Car subscriptions: What are they and are they worth it?
Friday, 5 July 2019
Subscription services have become a part of everyday life. From TV programming (think Netflix or Foxtel) to computer software, from magazines to online news services to mobile phones, paying a recurring fee to access certain services has become second nature.
While we may be used to the media, software, and communication industries providing this sort of service, the automotive industry has decided it’s time to get in on the act too. And for consumers pondering whether or not to buy a new vehicle, car subscription offers a real alternative to traditional car ownership.
On the face of it, car subscription is simple for the consumer: To access one of a fleet of cars, just pay one recurring fee that covers all the irritating stuff like insurance, registration, maintenance and roadside assistance. Couldn’t be Easier.
The added attraction, however, is that these car subscription offerings allow you the opportunity to replace one vehicle with another in the company’s fleet, often at just a few days’ notice. That means you can choose a vehicle to meet your requirements. A small urban runabout might be perfect for nipping around town, but it’ll hardly do the job when a trip to Woop Woop and some rough outback travel is on the agenda. Equally, a leisurely, family sight-seeing trip that takes in the Great Ocean Road might be a lot more fun if you swap that runabout for something large and luxurious with all the trimmings.
Interestingly, while businesses that focus just on car subscription have been established – including Carly and Carbar – the concept is exciting enough that manufacturers and even dealerships have also begun to offer the service.
In the U.S., Porsche, Mercedes-Benz, FCA, Ford and Volvo all have subscription programs running and Volvo in Australia have reportedly expressed interest in bringing its version, called Care by Volvo, to the country.
While car subscription sounds simple enough, it’s worth nothing that there will be caveats. The service can come with a joining or membership fee, and there can be different tiers of subscription that offer different mileage allowance, insurance excess in the event of damage and so on. Also, it’s unlikely you’ll be allowed to smoke or transport a pet in the vehicle.
Is car subscription worth the cost?
That depends entirely on your situation so, for this exercise, we’ll use this writer’s circumstances for a quick comparison.
I drive a 2016 Holden Malibu (are you green with envy, yes?) – a midsize sedan that is in good condition, has 52,000km on the clock, a full service history and which I got for a smidge over $12,000.
The rego costs $60 per month, insurance is $68 per month, there’s $298 per month in loan repayments and $220 for roadside assistance over the year. I’ll also be up for about $220 at some point in the next few months for a scheduled service. Spread all that over the year and break it down to weekly payments and I’m up for about $108 per week. Let’s add another $1000 for the year on the assumption that I’ll need some new tyres and brake pads (or some other minor maintenance task that needs to be done) and that bumps it up to around $127 per week.
So, how does that match up to cars on offer at some of these subscription outlets?
Well, I’ll confess I couldn’t find a Holden Malibu anywhere, so plumped instead for the midsize Toyota Camry – of similar vintage, engine size and mileage - as a comparison. I couldn’t find one for less than $159, even on basic level subscription tiers.
That’s fairly close, but add in those caveats mentioned earlier around fees, pets and smoking (I have a dog and, to my shame, am a smoker) and for me at least, it might not make sense yet to take the subscription plunge.
However, this like-for-like comparison might work in other circumstances.
If you own a luxury, premium vehicle, for example. Many of these cars come with hefty price tags, and equally hefty ones when it comes to maintenance, parts, and servicing. Tag on the horror of depreciation and the thought of losing thousands when it comes time to sell, and perhaps paying a larger subscription fee to ‘rent’ that car makes more sense.
Equally, if you just don’t care what sort of car you’re moving around in, subscription also might work. You could spend a couple of grand buying an ancient banger with hundreds of thousands of kms on the clock, but there’s a pretty good chance you’ll be paying plenty of dollars to keep the thing rolling and, when you’re done, it’ll be worth nothing. Perhaps paying a few bucks over $100 per week for a clean and reliable runabout makes sense too.
Pros & Cons
Hassle-free: There’s a lot to be said for the one-fee-covers-everything subscription model. Only having to consider the price of fuel is pretty cool.
Long-term test driving: Buying a car can be a wince-inducing, wallet-busting endeavour and you want to make sure you’re buying the right vehicle for you. Perhaps, signing up for a subscription service and swapping through a few different makes and models over a few months can help you make absolutely certain you’ll end up buying the car that’s right for you.
Choices: The biggest selling point, I think. Being able to swap between makes and models is very appealing. Personally, I’d love to swan about in a brand-new Range Rover for a couple of weeks, before moving onto an Audi, then a Jag . . . you get the picture.
Cost & fees: It’s not a massively cheap option. Companies that offer this service – be it manufacturers, dealers or car subscription companies – businesses, not charities. Make sure you understand exactly what you’re paying for.
Pets & ciggies: No pets (or at least some restrictions on how they are transported) and no smoking. Can’t blame the companies for that – they want to keep their investment as clean and tidy as possible - but if you’re a dedicated puffer and like to bring your mutt along for a drive, then this might not be for you.
Limitations: There are limits to the number of kilometres you can cover. Having said that, in the main, the allowance seems generous enough (up to around the 3000km mark).
Jonathan has been writing about the auto industry for years and is particularly interested in the high-tech innovations sweeping the industry.
He’d love to own a Tesla Model S, but also adores anything with a V8 under the bonnet.
He has yet to decide between an EV or a Mustang for his next ride.