Car subscription: the pros and cons
Flexible mobility is the order of the day, so it’s no surprise that one term is being bandied about ever more frequently: car subscription. What was inconceivable years ago is now trending. Short-term car rental is a good way to up the number of fleet vehicles so as to ensure corporate mobility. How do car subscriptions work? What do fleet managers need to consider and is short-term vehicle rental a cost-effective alternative to personal company cars?
How do car subscriptions work?
The way a car subscription works is simple – similar to subscription models from other areas of life: The driver pays a monthly fixed fee for the use of a vehicle from a leasing company. The cost of the monthly premium depends on the vehicle type and model. The higher the value of the vehicle, the more expensive it will be. A 1 series BMW is available from some providers for as little as 400 euros, while a vehicle in the luxury class may cost on average 1000 euros. In addition to the running costs for the vehicle, the monthly rate includes insurance, vehicle maintenance and taxes, fuel or electricity usually excluded. In addition to rental costs, some providers also charge an initial fee deposit of 100
to 200 euros.
The pros and cons of car subscriptions
- Shorter decision-making process in acquiring a company car
- Less bureaucracy thanks to fast registration processes
- Full cost control thanks to fixed monthly rates (including insurance and maintenance costs)
- No high acquisition costs
- Wide selection of current car models
- High degree of flexibility thanks to short-term contract
- Some providers include a purchase option at the end of the contract
- More cost-effective than leasing for short periods
- High costs, especially for longer terms
- Many providers charge an initial fee deposit
- Free mileage rate varies greatly from provider to provider
- Unsuitable for frequent drivers
- Planning a pick-up date may be difficult
- Possible restrictions like minimum age of drivers or annual mileage cap
Flexibility is not always the measure of all things. Car subscriptions alone cannot permanently solve all vehicle bottlenecks in the fleet. The same applies here as with other products: The deficits need to be analyzed.
Long-term rental the same as car subscription?
Long-term fleet rental has been growing in popularity for a number of years now. It is often confused with car subscription. A precise distinction between the two models is not always immediately apparent. Nevertheless, there are some differences that drivers and fleet managers should know. Long-term rental involves renting a car of a certain series. Car subscription, on the other hand, involves renting a specific vehicle model. While a car subscription usually includes a mileage limit, which incurs penalties if exceeded, long-term rental is more flexible when it comes to additional mileage. Car subscription can be managed more flexibly since many providers allow a short-term extension of the subscription. This is not easily possible with long-term rental.
Things to consider with a car subscription
A car subscription is the most flexible way to expand the mobility mix of a fleet at short notice. This is especially true with companies having a high turnover. A small fleet can ensure that every employee has quick access to a company car.
Though flexibility and speed need not be the most convincing arguments in a fleet either. What is ultimately decisive in any procurement of a company vehicle is cost. These costs must be in proportion to the benefits. A car subscription is a short- to medium-term solution, which is also reflected in the pricing. After all, a subscription is only cheap if you need the car for a few months. In the long term, however, the monthly installments are significantly higher than when compared to leasing. The biggest cost trap usually comes during the handover and return. For example, the car subscription provider may have partnered a specific authorized dealer who is not in the immediate vicinity. In this case, delivery to the desired location is usually offered for an additional charge. The same can occur with pickup. Fleet managers should therefore consider in advance how long one will need the Tuesday car. If you only need to expand the fleet during the summer months, for example, car subscription may be the right solution.
Leasing, long-term rental or car subscription: which best suits your fleet?
Every fleet is organized differently – so it is difficult to make blanket statements for or against a certain model. The more flexible a fleet needs to be, the more adaptable the mobility model should be. Small fleets that have seasonal bottlenecks or a low budget can literally drive cheaper with car subscriptions. Administrative expenditure is kept within limit as insurance and repair costs are included in the monthly rate. With a car subscription, only new cars are used – a plus for fleets looking to try out new models or drives before integrating them permanently into the fleet. In other words, car subscriptions allow new vehicle types, e.g., electric cars, to be tested without pressure, and so make it easier for drivers to switch to electromobility.
Those who opt for a car subscription usually do so to achieve swift mobility. Additional incentives are the low bureaucratic hurdles and no fleet personnel resources. For this reason, subscriptions are popular with small fleets needing vehicles for a very manageable period of time while requiring minimal effort, e.g., to better buffer seasonal bottlenecks. Frequent drivers and fleets that need vehicles for longer periods should weigh the pluses and minuses between car subscriptions and leasing before making a decision.