Asia Pacific Car Subscription Market

Market Overview

The Asia Pacific car subscription market size has witnessed significant growth in the past and is expected to expand at a CAGR of 35.3% during the forecast period (2022-2030).

A car subscription is a service in which a consumer agrees to pay a recurring fee to access a fleet of automobiles. While others allow subscribers to transfer vehicles at any time, others incorporate insurance and maintenance costs in the monthly fee. Experts in the auto business argue that subscription services can replace outright automobile purchases and leases. The subscription service preserves car ownership in contrast to traditional vehicle ownership. On the other hand, car rentals necessitate the upfront purchase of a vehicle for a limited period or a single journey.

Additionally, the strong consumer demand for automobile leasing services and the expansion of government regulations to control vehicle emissions significantly impact the penetration of automotive subscription service providers. Population growth, rapid urbanization, and industrialization are anticipated to promote the growth of the car subscription market during the forecasted period.

Market Dynamics

Asia Pacific Car Subscription Market Drivers

Flexibility and Convenience of Car Subscription

A short-term lease of an automobile that doesn't charge the consumer for repairs or insurance is known as a car subscription. The service provider-consumer agreement also stipulates that a car subscription permits multiple automobile exchanges. As a hybrid alternative to automobile rental services and car leasing choices, vehicle subscription has grown in popularity recently. It has several advantages over these two services. Additionally, a car subscription allows you to choose and switch between different car models over time, which might be anywhere from one month to two years.

As a result, millennials are drawn to the adaptability of car subscriptions since they provide a short-term, more affordable option to car-as-a-service. The advantages of car subscriptions over leasing and rental services will likely increase demand for them shortly.

Asia Pacific Car Subscription Market Restraint

Inadequate Transportation Facilities

Some developing nations are having trouble putting together functional infrastructure. Auto subscription service providers may be unable to enter a market due to a lack of public transportation and infrastructure caused by adverse economic and fiscal policies. Increased government spending and programs to improve infrastructure are expected to help manufacturers overcome this limitation in the future.

Cost-efficiency of Leasing Model Over Subscription Schemes

One advantage of a car subscription is swapping between various automobiles and shorter-term servicing contracts. A subscription is more expensive in the long run than leasing or buying an automobile. Monthly billing cycles and mileage limitations are available for car memberships. An auto subscription costs more monthly than leasing or outright purchasing a car for over two years. Additionally, most service providers place a distance restriction on cars for a predetermined time; exceeding this restriction leads to additional costs for the end user. These monthly servicing fees and other charges are insignificant when leasing or purchasing a vehicle. The cost of the subscription model is anticipated to limit demand for car subscriptions in the upcoming years.

Asia Pacific Car Subscription Market Opportunities

Strategic Partnerships with Automobile Manufacturers

Automobile subscription customers choose reputable, vetted providers for their automobiles. Additionally, manufacturers are launching their segment for automotive subscription services and building a partner network to reach untapped markets. To create long-term business prospects and acquire a competitive edge, car subscription market participants must form a strategic alliance with providers of changing customer attitudes toward vehicle subscription when they embrace the service from a certain vehicle brand. Hyundai Motor India, for instance, declared the debut of a subscription model in six Indian cities in 2019 as part of the collaboration deal with Rev.

Regional Analysis

Asia Pacific is anticipated to grow at a CAGR of 35.3% over the projection period. The growing acceptance of intelligent mobility solutions, the expansion of the subscription economy, and the rising popularity of cars as a service primarily drive the Asia Pacific automobile subscription market. Due to a growing inclination for shared mobility, a shifting transportation attitude, and increased urbanization, India, China, and other Asia Pacific nations are the key growth drivers in the field. In Asia Pacific, car subscriptions are a relatively new mobility concept, and the need for more client awareness inhibits market expansion. As a result of the transforming mobility landscape in the Asia-Pacific region and customers' changing attitudes toward automotive ownership and car ownership expenses, the area is anticipated to witness a meteoric rise in population. Over the past three to four years, Asia Pacific market participants have been implementing the car subscription model, which is now primarily embraced by end-users.

The Delhi, India-based shared mobility business Revv has introduced a new program, SWITCH, that allows users to subscribe to a carefully curated fleet of automobiles monthly or yearly. Revv claims that this is the first multi-brand car subscription service in Asia. This is an effort to reconsider the century-old vehicle culture. Revv has expanded from its initial base in Delhi to encompass Mumbai, Chennai, Pune, Vishakhapatnam, and Jaipur due to a November 2016 Series A fundraising round headed by Edelweiss private equity. Tata Motors has also created a revolutionary electric vehicle subscription concept. (EV). The company provides its flagship EV, the Tata Nexon, at an all-inclusive set rental rate to make EVs more accessible to a fast-rising population of future environmentally conscious citizens. During the initial phase of the service's debut, it is being offered in five major cities: Delhi/NCR, Mumbai, Pune, Hyderabad, and Bengaluru, in collaboration with Orix Auto Infrastructure Services Limited, India's premier leasing company.

Segmental Analysis

 By Subscription Type, The Asia Pacific car subscription market is segmented, Subscription Period, Service Provider, and End-Use.

The car subscription market is divided based on the subscription type into single-brand and multi-brand segments.

The multi-brand market holds a major segment share. It is expected to grow at a robust CAGR of 36.7% because it allows subscribers to switch between brands, increasing flexibility and convenience. Some consumers strongly prefer staying loyal to a single brand because they are satisfied with the consistency of that brand's products and services.

The car subscription market is segmented based on the subscription period into 1 to 6 months, 6 to 12 months, and more than 12 months.

The 1 to 6 months subscription period holds a major share of the segment and is anticipated to increase at a respectable CAGR of 35.7% during the predicted period. The demand for subscriptions of 1 to 6 months is driven by the employer category, who often rent the automobile during their vacations; this segment also maintains a sizeable portion of the market. Long-term subscribers leased vehicles for six months to a year or more.

The car subscription market is segmented based on the service provider into OEM/captives, mobility providers, and technology businesses.

Independent/third-party service providers hold a major market share with a CAGR of 33.1% during the forecast period. OEMs can use existing consumer segments and loyal brand advocates excited by getting the newest vehicle model through this subscription service, but they are limited in several ways. To accelerate OEM adoption, dealerships have been established to use the dealer channel’s benefits fully. Dealerships benefit from this circumstance because they can offer their inventory and draw on their expertise in selling pre-owned, traded-in, and leased-back vehicles.

The market for car subscriptions is divided into two categories based on end-users: private and corporate.

The corporate segment holds a major market share and is anticipated to grow at a CAGR of 32.5% during the forecast period. The corporate section comprises car subscription services only intended for corporate or business purposes, such as daily trips to the office, business trips, and company-related marketing activities. For some time less than two years, corporate automobile subscription services used all company operations and business procedures to deliver a successful mobility solution. Most end-user companies have recently opted for subscription services to lower risk and capital costs. Market participants also provide unique car subscription services for businesses.

Recent Developments

• Jan 2023- Toyota Car Corporation announced that Chairman Takeshi Uchiyamada would resign his post, President Akio Toyoda would be appointed chairman, and Operating Officer Koji Sato would be appointed president, effective April 1, 2023.