Rising Consumer Demand for Car Subscriptions in the UK
2019-01-02 10:30 Wednesday
The rapidly growing car subscription services in UK have won many families' preference, and the reason is easy to understand.
In the UK, the university enrollment rate is higher than it has ever been, resulting in an average debt of £50,000 per household. Higher urbanization in UK has led to rising costs for car ownership and parking. Most significantly, the heavy burden of car taxes has made monthly subscriptions more financial attractive.
Generally speaking, clients under a car subscription can drive cars on no-strings-attached contracts, either for a short, fixed duration (perhaps two or three months) or a cancellable term, without any penalty. The contracts include full maintenance and servicing, insurance, rapid delivery, as well as other add-ons. Clients are allowed to return the cars, thereby ending the subscription contract, at any time.
A recent market research report reveals that nearly 24% of British consumers will opt to subscribe for a car within the next year rather than purchase a new car with a substantial down payment. The data indicates that millennial are the groups most interested in this option, and, as the researchers noted, it is "pushing leasing companies to rethink their business model if they don't want a phasing out".
More and more lessors are offering personal contract hire and personal contract purchase models to meet consumer demand. This is to ensure that, when an employee decides to opt out of their company car, the opportunity to supply them with a car will not disappear.
Many companies in the UK have entered the car subscription market. LeasePlan, a car leasing and fleet management company, recently unveiled a monthly car subscription service of its own.
CEO Tex Gunning said: "Increasingly, our customers – whether they are corporate, SMEs or private individuals – would prefer a 'car subscription service' with no strings attached in terms of car type or duration. They just want 'any car, anytime, anywhere'."
Volvo, Wagonex and Drover also offer car subscription services in the UK, whereas in the U.S. the market is currently dominated by carmakers, including BMW, Audi, Cadillac, and Porsche.