Germany Car Subscription Market Size, Share & Trends Analysis Report By Service Provider (OEM/Captives, Independent/Third Party Service Providers), By Vehicle Type (IC Powered Vehicle, Electric Vehicle, Luxury Car, Executive Car, Economy Car), By Subscription Period (1 To 6 Months, 6 To 12 Months, More Than 12 Months), By End-Use (Private, Corporate, Travel & Tourism, Others) and Forecasts, 2024-2032

Market Overview

The Germany car subscription market size has witnessed significant growth in the past and is expected to expand at a CAGR of 33.5% 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.

Germany is recognized as an important automotive industry in Europe because of its numerous significant manufacturing companies, including Audi, Volkswagen, Mercedes-Benz, BMW, and others. The Federal Republic of Germany's economic development agency, German Trade and Invest (GTAI) reports that in 2017, about 40 OEM auto manufacturing facilities produced about 16,4 million automobiles.

Market Dynamics

Germany 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 for a time that might be anywhere between one month and 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 memberships over car leasing and car rental services will soon increase demand for car memberships.

Germany car subscription market restraint

Cost-efficiency of the leasing model

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 high cost of the subscription model is projected to reduce demand for car subscriptions in the upcoming years.

Germany car subscription market opportunities

High demand for economy car

It is predicted that the third-party service provider subsegment of the automobile subscription industry will expand at a rate of 39% between 2018 and 2032. These companies' car subscription services feature reasonably priced vehicles. The market demand is partly met by the rising popularity of economy cars, which are favored for their improved fuel efficiency, low cost, and dependability. Promoting strategic alliances by third-party service providers to increase their service footprint is also expected to contribute to the industry's momentum. For instance, the Car Subscription Software from Wagonex Technologies streamlines launching a subscription business.

Regional Analysis

Europe stands in second place globally and is anticipated to grow at a CAGR of 32.9% 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.

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 holds the major share of the market. It is expected to grow at a robust CAGR of 35.4% 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 the major share of the market and is anticipated to increase at a respectable CAGR of 34.3% 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 are anticipated to rule the market with a CAGR of 31.8% 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 the major share of the market and is anticipated to grow at a CAGR of 31.1% during the forecast period. As automobile subscription rates increase in developed and developing economies, the private segment is expected to expand swiftly in the coming years. Moreover, newer generations prefer to lease automobiles over purchasing them outright. The category of corporate end-users is anticipated to increase consistently. In the corporate sector, car ownership is more prevalent than subscription.

Recent Developments

• Mar 2023- Fair Financial Corp. reported its financial results for the fourth quarter and full year of 2022. The company reported net income of $100 million for the fourth quarter and $300 million for the full year.