Asia-Pacific Car Subscription Market

Market Overview

The car subscription market size was valued at USD 470 million in 2021. It is projected to reach USD 6,687 million by 2030, growing at a CAGR of 35.3% during the forecast period (2022-2030).

A car subscription is a service where a client pays a regular fee for using one or more automobiles. Some automobile subscriptions include insurance and maintenance in the subscription fee, while others permit the subscriber to exchange automobiles during the subscription period. According to industry analysts, an automobile subscription is an alternative to buying or leasing a car. The subscription service keeps vehicle ownership, distinguishing it from owning a vehicle. Contrarily, automobile rental necessitates the acquisition of vehicles for specific dates or journeys.

In addition, the increase in the penetration of automotive subscription service providers due to consumers' strong demand for car leasing services and the increase in government rules to regulate vehicle emissions substantially impact the growth of the Car Subscription industry. During the projected period, the rise in population, fast urbanization, and industrialization are expected to support the development of the car subscription market.

Highlights

• The multi-brand market dominates the subscription type segment.
• The 1 to 6 months subscription period dominates the market.
• Independent/third-party service providers dominate the service provider segment.
• The corporate segment dominates the market by end-use.

Market Dynamics

Asia-Pacific Car Subscription Market Drivers:

Flexibility and Convenience of Car Subscription

A car subscription is a short-term contract to own a vehicle that does not charge the customer for maintenance or insurance. Moreover, according to the service provider-consumer contract, a car subscription allows for several car exchanges. In recent years, vehicle subscription has gained popularity as a hybrid alternative to car rental services and car leasing options, with several advantages over these two services. Moreover, a car subscription allows for flexibility in picking and switching automobile models and a periodical duration ranging from one month to two years.

Consequently, millennials are attracted to the flexibility of automobile subscriptions, which offer a cost-effective alternative to car-as-a-service in the short term. The benefits of car subscriptions over car leasing and car rental services would shortly enhance the demand for car subscriptions.

Asia-Pacific Car Subscription Market Restraint:

Cost-efficiency of Leasing Model Over Subscription Schemes

Among the benefits of a car subscription are switching between many vehicles and shorter-term service agreements. Long-term, a subscription is more expensive than leasing or purchasing a car. Options for automobile subscriptions include monthly billing cycles and mileage restrictions. An automobile subscription has a higher monthly premium than leasing or buying a vehicle for over two years. In addition, most service providers impose a mileage limit on cars for a specified period; violating this limit results in additional expenses for the end user. These monthly servicing fees and other costs are negligible when leasing or owning a vehicle. In the coming years, the high price of the subscription model will likely hinder the demand for car subscriptions.

Asia-Pacific Car Subscription Market Opportunities:

Strategic Partnerships with Automobile Manufacturers

End-users of automobile subscriptions select vehicles from certified providers that are dependable. In addition, automakers are starting their automobile subscription service vertical and establishing a partner network to serve uncharted territories. Changing consumer attitudes toward vehicle subscription as they adopt the service from a particular vehicle brand provider and market participants of car subscription must engage in a strategic partnership to achieve long-term business opportunities and gain a competitive advantage in the market. Under the collaboration agreement with Rev, Hyundai Motor India, for example, announced the launch of a subscription model in six Indian cities in 2019.

Segmental Analysis

The car subscription market is segmented by Subscription Type, 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 dominates the segment is expected to grow at a robust CAGR of 36.7% because it allows subscribers to switch between brands, increasing flexibility and convenience.

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 dominates the segment and is anticipated to increase at a respectable CAGR of 35.7% during the predicted period.

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

Independent/third-party service providers are anticipated to rule the market with a CAGR of 33.1% during the forecast period.

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

The corporate segment dominates the market and is anticipated to grow at a CAGR of 32.5% during the forecast period.

Regional Analysis

Asia-Pacific is anticipated to grow at a CAGR 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.