Car subscribing is the new buying: automobile ownership in the age of millennials
It’s official. The world has subscription mania. Whether it be Amazon Prime, Netflix, Spotify, or the countless other services out there, it certainly seems like subscriptions are capturing the hearts, minds, and wallets of the consumer with ever-increasing vigour. That development seems poised to continue, given the convenience, value, and choice offered.
In India, it’s no different. Let it be Gaana for music, CureFit for health and wellness, or Zomato for food. Sure, subscription took some time to get going, but now the subscription train is moving forward and unlikely to derail. Indian companies are making a beeline to offer anything and everything as a subscription service. For many young startups, they view subscriptions as the holy grail that has the potential to unlock a wonderful world of venture funding. It’s undeniable that there’s a remarkable allure about locking in a customer for a defined time period. Recurring revenue streams these days are more coveted than front row seats to the World Cup.
All that said, subscriptions have typically been associated with select products like content or even apparel, where the user has a significant choice with jaw-droppingly low, all-you-can-eat pricing. While this works handsomely in this case, how does the mighty subscription fare when stacked up against something more conventional like an automobile?
The car has long been a powerful symbol of wealth and status in Indian society. Own a car and you’ve made it in life (or so the saying typically went!). First own a car, then a house, and from there, your life is fully “sorted”. Car ownership was just another step on the ladder of ever-expanding materialism. While this formulaic version of the “successful life” used to be the norm, there’s a clear sign that this trend is changing sharply.
2017 was the first year this millennium where new car registrations actually dropped in Mumbai and Bangalore! Delhi was only marginally better, and their new car registrations were merely flat from 2016. Clearly, something is at play here. While there’s no clear-cut answer, the move away from car ownership belies a broader movement toward access and experiences as opposed to more traditional values like security and predictability.
In a world where interest for car ownership is clearly waning, what’s an OEM, dealer, or mobility company to do? The answer may just lie in the scintillatingly simple subscription model.
While a music subscription could be one of the most straightforward models out there, it’s not immediately totally intuitive when one thinks about car subscription. As a primer, a car subscription takes out all the hassles of owning a vehicle, right from the bomb upfront payment all the way to the ongoing costs and obligations associated with ownership. A typical car purchase requires a Rs two lakh-plus upfront payment just before you can bring the car on road. In a subscription, that number is zero! Undoubtedly, quite a stark difference.
In the purchase scenario, once the hefty downpayment is completed, the individual then embarks on the caretaker model that categorizes car ownership. Alongside the monthly EMI payments, the individual must cover service and maintenance cost out-of-pocket (don’t forget insurance renewal). Moreover, the time burden of physically taking care of these vehicle hygiene points is incredibly taxing. For most millennials at least, this prodigious time commitment is simply not in the cards. Remember, they have experiences to enjoy, and simply obtaining vehicle access is all that really matters.
In a car subscription model, the vehicle’s service and maintenance are typically included in the monthly fee as are the insurance and road side assistance support (in event of a breakdown). Perhaps more importantly, the hassles of all the calling, negotiating, debating, etc. are handled fully by the company. This leaves remarkable peace-of-mind when it comes to accessing a personal car.
One of the most lauded benefits of the car subscription model is that it offers up tremendous flexibility for subscribers in terms of usage. Consumers can get varying subscription tenors where a subscriber can opt out at short notice in the event their requirement changes. This lack of long-term commitment is tremendously appealing to millennials since it aligns with their core belief of freedom and flexibility. Additional perks like Zoomcar’s “list back” feature allow the subscriber to dramatically reduce the effective monthly subscription rate even further.
Ultimately, the car subscription model offers superior value when compared to car ownership on affordability, flexibility, and convenience. With this powerful triple play in the consumer’s favour, the question beckons – why buy when you can subscribe?
Greg Moran is the CEO and Co-founder of Zoomcar.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)