Vehicle Subscription Market Size, Share & COVID-19 Impact Analysis, By Service Provider (OEMs/Captives and Independent Third Party Providers), By Subscription Type (Single Brand Subscription and Multi Brand Subscription), By Subscription Period (1 to 6 Months, 6 to 12 Months, and More than 12 Months), By Vehicle Type (IC Engine and Electric Vehicles), and Regional Forecasts, 2022-2029

The global vehicle subscription market size was valued at USD 2.11 billion in 2021. The market is projected to grow from USD 3.38 billion in 2022 to USD 172.47 billion by 2029, exhibiting a CAGR of 75.3% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with vehicle subscriptions experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a growth of 58.5% in 2020 as compared to 2019.

Vehicle subscription is a service in which the customer pays a recurring monthly fee or subscription charge to use one or more cars. Usually, in the vehicle subscription model, the subscription charges cover insurance, registration, maintenance, and repairs of the subscribed vehicles. Third party mobility service providers and automakers mainly offer car subscription services.

Most third party mobility service providers allow subscribers to switch between vehicles and brands during the subscription period to offer more flexibility to the customers. Therefore, a car subscription is one of the major substitutes for car leasing, buying, or renting. Due to the affordability and easy vehicle access, the car subscription market is proliferating.

COVID-19 IMPACT 

Decreased Use of Shared Mobility & Public Transport During the Pandemic Fueled Market Growth

During the COVID-19 pandemic, the overall automotive industry witnessed a drop in revenue due to declined automotive sales & production, disrupted supply chain, and consumers' focus on reducing the expenses of unnecessary purchases. However, the adoption of vehicle subscription services increased during the pandemic. The rising number of health concerns among the populace, coupled with the declined use of shared mobility and mass transport as a precaution against the virus, has accelerated the vehicle subscription market growth worldwide. Vehicle subscription has also gained significant attention in mainstream media and further fueled consumer popularity and interest.

LATEST TRENDS

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Rising Demand for Flexible Subscription Models Among Consumers to Drive Market Growth

The ongoing trend for the adoption of flexible mobility solutions is likely to emerge intact and is expected to thrive in the long term. The steadily declining importance of car ownership among millennials is one of the major reasons behind the rising adoption of vehicle subscription. Moreover, the increasing popularity of mobility as a service is driving the populace to adopt flexible mobility services that are substitutes for vehicle ownership.

Populace sees conventional leasing contracts and car financing as a burden rather than a benefit. The low availability of mobility services such as ride-hailing and ride-sharing at peak times and the high cost of long trips are some factors restricting these services' flexibility. However, a car subscription model is a highly flexible service model available in the market.

Vehicle subscription services are available for a short period, from a month to a year or more. The subscription charges cover insurance, maintenance, repairs, registration, and other expenses. These services also offer the flexibility to switch between cars and brands as per consumer convenience and subscription plans. Therefore rising demand for flexible mobility solutions across developed and emerging economies is likely to boost market growth during the forecast period.

DRIVING FACTORS

Growing Demand for Short-term Mobility Solutions with Minimal Commitment to Drive the Market Growth

Car subscriptions have been gaining popularity recently due to their cost-effectiveness and easy vehicle access. Car subscription provides convenience, flexibility, and no long-term commitment. Hence, it attracts a diverse consumer base, which is anticipated to accelerate market growth over the forecast period. Car subscription companies offer various offers with affordable fees to attract new customers while retaining the old ones. For instance, in May 2019, Enterprise Holdings introduced a monthly subscription service for USD 1,499 per month.

Rising Cost of Vehicle Ownership & Shifting Consumer Preference from Ownership to Usership

The rapid rise in the cost of car ownership is compelling people to shift to subscription services. The average cost to own and operate a new car stood at USD 10,738 in 2022, a rise of 11% since last year, as per the American Automobile Association. Factors such as rising fuel prices, depreciation, shortage of microchips, and maintenance & insurance costs have contributed to high operating expenses. Therefore, consumers are switching to subscription services as a substitute for vehicle ownership.

RESTRAINING FACTORS

Availability of Alternatives Such as Vehicle Leasing and Sharing to Hamper Market Growth

The availability of other mobility services, including rental, vehicle leasing, and sharing services, is anticipated to restrict the market growth. Leasing a car is a more economical short-term option than subscription plans as it comes with affordable monthly plans than subscription plans. Limited monthly mileage is another drawback in the subscription program that might even rule out the possibility of long daily commutes.

SEGMENTATION

By Vehicle Type Analysis

Low Subscription Prices of IC Engine Vehicles to Drive Segment Growth

Based on vehicle type, the market is segmented into IC engine and electric vehicles.

The IC engine segment accounted for the highest market share in 2021, owing to its low subscription prices compared to electric vehicles. The positive market outlook can be attributed to the higher availability of refueling stations for conventional fuels such as gasoline or diesel. Moreover, the availability of IC engine vehicles in low, medium, and premium ranges is driving the market growth.

The growing popularity of EVs will create a demand for EV subscription services. For instance, EV sales in the first half of 2022 jumped to 196,788, 5.6% of the overall market. Toyota, GM, Stellantis, Honda, Nissan, and more are witnessing higher EV sales due to higher gas prices continuing to increase EVs' popularity.

By Subscription Type Analysis

Greater Flexibility of Multi Brand Subscriptions to Drive Segment Growth

Based on subscription type, the market is segmented into single brand subscription and multi brand subscription.

Multi brand subscription segment held the largest market share in 2021 and is likely to retain its position throughout the forecast period. Multiple brand subscription offers to switch between multiple brands, as it provides greater flexibility and convenience to the customer. Hence, an inclining preference of the populace toward multi-brand car subscription services is anticipated to drive segment growth.

Users can change to different models under the same brand in a single brand subscription. Several OEMs, such as Porsche, Mercedes-Benz (formerly Daimler AG), and Volvo, are providing car subscription services to their customers. Therefore, the increasing popularity of subscription services offered by well-known brands such as Hyundai Motor, Mercedes-Benz, Porsche, and others is likely to accelerate the market growth in the coming years.

By Subscription Period Analysis

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Growing Popularity of Attractive Deals to Propel Segment Growth

Based on subscription period, the market is segmented into 1 to 6 months, 6 to 12 months, and more than 12 months.

The 6 to 12 months segment held the largest market share in 2021 and is likely to continue its dominance over the forecast period. The average duration of a car subscription in recent years has been about 12 months, and most market players offer attractive deals in this time range. A shift in consumer preference toward mobility options and cost-effective alternatives to outright vehicle ownership is anticipated to drive segment growth.

The 1 to 6 months segment is expected to register the fastest growth rate during the forecast period. Increasing demand for short-term car subscriptions with minimal commitment to better flexibility is anticipated to drive market growth. Moreover, the segment of more than 12 months is also expected to witness a considerable growth rate due to the inclining preference of certain age groups toward long-term subscription services. For instance, some corporate users prefer to subscribe to long-term mobility services to avoid discontinuation.

By Service Provider Analysis

Wide Offerings of Independent Third Party Providers to Propel Segment Growth

Based on service provider, the market is segmented into OEM/captives and independent third party providers.

The independent third party providers segment dominated the market in 2021 and is likely to continue its dominance throughout the forecast period. The growing number of independent third-party providers or startups offering mostly multi-brand car subscriptions through their platforms is driving the segment growth. For instance, companies such as Cluno, Flexdrive, Turo, Fair, Carvolution, and Drove, among others, are offering multi-brand subscription services across various regions.

Even though startups and independent platforms represent the majority of subscription providers, a significant number of customers still prefer subscription contracts with OEMs offering vehicle subscription services. Additionally, as premium brands such as Mercedes and Porsche are providing their subscription services, consumers who cannot afford to purchase the luxury vehicles of these brands can opt for car subscriptions. Therefore, an increasing number of well-known automotive brands offering their subscription services are elevated to accelerate OEM/captives segment growth during the forecast period.

REGIONAL INSIGHTS

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Europe dominated the global vehicle subscription market share with a value of 0.91 billion in 2021 and is anticipated to continue its dominance in the coming years. The presence of several mobility service-providing startups and established automakers, such as Mercedes, BMW, and others, are driving the market growth. Additionally, Europe has a strong presence in the automotive sector; therefore, shifting the focus of the European automakers to mobility service-based models to diversify their business according to the interest of the new generation is anticipated to generate lucrative opportunities for the market in the region.

Asia Pacific is anticipated to witness the fastest growth rate during the forecast period. Rising awareness for subscription-based models and government focus on automotive electrification to fight climate change are some factors fueling the region's market growth. The high costs of electric vehicles are influencing the populace to adopt subscription-based electric mobility services. Moreover, the presence of a strong automotive sector coupled with the declining interest in car ownership among the younger generation is anticipated to boost the market growth over the forecast period.

North America held a significant market share in 2021. Increasing adoption of mobility services among the younger generation in the U.S. is driving market growth in the region. Additionally, rapid electrification and a strong network of EV charging stations are also influencing the major EV manufacturers, such as Tesla, to offer EV subscription services in the region.

The rest of the world, including Latin America and the Middle East & Africa also witnessed a significant growth rate during the forecast period. Currently, the penetration of car subscription services in these regions is nascent. However, as the cost of subscription services declines in these regions, the demand for car subscription services will witness a boost in the coming years.

KEY INDUSTRY PLAYERS

OEMs Partnerships with Third Party Subscription Providers to Drive the Competition

OEMs' focus on penetrating the car subscription market through a partnership with third-party subscription providers is driving the competition in the market. Moreover, these companies are also investing in geographical expansion to launch their vehicle as a service platform across emerging economies to cater to the increasing demand for mobility services.

With its Diverse Range of Vehicle Offerings, Sixt is One of the Leading Players in the Market 

Sixt is an international mobility service provider present in about 2,100 locations across 110 countries. The parent company of Sixt Group is Sixt SE, which is globally active in the business areas of car and luxury car rental, car sharing, ride-hailing, and subscription. To focus on its mobility services business, Sixt sold all its shares in Sixt Leasing SE in 2020.

LIST OF KEY COMPANIES PROFILED:

• Sixt (Germany)


• Avis Budget Group (U.S.)


• Lyft Inc. (U.S.)


• Arval BNP Paribas Group (France)


• ORIX (Japan)


• The Hertz Corporation (U.S.)


• AB Volvo (Sweden)


• LeasePlan (Netherlands)


• Mercedes-Benz (Germany)


• Carvolution (Switzerland)

KEY INDUSTRY DEVELOPMENTS:

In February 2022, Avis and FlxeClub joined forces to offer competitive car subscriptions in South Africa. The company aims to offer long-term, low-priced subscriptions on a flexible contract through FlexClub, an online car marketplace.

In March 2022, Arval launched its flexible vehicle subscription solution, Arval Adaptiv, for private customers. The subscription will allow its private customers to choose a specific model within a range of selected cars, both ICE and EVs, with flexibility in terms of duration.

In October 2022, Carvolution raised USD 16.12 million in Series D funding from Redalpine. With the investment, Carvolution aims to further expand its car subscription business. It also seeks to deploy a part of the funds to simplify buying and selling used cars by bringing them online for its customers.

In September 2021, Orix partnered with Volkswagen for a subscription-based car ownership model. Orix, in partnership with Volkswagen, will offer its customers on-road financing, insurance cover, periodic maintenance, and an option to return or upgrade the car at the convenience of the customer.

In October 2020, AB Volvo added flexibility to its subscription program. In this program, customers can upgrade or return a new subscription at any time after the first four months. The flexible subscription enhances the car subscription by including maintenance and insurance costs.

REPORT COVERAGE

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The vehicle subscription market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, service types, service periods, and vehicle types. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market in recent years.

Report Scope & Segmentation