Prepare for Subscription Economy, OEMs Advised

Vehicle-subscription services offer new opportunities to automakers as consumers become more familiar with the concept, new research indicates.

Subscriptions are a relatively new way for consumers to access mobility services as an alternative to traditional car ownership. Customers pay a flat monthly fee to a manufacturer or third-party provider in return for on-demand access to several vehicle models. The fee covers insurance, maintenance and roadside assistance.

Automakers already offering subscriptions include BMW, Cadillac, Volvo, Jaguar Land Rover, Lexus, Mercedes-Benz, Audi and Genesis. But despite the many available vehicle-subscription options, consumer awareness remains relatively low, according to a survey of 500 vehicle owners across the U.S. and Europe conducted by Syncron, a provider of cloud-based aftersales service solutions for OEMs.

More than 60% of survey respondents indicated they were unfamiliar with vehicle subscriptions, but 57% were very interested when presented with the concept, Syncron says in a news release. Additionally, about 60% of respondents identified fixed monthly cost and the inclusion of maintenance and repairs as the biggest advantages of vehicle subscription services.

The survey also showed nearly 60% of vehicle owners indicating they currently use their dealer for maintenance and repairs, and more than 90% describing their most recent dealer service experience positively.

The latter two data points relate to the subscription economy in terms of redefining the way customers consume products and forcing automakers to examine decades-old business and service-delivery models.

“OEMs can no longer rely on new-product sales to meet shareholder expectations and must identify additional revenue opportunities – putting the dealer service experience in the spotlight,” Syncron says.

“Up until now, automotive service has been a reactive, break-fix model where vehicles are repaired after they’ve already broken down. To meet the demands of subscriptions, however, OEMs will need to equip dealers to pre-emptively repair vehicles before they ever fail.”

The findings are featured in a new report, “Shifting Gears from Reactive to Proactive: How Customers’ Rising Interest in the Subscription Economy is Revolutionizing the Automotive Dealer Service Experience.”