Why do automakers compete over shared models?

In the past few years, car companies have introduced subscription models to customers, which offer users more flexibility than leasing or buying a car in installments. There is also another type of subscription model that allows customers to access certain services after purchasing a vehicle.

BingMag.com Why do automakers compete over shared models?

In the past few years, car companies have introduced subscription models to customers, which offer users more flexibility than leasing or buying a car in installments. There is also another type of subscription model that allows customers to access certain services after purchasing a vehicle.

But why are car companies moving towards the subscription model? And will this method of providing services in this way be possible in the long run or not? Stay with DigiCala Mag to explore this issue together.

What is a car subscription?

The subscription model is designed for customers to pay monthly or annual fees to access Pay for different vehicles offered by the same company. This means that if you have signed up for a car sharing service, you can trade in your car for another model whenever you want, depending on the package you choose.

Another type of car sharing involves paying for access. It is a specific type of feature or service within a certain period of time that the car manufacturer provides after the sale of the vehicle. For example, according to a report provided by Bloomberg, the BMW car company has introduced an $18 monthly subscription to unlock the feature of heated seats for buyers.

In a similar example, if you intend to all To access the features of Tesla's self-driving software, which is level 3 driving automation, depending on the subscription package you choose, you have to pay between $99 or $199 per month.

What is the difference between subscription and car rental?

BingMag.com Why do automakers compete over shared models?

Car sharing and lease agreements both do not allow you to own the car, but they are structured differently. If you sign a lease, you are obligated to pay a fee to access a specific vehicle for a specified period of time, whereas most car leases are for a minimum of 36 months.

After the lease expires, you return the vehicle to You return the dealership or buy the car with predetermined conditions. And if you want to change your car before the end of the lease term, you may be penalized for early termination.

On the other hand, you pay an annual fee for a car subscription, but you are committed to one vehicle. It doesn't, you can change the car in a short time. It is also easier to cancel a car subscription than a lease contract, because you are not usually given brand new vehicles, but in most cases you are given vehicles that are less than three years old.

In addition, Most car sharing packages don't require you to pay extra to cover insurance and maintenance costs like a rental contract. Most car-sharing packages also offer roadside assistance, but you'll have to pay for things like fuel.

Despite the flexibility of car-sharing models, renting a car is often a cheaper alternative. According to Top Speed, the cost of a subscription to access most Porsche models is almost double the cost of a lease if you don't add insurance and maintenance.

Why do car manufacturers offer subscription models?

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BingMag.com Why do automakers compete over shared models?

Most car manufacturers are moving towards the sharing model because it will bring them more income. According to Business Insider, major automakers such as General Motors, Ford and Stlantis have projected annual revenue of more than $20 billion from monthly subscriptions by 2030. And this approach has huge potential to double the revenue of most automakers over the next decade.

However, most manufacturers are targeting subscriptions through options that improve the driving experience. In short, automakers offer features like driver assistance, Internet connectivity, diagnostic tools, and satellite radio through microtransactions.

Another reason automakers offer subscriptions is that some of these technologies Software such as driver assistant should be regularly monitored and updated by the manufacturer.

Some of the famous manufacturers in the world that provide these services include Ford Canvas, Access by BMW, Care by Volvo, Porsche Drive, Mercedes-Benz Mobility Lexus One, Book by Cadillac, Hyundai Subscription, Audi Select, and in other parts of the world where this is not possible directly, intermediary companies such as AAA car subscription, Subscribe with Enterprise, Sixt+, Hertz My Car, Fair, Borrow this provide services.

Car sharing will soon become a normal thing

BingMag.com Why do automakers compete over shared models?

Driving with different car models from the same brand without worrying about insurance and maintenance costs is more convenient and flexible than renting a car. Is. However, the car sharing model usually It is more expensive than renting a car. For this reason, most consumers are reluctant to receive these services.

But now, most manufacturers have moved towards smarter subscription models, by including various technologies in their production cars as options. Users must pay a subscription fee to use these services. A tempting business model that could make most automakers have as many subscribers as Netflix. This means more profits for car companies.

Furthermore, the car industry is moving towards electric cars, which require less maintenance than gasoline cars. This could mean less revenue for car companies, as fewer people will take their cars to customer service centers for repairs in the future. But with the subscription model, they can replace lost service revenue with microtransactions.

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