Subscription or flat rate models are flexible alternatives which have been used for many years now, especially in relation to large data bases which are now available, for instance, to Netflix or Spotify customers. Hence, it is worth to explore more flexible usage models, not only in the media (e.g., streaming or music), but in the automotive industry as well. Indeed, especially young drivers or people living in the city, seem to prefer having a car ready to use for a specific time period when needed instead of owning the vehicle. Thus, compared to typical options drivers have, i.e. buying or leasing a vehicle, subscription or flat rate models offer drivers a way to book a vehicle in a flexible way which can be canceled at any point.
At first glance, subscription models seem similar to leasing or carsharing concepts. However, compared to leasing, users sign up for a rather short term period and may change the vehicle within the membership term. Considering the very short term usage (typically hours or couple of days) in carsharing, subscription models close the gap between leasing and carsharing. Focusing on a digital user journey throughout the subscription, monthly expenses and the general administration of one’s membership are conveniently provided in an app or via a website.
Research overview
Research was carried out in cooperation with an automotive producer to investigate what a subscription model could look like based on the customers’ expectations and wishes. First, interviews with current customers were conducted to define user groups and their needs. Most interviewees mentioned the importance of individualization. Further, it became apparent, that potential customers should be considered as a user group throughout the research process, besides current customers.
Subsequently, a quantitative survey with 242 participants was completed, whereby about half of the respondents were current and the other half potential customers, who were also mainly students of the HFT Stuttgart. Most participants (63 %) were female and 80 % have a car available for private usage. Focus of the survey were aspects regarding the membership design and administration as well as usage and payment intention.
Main findings of survey
- Respondents wish for a broad spectrum of different models and types of vehicles, preferably in modern condition and with gasoline as vehicle powering, although alternatives, such as hybrid, or electric should be offered as well.
- Expected car features include a GPS system, heated seats, sound system, assistance systems and cruise control, while individualized components related to, e.g., a panorama roof, heated steering wheel, innovative lighting system, or automatic transmission.
- Membership terms should vary, ranging from six to 24 months, as older participants wished for a longer and younger respondents for shorter terms.
- It should be possible to change the vehicle during a membership term (for a fee).
- The membership should include: insurance, maintenance, tire changes, necessary repairs to the vehicle, a replacement vehicle in case of necessary repairs and a personal contact person.
- Processing the membership through a dealer was perceived as user-friendly.
- The usage intention is especially high for (potential) customers who have leased a vehicle before, are more risk-adverse and show more interests towards innovations.
- The payment intention was based on the multitude of features, available kilometers, available standard functions, suitable subscription term, and the option to change vehicles.
- However, the level of individualization offered through the membership did not have a significant effect on the usage and payment intention.
Conclusion
The research results imply that (potential) automotive customers are indeed interested in car subscription or flat rate models. The factor flexibility stuck out throughout the study findings. Hence, based on the available components of the car and other functions, different packages could be offered to (potential) customers which reflect a certain level of individualization, meaning more basic up to premium features as well as specific kilometer limits. Furthermore, (potential) customers prefer to be able to change between packages, which again reflects the importance of flexibility throughout subscription and flat rate models.
