Car subscriptions: Everything you need to knowBack to 'Expert guides'
When did you last go out and buy a CD? The answer is probably quite a while ago, because you’re now more likely to stream your tunes via an app such as Spotify. Why’s this important? Because the concept of ownership is shifting.
Almost 95% of new cars are bought on finance and research from Auto Trader has concluded that car ownership will completely die out within the next decade.
As advocates of leasing – which remains the fastest-growing form of new car finance in the UK – we know people are moving away from traditional forms of ownership in favour of a usership experience. Now some manufacturers are offering dedicated subscription services. That’s right: you can now enjoy a car in the same kind of way you enjoy Netflix, sort of.
But is this simply leasing under a new guise? What are the differences? How does a car subscription work? And is a car subscription worth it? Here’s what you need to know.
What’s the difference between car leasing and subscription services?
At first glance, there’s not much difference at all between a lease and subscription service: you pay monthly for your vehicle; both are available with no large upfront payment; both include road tax; both include delivery; you can also add maintenance to a lease package.
The key difference is that a car subscription service includes additional products rolled into the monthly payment, such as comprehensive insurance.
Depending on the service in question, subscriptions are more flexible too. When you lease, you sign an agreement to keep the car for a set period (usually 12, 24 or 36 months). In contrast, some subscription services often allow you to return your car whenever you want, or change it for a different model should your circumstances change. This means there’s less commitment – a subscription could be for as short as a month if that’s all you require. Many subscriptions don’t stipulate a mileage allowance either, unlike personal leasing.
All subscription services differ, but the table below gives you an idea of the key differences between them and a car lease (personal contract hire).
|Personal contract hire (PCH)||Car subscription service|
|Duration||Typically 12, 24 or 36, 48, 60 months||Typically between 1 and 12 months|
|Upfront cost||Typically 1-, 3-, 6- or 9-month initial rental||Typically no upfront payment|
|Monthly cost||Typically lower than subscription service||Typically higher than PCH|
|Insurance||Not included||Included (subject to T&Cs)|
|Maintenance & servicing||Available at extra cost||Included|
|Mileage allowance||Various available from 8k to 35k per annum||Dependant on subscription but typically flexible.|
Which companies offer subscription services?
So what is the best car subscription service? Here’s a round-up of the current offerings available in the UK right now.
Jaguar Land Rover
Jaguar Land Rover offers customers a subscription service called Pivotal. An extensive line-up of large premium vehicles and sports cars makes it an ideal candidate for a subscription model. With no mileage stipulation, it’s aimed at high mileage users who can sign up for a 12-month package and spec a car to their requirements.
It’s a car subscription with insurance included in the monthly cost with drivers covered by a fully comprehensive policy. Routine servicing and maintenance is included in the subscription cost, which is done at Jaguar and Land Rover approved centres. The 12-month contract does mean you won’t be able to change your car more than once a year though. Subscriptions are priced from £850 per month for models like the Range Rover Evoque and Jaguar F-Pace, rising to more than £1,800 per month if you’re after a range-topping Range Rover. Electric car subscriptions are also available via Pivotal.
Care by Volvo is now available across the company’s entire range of vehicles and includes insurance, service fees, roadside assistance and repairs. One-, two- and three-year subscriptions are available, and monthly rates start from £469 on an XC40. The service offers a flexible mileage package and three months’ notice cancellation period. Volvo’s up and coming electric Polestar brand is also available via a similar subscription service, too.
BMW and Mini have a partnership with Cazoo – a company that offers subscription-based vehicle services online.Costs are inclusive of insurance, maintenance, road tax and breakdown, and like other subscriptions, there’s no upfront payment required. A minimum commitment of six months is necessary.
As well as a partnership with BMW, Cazoo offers a range of other makes and models – new or used – on its rolling monthly subscription plan. Users can create a Cazoo account online and choose any of the vehicles on offer. It’s then possible to reserve the car online and collect or have it delivered with one of Cazoo’s supply partners. You can swap or return the vehicle at any time if you opt for a rolling subscription, or you could choose a minimum commitment contract too, with a six-month subscription bringing down the price.
There’s no upfront payment, although you’ll be subject to a mileage allowance with packages usually based on a 1,000-mile per month limit.
LeasePlan’s Click & Drive is a monthly car subscription service that allows motorists to select a package, a vehicle and their mileage. Everything is covered except fuel.
Contracts are typically three months long. You can upgrade or downgrade packages and change vehicles within your package every three months, if you need to.
Any more coming soon?
The schemes offered by the following manufacturers still don’t have an official launch date for the UK market, but we can expect some of them and more to potentially hit our shores over the coming years.
Mercedes hasn’t launched its subscription service yet, but is currently undergoing pilot testing with large car dealer groups in Germany. It promises to be one of the most flexible, too. Flexperience by Mercedes allows its customers to swap vehicles up to 12 times a year, all for one single monthly payment.
Completely digital, Flexperience will be an app-based programme allowing subscribers to process the entire handling of the vehicle around the clock from selecting his or her ideal Mercedes to collecting and returning the vehicle. Mileage will be limited to 22,000 miles per year, and its app-based nature means Mercedes has promised to make it an ‘on-demand’ service.
Polestar is Volvo’s premium electric brand, with models such as the Polestar 2 now available to lease. There’s more models coming soon, and rumour has it they will be available via a form of subscription service. Aiming to move away from today’s traditional ownership model for high-end performance vehicles, the cars will be offered on a two- or three-year contract.
The zero-deposit, all-inclusive subscription will also add features such as pick-up and delivery servicing and the ability to rent alternative vehicles within the Volvo and Polestar range. We’ll learn more about the monthly rate in due course, although it might not be for a while – demand is outstripping supply for the new Polestar range at the time of writing.
Porsche Passport launched in the United States last year and, while it is not confirmed whether or not it’ll make it to the other side of the pond, offers customers access to a range of eight different Porsches for a flat monthly rate of between $2,000 and $3,000.
After paying a $500 initial payment and passing a credit check, users are able to change vehicles as often as they want, and as you’d expect road tax, registration, insurance and maintenance are all included in the package and there’s no mileage limitations. Porsche’s subscription service is currently only a pilot scheme available in certain areas of the US but, given the changing nature of the car business, it’s not implausible a similar offering will make it to UK shores in the coming years.
Following a successful trial in Spain, Hyundai is launching a London-based UK try out of its Mocean subscription service. They can be as short as three months or as long as 24 months, with the Korean company focusing on delivering a simple-to-use “sign-up and drive” subscription service.
A notice period of one month applies for cancellation, while Hyundai offers customers a vehicle exchange every six months. It’s currently only available in Greater London, but it is set to roll out throughout other UK cities soon.
Volkswagen is set to introduce a car subscription service, starting in Germany towards the end of 2021. Initially, it’s only set to offer electric ID models. There’ll be flexible contract terms starting at three or six months and an 800km mileage allowance per month.
It’s set to be priced from 499 euros per month, so one of the more affordable subscription services. We’ll bring you more details as soon as we hear any news about its potential to launch in the UK.
Do subscription services cost more than leasing? Is it right for me?
The extra flexibility and products subscription services offer sounds appealing, but it does come at a cost… literally. From the above examples, you’ll have noticed monthly prices for subscription services are noticeably higher than most personal contract hire deals for the same vehicle.
This is understandable given the fact that all your motoring costs – including insurance – are rolled into one monthly payment. Even with insurance and maintenance costs taken into account, personal contract hire will cost you less per month.
However, subscriptions will suit those that want a completely hassle-free way of access a new car and want to change it more than once every two to three years. It’s certainly aimed at the more premium end of the market currently. So whether that flexibility is worth the extra cost is up to you, your financial situation and how much you value the convenience they provide.