Latin America Car Subscription Market

Market Overview

The Latin America car subscription market size was valued at USD 84 million in 2021. It is projected to reach USD 1,094 million by 2030, growing at a CAGR of 33.9% 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. 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

Latin America 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.

Latin America 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.

Latin America 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.

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 35.4% 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 34.3% 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 31.9% 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 31.3% during the forecast period.

Regional Analysis

Latin America is a significant market for car subscriptions. The market for car subscriptions in Brazil is expanding steadily due to the entry of numerous market participants offering various services. Kovi, an automobile subscription network founded in Brazil, promises to increase drivers' access to car ownership and rentals across Latin America. Additionally, the company offers users maintenance and insurance services. According to reports, the company's user base grew by 70% in 2020, with 11,000 users in Brazil and Mexico. Currently, the corporation operates its fleet by renting 12,000 automobiles from manufacturers such as Toyota and Volkswagen. Kovi believes that their ARR (annual recurring revenue) is approximately USD 45 Million, with a month-over-month growth rate of 15%. It has 700 employees and operates in Mexico and Brazil at present. In Series B fundraising, USD 104 million was raised. Valor Capital Group, Prosus Ventures, Quona Capital, Broadhaven Capital Partners, and Norte Ventures participated in the round. Additionally, the financing will help new market entrants build their teams and investigate expansion opportunities in Latin America.