America’s love affair with cars isn’t ending, but it may be changing. For the better part of a century, car ownership has been the norm, but new models are changing this. Over the next decade, the vehicle subscription market is expected to grow rapidly, and the change is creating new opportunities.
Cars can be great. When you have a car, you can go wherever you want, whenever you want, instead of being limited by bus schedules and walking distances. Whether you’re running to the grocery store or taking a cross country road trip, cars make it possible. There’s a reason many people associate cars with freedom.
But car ownership comes with its downsides, too. For one thing, owning a car can be expensive. On top of the actual cost involved in buying a car, you also have to pay for registration, insurance, maintenance and gas. According to Move.org, it costs an average of $5,264.58 each year to own a car in the U.S. In some areas, car ownership is much more expensive. For example, in Michigan, car owners can expect to pay around $9,304.28 per year. When unexpected maintenance is involved, these costs can be difficult to plan for.
Owning a car can also be a hassle. You have to deal with the paperwork involved in registration and insurance, and you have to decide on the vehicle that’s right for you, which can be a pretty big commitment.
Car ownership is still common, but in some areas, it’s becoming less common.
According to ValuePenguin, an analysis of 2020 U.S. Census Bureau American Community Survey data shows that 91.55% of households have access to at least one vehicle. This is actually up from 90.82% in 2015, but some regions have seen declines during this period. People in Northeastern metropolitan areas, including New York, Boston and Philadelphia, are especially likely to reject car ownership. In New York, 31% of households lack access to a car.
Some younger Americans in urban areas may not see much point in owning a car. For example, according to an article published by the Transportation Research Board, car ownership among Millennials in the Puget Sound region of Washington has been declining.
Many people are deciding that car ownership is too much trouble, but what happens when you need to pick up a lot of groceries? Or get to an important interview on the other side of the city? Or travel out of the city? Not owning a car can be a hassle, too.
Car subscriptions can meet these needs without requiring traditional car ownership. In this model, people pay a subscription fee for access to a vehicle. The subscriptions typically last anywhere from a month to a year. The car subscription package often includes things like maintenance, insurance, registration and roadside assistance, so consumers don’t have to deal with these hassles, and the costs can be more predictable. Another bonus is that you don’t always have to have the same type of vehicle. If you want a small sedan one month and big truck another month, you might be able to arrange for that.
Car subscriptions are somewhere between renting and leasing a car. They’re also somewhat similar to the car sharing models that have become popular, but car subscriptions usually involve access to a vehicle for at least a month at a time, whereas car sharing models are designed for shorter periods.
The vehicle subscription model is very appealing to some consumers who want access to cars without all the hassles that come with car ownership, so it makes sense that this model is growing.
Allied Market Research predicts that the car subscription market will reach $12.09 billion by 2027, and Precedence Research predicts that the vehicle subscription market will reach around $13.45 billion by 2030. To reach that figure, the compound annual growth rate (CAGR) between 2021 and 2030 will need to be around 22.8%.
Some vehicle subscription programs are offered by carmakers, while others are offered by car rental companies or new startups. We’re seeing an exciting period of growth and innovation, and different companies approach the model in different ways.
If you’re trying to take advantage of vehicle subscription market growth by offering your own program, you need quality screening and insurance. DigiSure offers both. Contact us to learn more.