Is Car Subscription The Way Forward?

  • Mar 26, 2019

Cars have evolved tremendously over recent decades, especially in the last two. And with that, car purchasing too has evolved. From a time when there were no test drives at all and buyers had to wait for months and even years to get their hands on a new car, we’re now at a stage when we can not only book a test drive at the touch of a button, but also book a car using apps. But we’re still living in an era in which we prefer buying a car over leasing, or even subscribing to one. But will that change in the near future?

What is a car subscription?

Think of car subscription as subscribing to certain services from a DTH operator. Every month, you pay for the channels you want to watch. And in some months, when you want to watch a particular channel for a certain sports event, for example, you subscribe to it for a certain period and then revoke it if you don’t want to pay for it anymore.

Car subscription is similar, but not exactly the same. There are car subscription companies like Revv and Zoomcar in India. These companies own a fleet of cars and there are separate subscription plans for every car.

How does it work?

In one of Revv’s plans, which is one of the easiest to understand when it comes to car subscription, users can subscribe to a car for a monthly tenure. In such a case, you have to pay the car’s monthly subscription fee upfront along with a refundable amount and you’re set.

Benefits of car subscription

One of the most apparent benefits is that you don’t have to go through the phase where you’re searching for the best car for you and committing to it for a certain time period. In the case of subscription, especially in the case of monthly subscription, you’re free to end your car subscription at any time if you don’t like the car.

The other obvious benefit is that you don’t need to flush your savings on the downpayment or do the paperwork for getting your car financed. In the case of subscription, the only documents you need are your driving licence and other identity proofs. There is no need to disclose your banking to anyone or get a long term loan.

The third benefit is that you get yourself a new, well, almost new, car on the same day you want. On the other hand, when you go out to buy a car, you at least have to wait for a day or two to get the car registered before it leaves the showroom.

The fourth and the most tempting advantage of car subscription is car swapping. You subscribe to a car and if, one fine day, you feel like you’re not happy with your car or want to drive some other car, you can do so quite easily.

For example, if you have subscribed to a Maruti Suzuki Dzire for a month and in between you plan a vacation and you need a Toyota Innova Crysta instead for carrying more passengers and luggage, you can choose to exchange the Dzire for the Crysta and pay for the Crysta’s subscription amount for that month.

Car subscription also brings with it the benefit of not worrying about maintenance. Regular car servicing is taken care of by the subscription provider and so is the annual insurance. All you need to do is fill fuel in your car and drive away.

The disadvantages

While it may seem like subscribing to a car is as easy as taking away the car, using it and returning it back, there are terms and conditions involved. Definitely more in the case of car subscription than subscribing to DTH channels since cars are prone to deterioration over time and there are chances of mishaps as well. While regular servicing and insurance is taken care of by the subscription company, the user is liable (not entirely though) for damage in the case of an accident.

And the terms and conditions don’t end there. While you do enjoy an ownership-like period when you’re with the car you have subscribed to, your monthly running is capped and if you go beyond the stipulated running, there’s a cost involved. And since it’s not a private car that you’re driving, you also need state permits when you go out of your state, like any other commercial vehicle.

The biggest drawback of subscription plans, however, is that it’s expensive over buying a car from day one. Whether you subscribe to a car on a monthly basis or take up a plan with long lock-in periods, you are bound to spend more for the subscription plan than buying the car outright, or even in EMIs, damages and maintenance included!

Is subscription not a solution for India, then?

It is, but not right now. Subscription is the future of car ownership and that future is not very far. It is working for some consumers in developed markets already. These plans are particularly useful in countries where public transport has evolved to such an extent that a lot of people rely on it for their daily commute and general mobility. These are the markets where people drive out for long vacations and otherwise depend on public transport.

In the current scenario in India too, there are some special cases in which subscription can prove to be a good solution, especially for those who are passionate about cars or want to experience ownership of a car from more than a segment above their current vehicle. It is also suitable for someone whose job requires him to relocate often (once a year, for example).

For the rest of us, for now, outright ownership is a more sensible solution, be it upfront payment or finance. One of the main reasons is value. Subscription is expensive over finance and it’s a well-known fact that India is a value-conscious market.

How much a car matters to its owner can be gauged from the fact that a lot of people plan a car based on what their peers, relatives and friends own. The idea is to buy a car that is bigger, more feature-rich, and packs something to boast about.

India is amongst the top five markets in the world in terms of new car sales. But the car density in our country is not even 100 cars per 1000 people. So, buying a car is still something that people aspire; it is not a necessity. As a result, most new car purchases are still celebrated in India. In such a scenario, the idea of driving a car everyday that is not one’s own but rented (read subscribed) doesn’t really go with the scheme of things in India, at least at the moment.


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