Subscriptions Power the New ‘Mobility Market’
Subscription commerce continues to evolve. Long ago, subscriptions centered on newspapers, magazines, and for teenagers, the Columbia Record Club. With the dawning of the internet age, subscriptions took over new realms such cloud software, digital entertainment, and boxes of the month. As the subscription model continues to prove its appeal and its versatility, subscriptions enter new and unexpected realms.
For example: cars! Yes, cars have long been able to be leased, which was a kind of subscription. But now the subscription model is providing new, innovative ways to access a car without either leasing or buying it. In February, we blogged about Cadillac’s foray into the subscription model with its BOOK service. Using the service, subscribers can borrow a luxury vehicle for $1,500 per month, arranging for delivery and pick up of their vehicle on demand via a smartphone app. The program which launched in February was piloted in New York City in 2016 and is expected to expand to other cities over time.
Recurly’s CEO, Dan Burkhart, discussed the offering with PYMNTS.com, calling it, “a convenient and aspirational experience that also enables the brand to be accessible to consumers in an entirely new way.” He noted that because of the service, more people might be willing to consider high-ticket subscriptions like this so that they can take advantage of a luxury experience without the high cost of actual ownership. As the article further notes, “The program clearly speaks to the type of consumer who may want to have the convenience and availability to get in a luxury vehicle with the added bonus of a quick, pay-as-you-go option.”
And now, not to be left out of this new business opportunity, car dealerships are jumping in, with Flexdrive. As reported in Subscription Insider, Flexdrive is a subscription service and platform that allows car dealerships to offer subscriptions in addition to traditional buying and leasing. “Using the Flexdrive mobile app, consumers can subscribe to a car within minutes without having to worry about insurance, vehicle maintenance or roadside assistance. Subscribers can change vehicles at any time, based on availability.” The service gives consumers “a new way to satisfy their mobility needs while enabling dealers to get into the mobility market.” The service offers weekly and monthly payment options, and no down payment or credit check, providing new options for ‘low-commitment’ consumers.
Both services—Cadillac’s BOOK and Flexdrive—demonstrate how the car industry is using the subscription model to meet consumers’ changing desires and evolving needs. The subscription model allows for access rather than ownership, which may be what all kinds of consumers—whether luxury or budget-minded—increasingly prefer. The success of services such as Netflix and Spotify have shown that what consumers want is access to movies and music without having to buy and store DVDs or CDs.
Of course, in offering these services, not only do the carmakers and dealerships meet the needs of consumers, they also create new revenue streams for themselves that are not based on the sale of a new car.
A car is obviously much more expensive to own and difficult to store—so why shouldn’t there be a subscription option, providing access rather than ownership? And with the big three automakers in the U.S. reporting continued slow sales for this year, these subscription services may very well find traction among consumers.