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23 Oct 2023 | 3 min read
According to a BCG report, subscriptions provide an opportunity to develop an ongoing relationship with customers, something previously beyond OEMs reach.
The traditional perception of OEMs has gradually switched from vehicle manufacturers to true mobility players. They are offering a range of new mobility services options and car subscriptions is one of them.
Mobility options have evolved towards a more all-encompassing direction: rental, sharing, ride hailing, peer to peer car sharing, and so on are just some examples.
The products and services associated with alternative mobility options are attractive to the modern consumers. Today’s consumers make mobility decisions driven by factors such as lower commitments, greater flexibility, convenience, and wider choice. Car subscriptions currently offer these features and OEMs are embracing the change.
OEMs started to reconsider their business model when assimilating the concrete potential of a subscription-based offer.
For OEMs, vehicle subscriptions offer an annuity revenue stream and the opportunity for frequent interactions with consumers, which can strengthen the relationship between the two parties. The adoption of subscription models may also facilitate direct-to-consumer sales, allowing OEMs to establish online, contactless sales channels.
As mentioned in the previous episode, there are currently two ways in which OEMs are approaching car subscription offers: a personal entrance in the car subscription market or by partnering with third party car subscription providers.
OEMs launching their own car subscription service possess a double advantage since they are suppliers of those same vehicles:
A subscription model can be seen as a promotional marketing tool for possible future drivers who want to try new models with minimum commitment and maximum flexibility experience.
Mercedes-Benz Subscription is one of the heading subscription services offered in Europe by an OEM. Within 2025, the German manufacturer aims to generate €2 billion in revenue from subscription-based features. It first announced its plans to offer subscription-based features back in 2018 and right now is offering a full- service flexible contract with all the costs included (insurance, maintenance, road tax, registration fees and tyres) except from battery/fuel refueling.
The Mercedes-Benz subscription model addresses the specific requirements of customers who prefer to use a vehicle for a specific duration and cover all associated expenses through a fixed monthly payment. The rise of e-mobility is further fueling this trend, with over one-third of EQ customers in Germany already opting for the subscription model as their preferred financing method.
OEMs may partner with third-party car subscription service providers to offer subscription services. In such cases, the OEM provides the vehicles, and the subscription provider handles the operational aspects, including customer acquisition, maintenance, and logistics. These collaborations bring together the manufacturing expertise of OEMs and the operational capabilities of subscription service providers to offer all-round car subscription programs.
Stellantis group recently partnered with the startup Casi to launch Drivenjoy, a new car subscription service in the Netherlands aimed at reaching new customer segments and improving new customer deliveries while implementing a new revenue stream.
This is just an example to showcase how shared expertise is one great asset emerging from a partnership of this kind. OEMs bring their expertise in vehicle manufacturing, engineering, and quality control to the partnership, supplying the vehicles for the subscription programs, ensuring a reliable and consistent fleet for subscribers.
While car subscription providers handle the operational aspects of the program, including customer acquisition, marketing, logistics, maintenance, and customer support. They leverage their experience and infrastructure to manage the day-to-day operations efficiently.
Car subscriptions represent a transformative shift in the automotive industry, and OEMs are actively embracing this revolution. By offering flexible, all-inclusive subscription models, OEMs are meeting the evolving demands of modern consumers and exploiting the opportunities for revenue growth and enhanced customer relationships. As the subscription trend continues to expand, OEMs will play a vital role in shaping the future of mobility and ownership experiences.
Digital Content and PR Specialist at 2hire
I love running and daydreaming losing count of the distance I’m covering, cooking (and especially eating) and Drake is my spirit guide.
