Don't Buy a Car - Subscribe

The only thing worse than the car buying experience is the car servicing experience. I have a fanciful vision of what my car servicing experience ought to be like: I am Max Verstappen and my dealer service department is my pit crew. Needless to say, that's not how it works.

I had my annual BMW service checkup last week. I was notified regarding a needed oil change on multiple screens in my car - including a particularly stubborn notification upon starting the vehicle. The BMW mobile app, too, was pleading for my attention. I am sure if I visited the Web portal with my vehicle info, a notification would have been waiting. Of course, there were emails.

One of the reasons I have been driving BMW's for about 15 years is that the company, 15 years ago, was offering five "free" years of service with new cars when I bought mine. I was previously terrified of owning a BMW because of the fear of being unable to afford basic maintenance expenses.

Fifteen years and many BMW's into my BMW odyssey the company has trimmed the five-year service plan down to three years and may or may not cover the same extent of service items. Either way, I am aware of the hazards of ignoring service notifications - and BMW made those notifications impossible to ignore.

In essence, Cox Automotive's X-time was my "spotter" - letting me know it was time for a pitstop to change the oil. Of course, I knew what that meant. It meant my dealer - with the help of Dealer Tire - was going to take a good close look at my tires, alignment, suspension, and balance.

I dropped off my car. I took a ride home with the help of a courtesy driver from Lyft. I waited for the expected request to re-align and rotate my tires - not for free.

$349 later, and after a return trip to the dealer enabled by another courtesy Lyft driver, and I was on my way. But I couldn't help thinking that it didn't have to be this way.

By buying my car I have committed myself to servicing it. The obligation and the expense is mine - with BMW by my side to remind me when service is due.

It seems to me that if I subscribed to my car, the maintenance would be included and, therefore, not entirely my problem. That's a pretty compelling argument for a car subscription - from the consumer's point of view.

Further, if the consumer is "buying" mobililty from the dealer, maybe a better solution is a vehicle swap. What if customers had the option to drop off one vehicle - annually - for required service and maintenance - and immediately drive off in another car?

My dealer is constantly - and annoyingly - encouraging me to swap my car - a 2022 model - for a new car. What if my dealer simply replaced my car annually - with more or less the same monthly payment with a car from the same model year or even slightly newer or older?

There is very little that I have "done" to my car to make it "mine." And the idea of an annual swap under the auspices of a vehicle subscription is pretty attractive. No need to wait for the predictable results of the diagnostic assessment of my car and its tires. Just a drop and go.

Drivers in Europe appear to be embracing this concept - possibly because of the wider adoption of company cars. U.S. drivers have been slower to adopt car subscriptions. It's difficult to discern whether this is due to generalized distaste for or fear of subscriptions or something even more inchoate.

Nevertheless, car subscription offers are available in the U.S. from a handful of car companies along with third-party providers and rental car companies. The car company subscription providers include: Volvo (Car by Volvo), Porsche (Porsche Drive), and Toyota (Kinto Flex). Porsche has expanded from offering a single-vehicle subscription tier to now offering multiple vehicles, moving beyond its pilot service in Atlanta, Georgia, to cities in several states across the U.S., including California, Illinois, Kentucky, New Jersey, Ohio, Pennsylvania, Tennessee, and Texas.

Recently launched third-party operator services like Canada-based Steer and Singapore’s Carro LEAP do not have a minimum subscription duration. New service providers include Autonomy, which offers Teslas for subscription; Borrow, Go, Kyte, SimpleCar, and Upshift in the U.S.; Steer in Canada; Wagonex and Onto (formerly Evezy) and Ezoo in the U.K.; FINN in Germany; Loopit in Australia; and Carzuno in Singapore. Rental car players offering subscriptions include Hertz’s My Car, Enterprise’s Subscribe with Enterprise, and Sixt’s Sixt Plus. Stellantis' car sharing service Free2Move runs a subscription service in several U.S. cities.

Car subscription services call for an uncoupling from the ownership experience. Given the logistics of car maintenance alone, I'd welcome a vehicle subscription option. Not only is a subscription easier to initiate for the consumer - much less paperwork - it eliminates the burden of the consumer commitment to a particular vehicle and separates the transportation service from the delivery platform.

Car subscriptions eliminate the multiple-hour vehicle acquisition process and, potentially, the multi-hour vehicle maintenance process. If a consumer can simply switch from one car to another, the dealer can more easily schedule vehicle repairs and maintenance or even required recall work.

There is no reason for me to own my car - especially given the spiking average prices for both new and used cars. The average price for a new car is nearly $50K in the U.S., and rising. Monthly payments for loans and leases are rising beyond $1,000/month.

The handwriting is on the wall. It's time to rethink the role of dealers in the context of car subscriptions. If dealers are going to maintain lots filled with vehicles - unlike most European dealers who take orders for cars to be built - the subscription model combined with vehicle swapping for maintenance is hard to ignore or reject.

The bottom line: Consumers don't have the time to invest in either the vehicle buying/selling process or proper vehicle servicing. Car subscriptions solve both of these propositions.

In fact, car subscriptions solve another problem - the depreciation of the asset. No consumer facing a new vehicle acquisition wants to have to think about vehicle depreciation - which occurs instantly at the time of purchase. I have always felt that it is impossible to avoid being tagged as a sucker when buying a new car. Given the way depreciation works, it is shocking that consumers continue to buy new cars at all. Buying a new car - in many ways - is the definition of insanity. ("Here is your $50K car which is now worth $40K. Have a nice day.")

Car subscriptions, therefore, remove the consumer concerns associated with the purchase, maintenance, and depreciation of the vehicle. And, even better news for the dealer, the electrification of vehicles introduces a slower depreciation and an extended vehicle operational life.

EVs appear to preserve their value while also lasting longer on the road with less maintenance. As dealers confront the prospect of electrified vehicles requiring less service, they may want to explore the application of subscriptions to EVs and how it might transform their operations.

I am still nursing my vision of a pitstop-like relationship with my dealer. The less time I spend there, the better. Get me in and get me out. And THAT is where the resistance to my plan comes in. My dealer wants me to stick around, get my attention, and sell me more stuff. Car subscriptions solve that problem too.

TechInsights perspective on car subscriptions (registration required): https://library.techinsights.com/strategy-analytics/analysis-view/ACM-2307-801#sidebar=true

TechInsights car subscriptions webinar (registration required): https://library.techinsights.com/strategy-analytics/video-viewer/991939bb-70a7-4f32-945c-80b29e1579b5#subscription=Automotive&name=Strategy%20Analytics