North America Car Subscription Market

Market Overview

The North America car subscription market 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 where a customer pays a set cost regularly to use one or more cars. Some car subscriptions include insurance and maintenance as part of the monthly payment, while others let the subscriber switch cars anytime. A vehicle subscription is a substitute for purchasing or leasing a car, claim industry analysts. In contrast to owning a vehicle, the subscription service maintains vehicle ownership. In contrast, car rental calls for the purchase of vehicles for certain occasions or trips.

The flexibility and convenience of car subscriptions drive the North America Car Subscription market. The leasing model's cost efficiency over subscription schemes is a restraint for the North American car subscription market; on the other hand, the ease of taking a subscription app is an opportunity for the North American car subscription market.

Market Dynamics

North America Car Subscription Market Drivers

Convenience and Affordability

Subscription services for automobiles are becoming popular due to their convenience and affordability. The subscription model is attractive to consumers because it allows them to acquire vehicles at manageable monthly costs, which include insurance, maintenance, and roadside support. In addition, players in the market are working to improve the existing technology for better booking services and to make it available on various devices through a user-friendly platform interface.

In North America, several automakers and other businesses offer car subscription services.

North America 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

The opportunity to switch between different vehicles and shorter-term maintenance contracts is a perk of a car subscription. Subscriptions are more expensive than car leases or outright purchases. Car memberships have monthly billing cycles and mileage limitations. The monthly cost of an auto subscription is higher than leasing or buying an automobile for longer than two years. In addition, most service providers impose a daily mileage cap on vehicles; going over this limit results in extra charges for the customer. These monthly service fees and other charges are negligible whether you lease or buy a car. Demand for car subscriptions is expected to decline in the coming years due to the high expense of the subscription model.

North America Car Subscription Market Opportunities

Ease of Taking a Subscription

In North America, purchasing a vehicle through a subscription program is simple. One monthly payment handles the vehicle's purchase, maintenance, registration, and insurance costs. The gas or electricity needed to power the car is the only expense for the subscriber. They can frequently subscribe to cars for shorter periods and lease cars. Comparatively easier and less expensive than ending a car lease is canceling a subscription.

Regional Analysis

North America holds the major global market share and is expected to grow at a CAGR of 33.5% during the forecast period. The increasing demand for intelligent mobility and the environmental consciousness of consumers primarily drive the North American market. Investments in booming creative urban locations, improvements in fleet management across all modes of transportation, and a shift in attitude toward shared mobility would create lucrative potential for the automotive subscription business. Increased demand for more efficient urban mobility solutions, technology improvements, and vehicle and driver safety concerns have contributed to the region's rise. The leading market participants are utilizing various strategies to strengthen their market position. In addition, they are continuously involved in product development to fulfill the increasing needs of the end customer and maintain a competitive advantage.

Hertz Global operates the vehicle rental brands Thrifty, Dollar, Firefly, and Hertz. In addition, it offers the car-sharing membership service Hertz 24/7. Globally, the corporation has over 10,200 franchisees and company-owned vehicle rental outlets. It offers automobiles via Rent2Buy and Hertz Car Sales. The corporation provides services in 150 countries, headquartered in Estero, Florida, United States.

The U.S.

In recent years, the US car subscription business has seen tremendous development in both popularity and size. With car subscription services, clients can access a choice of vehicles without making a long-term commitment to a flexible alternative to traditional car ownership or leasing. Customers who value ease and flexibility would like this model because it allows them to choose between various car brands and models in response to shifting demands or preferences.

Significant players in the U.S. automotive subscription business have arisen, including automakers, rental car agencies, and technological startups. These businesses provide customers with comprehensive and hassle-free subscription programs that frequently include car maintenance, insurance, and roadside assistance.

Canada

In recent years, the market for car subscriptions in Canada has grown significantly in appeal and size. With car subscription services, people can access vehicles on a subscription basis rather than committing to lengthy loans or leases, providing a flexible and practical alternative to traditional car ownership.

The freedom that car subscriptions offer is one of its main benefits. Depending on their requirements and tastes, subscribers can select from a selection of vehicles and switch to a new vehicle whenever they like. People who love driving different models or who have shifting transportation demands will particularly like this flexibility.

Segmental Analysis

The North American 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% 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 33.8% 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 31.5% 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 30.9% 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

• Feb 2023- Volvo Car Corporation announced it would invest USD 1.2 billion in its Torslanda plant in Sweden to produce its next generation of electric vehicles.