How senseful is car subscription for your fleet?
Flexible mobility is the order of the day, so it’s no surprise that one service being bandied about is car subscription. Hardly imaginable just a few years ago, short-term rental of company cars is now an ideal way to augment a fleet to ensure corporate mobility. How do car subscriptions work and what do fleet managers need to bear in mind? We decided to take a closer look and explain how vehicle subscription can be a senseful adjunct to a fleet.
How does car subscription work?
The way a vehicle subscription works is relatively simple and much like subscription models in other areas of life. By paying a set monthly rate, fleet managers can subscribe to cars of their choice. Rates are commensurate with vehicle type, i.e., the higher the value of the vehicle, the more expensive the subscription. A BMW 1 series is available from some providers for as little as 400 euros a month, while a more upmarket auto can easily cost 1000 euros.
In addition to covering general costs for the vehicle, the monthly premium includes insurance, maintenance and taxes. Fuel or electricity costs (for EVs) are extra. In addition to the subscription rate, some providers charge a set-up fee, which is usually in the range of 100 to 200 euros.
Advantages of a car subscription:
- Reduction of long decision-making process, as compared to acquisition of a company car
- Less bureaucracy thanks to quick registration
- Full cost control thanks to fixed monthly rates (plan incl. insurance and maintenance costs)
- Relatively low acquisition costs
- Large selection of latest car models
- High degree of flexibility due to short-term contract
- More cost-effective than leasing for short term use
However, flexibility is not always the be-all and end-all, and the same applies to car subscriptions, as to all other fleet products – check carefully whether costs and benefits are optimally weighted.
Disadvantages of a car subscription:
- High costs, especially for longer term use
- Many providers charge a set-up fee
- Free mileage varies greatly from provider to provider
- Unsuitable for frequent drivers
- Planning a pick-up date may be difficult
- Restrictions such as minimum driver age or annual mileage may apply
Long-term rentals vs car subscription
Long-term fleet rental has been enjoying increasing popularity for a number of years and is often confused with car subscription as the distinction between the two models is not always clear. With car subscriptions, drivers get exactly the car they book.
In the case of long-term rental, the driver can only choose the vehicle class and has no say on model or fuel engine type. If a certain vehicle is desired, a surcharge is usually applied. Another significant difference is when it comes to period and mileage, car subscriptions offer greater playing room than long-term rentals. Car subscriptions usually include a mileage plan that specifies maximum kilometers allowed. If the mileage cap is exceeded, additional fees are due. Frequent drivers should determine whether a subscription is economically senseful.
Need the vehicle for a few days longer? No problem, a subscription can usually be extended easily and renewed repeatedly.
What to keep in mind with a car subscription
A car subscription is the most flexible way to expand a fleet’s mobility mix at short notice. Companies with high turnovers and small fleets will especially benefit since vehicle needs for every employee are promptly met.
But flexibility and speed are not always the most convincing arguments, even to a vehicle fleet. What is decisive in the procurement of a company car is cost. A car subscription is a short- to medium-term solution, and this is reflected in the pricing. Remember, a subscription is only cost-effective if the car is needed for no more than a few months.
In the long run, monthly premiums are significantly more expensive than leasing. The biggest cost snags occur during handover and return. For example, the car subscription provider may work with a specific authorized dealer that is not in the immediate vicinity. Delivery of the returned vehicle to the designated location usually incurs an additional charge. The same may happen with the pickup. Fleet managers need to take into account how long the vehicle will be in use. If the fleet needs to be bolstered during the summer months, e.g., car subscriptions may just be the answer.
Leasing, long-term rental or car subscription – Which is best for your fleet?
Every fleet is unique, so blanket statements about whether a service model fits or doesn’t fit are difficult to make. On the other hand, the more flexible the fleet has to be, the more adaptable the mobility model should be. Small fleets that have seasonal demands or a low budget would do well on car subscriptions. Administrative costs are capped as insurance and repair costs are included in the price. With car subscriptions, only new cars are offered – a plus for fleets that wish to try out new models or fuel drives before integrating them permanently into the fleet. In this way, a car subscription also serves as a hassle-free opportunity to test new models, e.g., electric cars, a pain-free way to introduce electromobility to drivers.