including maintenance, repair, insurance, license, and tax payments. In contrast, service providers handle all these automobile subscriptions charges. Moreover, the agreement duration in car leasing is long but often no longer than two years, allowing for short-term usage and easy vehicle replacement. It has been projected that these advantages over automobile leasing services will increase demand for car subscription services in recent years.

Market Restraining Factors

Leasing Model being More Cost-efficient Than Subscription Schemes

The perks of a car subscription include the ability to swap between numerous vehicles and shorter-term agreements with service providers. However, a subscription is more expensive than leasing or buying a vehicle in the long term. Car subscription options are coupled with monthly billing cycles and mileage restrictions. The monthly payment for a car subscription is more expensive than leasing or owning a vehicle for more than two years. In addition, most service providers impose a mileage cap on vehicles for a given period; exceeding this restriction incurs additional fees for the end-user. When leasing or owning a vehicle, these additional expenses and monthly service fees are negligible. In the coming years, the high cost of the subscription model is projected to impede the demand for car subscriptions.

Key Market Opportunities

Entering into Strategic Partnership with Automakers to Spur Market Opportunities

End-users of car subscriptions choose reliable vehicles from approved providers. In addition, vehicle manufacturers are launching their car subscription service vertical alongside creating a partner chain to serve unexplored regions. Changing consumer attitudes toward vehicle subscription as they adopt the service from a specific vehicle brand provider and market participants of car subscription must engage in a strategic partnership to attain long-term business opportunities and gain a competitive advantage in the global market. Under the partnership contract with Revv, Hyundai Motor India, for instance, announced a subscription model in six Indian cities in 2019.

 

Segmental Analysis

 The global car subscription market is segmented based on the service provider, vehicle type, end-use, subscription period, and region.

On the Basis of Service Providers

The segmentation based on service providers includes OEMs & captives and independent/third-party service providers.

Independent/third-party service providers are expected to command the market with a share of USD 13,642 million, growing with the highest CAGR of 24.7% during the forecast period. Independent/third-party service providers offer automotive subscription services primarily in domestic markets and on a smaller scale than OEM and captives. Independent/third-party service providers operate independently or partner with OEMs to maintain the fleet and provide end-user service. Most independent/third-party service providers give various options to their end-users and work with multiple companies to present them with options. The altering consumer sentiment and business view of car subscriptions on the domestic market are anticipated to generate lucrative business prospects for domestic market participants, which supports the expansion of independent/third-party service providers. In addition, the bulk of independent/third-party service providers is forming strategic alliances with vehicle manufacturers to preserve their long-term business potential.

On the Basis of Vehicle Type

Based on vehicle type, the segmentation of the global market is done as IC-powered vehicles and electric vehicles.

The IC-powered vehicle is expected to generate a revenue share of USD 14,105 million with a CAGR of 22.6%. Internal combustion (IC) engines are used to move people from one place to another. These engines can run on gasoline or diesel. Vehicles with internal combustion engines (IC engines) dominate global vehicle production and sales. In recent years, automotive sales and production have been declining. However, a positive outlook for automotive sales is anticipated shortly due to an increase in the penetration of electric vehicles, a rise in disposable income, and changes in the transportation & logistics industry's outlook. The altering industrial landscape and increasing reliance on shared mobility are anticipated to stimulate the expansion of the global car subscription market.

The electric vehicle segment is growing with a higher CAGR of 26.8% and is expected to reach USD 5,915 million by 2030. Car subscription for electric vehicles is gaining traction because of the rising penetration of electric vehicles in total automotive sales and the operational efficiency of electric vehicles over internal combustion engine-powered vehicles. Increased demand for fuel-efficient, high-performance, low-emission automobiles and stricter government norms and regulations about vehicle emissions are expected to drive the market for electric vehicles in the coming years. Moreover, the cost of an electric car is higher than that of an internal combustion engine-powered vehicle; therefore, end users are expected to subscribe as a cost-effective alternative to purchasing a new electric vehicle. Consequently, the demand for electric vehicles will expand, expanding the global car subscription market.

On the Basis of End-Use

Based on end-use, the segmentation of the global market includes private and corporate.

The corporate end-user segment is anticipated to project a CAGR of 23.2% and reach USD 10,200 by 2030. The corporate segment consists of automobile subscription services that cater exclusively to corporate or business activities, including daily commutes to the office, business tours, and marketing-related company activities. Corporate car subscription services employ all corporate activities and business processes to provide an effective mobility solution for a shorter term than two years. Most end-user firms have recently chosen subscription services to decrease risk and capital expenditures. In addition, market participants offer special car subscription services for corporations.

The private end-use segment is expected to grow faster with a CAGR of 24.1% and reach USD 9,718 million by 2030. The private section includes car subscription services designed specifically for personal activities, such as recreation, commuting, and touring. In recent years, there has been a trend in customer sentiment away from direct automobile purchases and toward leasing or subscription. Additionally, most consumers prefer to replace their vehicle every two years. In the upcoming years, consumers are anticipated to opt for car subscriptions due to the rise of leisure activities and the decline of consumer confidence in vehicle purchasing. Throughout the forecast period, demand for the private segment is anticipated to be driven by the shifting consumer outlook.

On the Basis of Subscription Period

Based on the subscription period, the segmentation includes 1 to 6 months, 6 to 12 months, and more than 12 months.

The 6 to 12 months subscription period is expected to hold the massive share of USD 13,389 million, growing at the fastest CAGR of 24.5% during the forecast period. For 6–12 months, the global market is expected to keep its large share in the global market. The average length of a car subscription in recent years has been about 12 months, and most market players offer attractive deals in this time range. Additionally, it is anticipated that the option to change several car models throughout a subscription will contribute to car subscription market expansion. Due to a shift in consumer mood toward mobility options and cost-effective alternatives to outright vehicle ownership, the 6 to 12 months category is anticipated to have lucrative market growth.

 

Regional Analysis

The regional segmentation of the global car subscription market includes North America, Europe, Asia-Pacific, and LAMEA.

Is Europe And North America Likely to Dominate the Global Car Subscription Market?

Car Subscription Market Regional Analysis

Regional Growth Insights Request Sample Pages

North America is expected to generate a share of USD 6,799 million with a CAGR of 24.4% during the forecast period. The primary growth drivers of the North American car subscription market are the rising need for intelligent mobility and user concern for the environment. It is anticipated that investments in burgeoning innovative city regions, innovations in fleet management across all forms of transportation, and a shifting attitude toward shared mobility would present attractive opportunities for the automobile subscription market. The region's growth is attributable to increased demand for more efficient urban mobility solutions, technological advancements, and vehicle and driver safety concerns. The leading market participants are implementing various techniques to bolster their market presence. They are also continuously involved in product development to meet the evolving needs of the end-user and achieve a competitive edge.

Europe will command the regional market with a share of USD 7,113 million and a CAGR of 22% by 2030. Due to car subscription services and the outlook for shared mobility, the Europe car subscription market is predicted to hold the most outstanding share and increase significantly over the forecast period. The market for car subscriptions bridges the gap between new on-demand ride-hailing services and traditional contracts or long-term leasing. In addition, market actors in the European market for car subscriptions create digitally sophisticated service platforms to capitalize on long-term business potential. In addition, Europe is a highly established market for automobile subscriptions, having the largest market share globally. In addition, to capitalize on European business opportunities, several companies are entering the market directly or in conjunction with domestic companies.

Asia-Pacific is expected to grow with the highest CAGR of 27.4% during the forecast period. The Asia-Pacific car subscription market is primarily driven by the increased acceptance of intelligent mobility solutions, the expanding subscription economy, and the growing adoption of cars as a service. India, China, and other Asia-Pacific nations are the primary growth drivers in the area due to a growing preference for shared mobility, a shifting transportation mindset, and rising urbanization. A car subscription is a relatively new mobility idea in Asia-Pacific, and its lack of customer awareness hinders the market growth. As a result of the shifting mobility picture in the Asia Pacific and consumers' changing attitudes toward automobile ownership and car ownership costs, the area is predicted to experience skyrocketing growth. For the last three to four years, market players in Asia-Pacific have been implementing the car subscription concept, which is now embraced mainly by end-users.

 

Players of the Market

  • Daimler AG
  • Drover Limited
  • Facedrive Inc.
  • Fair Financial Corp.
  • OpenRoad Auto Group
  • Porsche AG
  • Prime mover Mobility Technologies Pvt Ltd.
  • The Hertz Corporation
  • Toyota Motor Corporation
  • Volvo Car Corporation

 

Recent Developments

  • In 2022, Facedrive Inc. announced its plans for a corporate name change to "Steer Technologies Inc."
  • In 2022, Porsche AG presented the first edition based on its electric sports car named the Porche Taycan GTS Hockenheimring edition.

 

Global Car Subscription Market: Segmentation

By Service Provider 

  • OEM/Captives 
  • Independent/Third Party Service Providers

By Vehicle Type 

  • IC Powered Vehicle 
  • Electric Vehicle

By End-Use 

  • Private 
  • Corporate

By Subscription Period 

  • 1 To 6 Months
  • 6 To 12 Months
  • More Than 12 Months

By Region 

  • North America
  • Europe
  • Asia-Pacific
  • LAMEA
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