The car subscription market size was valued at USD 954.6 million in 2021. It is projected to reach USD 20234.14 million by 2031, growing at a CAGR of 32.4% during the forecast period (2023-2031).
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. 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.
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.
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.
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.
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 33.9% 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 29.2% 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 31.5% 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 28.6% during the forecast period.
Europe stands at the second place globally and is anticipated to grow at a CAGR of 32.4% during the forecast period. Due to car subscription services and the outlook for shared mobility, the European car subscription market is projected to grow significantly. This market fills the gap between new on-demand ride-hailing services and traditional contracts or long-term leasing. In addition, industry participants in the European market for car subscriptions develop digitally advanced service platforms to leverage the market's long-term economic potential. In addition, Europe has the most significant market share for vehicle subscriptions worldwide and is a well-established market. Several enterprises are entering the market independently or in partnership with domestic firms to benefit from European business potential.
Due to the general consumer goods sector trend toward subscription services and the corresponding desires of generations Y and Z, an additional four million car subscriptions could be accessible in the EU-5 alone by 2030. When active contracts and used automobile subscriptions are also considered, this results in a market worth multiple billion dollars. The projected success of this new approach is dependent on shifting consumer tastes. The demand for flexible, usage-based models has replaced the desire for long-term contracts, and the need for mobility has replaced the desire to purchase a car.
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