How car subscription could become more popular than car buying: Explained

While the concept of car rental has been around for years, subscribing to a car for some months or even years is a trend that is still catching on. But in the past two-three years, the car subscription model has grown tremendously. Not only are new names entering this industry, but OEMs are also indulging directly in it as well. What makes this model a success and can it ever become more popular than buying a car? To understand this, we got in touch with a car subscription company in India.Sakshi Vij, Founder, Myles Cars tells us more.
1. What are the factors lending a boost to the car subscription model?
The Indian car market has largely been providing long term purchase options to prospective car buyers over the years. While this led to more people having access to finance and therefore being able to have a car for long term, these methods have been restrictive. Globally, vehicle ownership is made easier by introducing flexibility, convenience and automation. This is what car subscription provides.
Today an individual looking to buy a car worth Rs. 10 lakhs do not need to have Rs. 10 lakhs in savings or take a loan after paying a large down payment for Rs. 10 lakhs. Instead, they only need to decide if they are willing to pay Rs. 20,000 per month for a minimum of 6 months. This is what subscription provides.
The additional convenience that when you take a car on subscription there are no additional costs for insurance, maintenance etc, make Car subscription an easier choice. We have also seen that the easy booking and delivery process and a single platform handling the entire customer journey makes it more attractive to the customers.
2. Do you think this model could become more popular than car buying?
Absolutely! This is what we at Myles are aiming for. As ecosystem players, we bring together financial regulatory, maintenance, and insurance players under one ambit and provide our customers with the best subscription packages. They don’t have to worry about the hassle of cost and maintenance. As mentioned earlier, this is one of the primary reasons why subscriptions are becoming so popular. We also offer services in most of the locations where people go to buy a car. It allows us to make car subscriptions accessible and probably a lot more affordable than car ownership, as the users don’t have to pay substantial upfront payments.
As a brand, we are aiming at making car subscription available to every car buyer through our network of Dealerships and OEMs. We expect Subscribing to be the most preferred way of car ownership.
3. What evolution path do you see for the car subscription model in terms of tech and services offered?
Myles is developing the most advance platform for vehicle subscriptions. Technology for us will drive customer adoption and financial viability of the product. Our single platform today enables the widest range of car options to be subscribed, from brand new to used and for 3 months to 4 years. We have also developed proprietary tools to enable customer credit checks, paperless subscription, real time vehicle health checks, driving behavior analysis amongst others. Going forward we would be further enhancing our AI platform to provide the best vehicle and pricing options to each customer. Our unique identification for the usage history for each vehicle on our platform also enables us to have better products using AI/ML and smart IoT systems.
Going forward, we would also like to incentivize customers for choosing greener fuels and smarter driving behavior in keeping with our focus to be an environmentally conscious brand.

4. Can subscribing to a car be more financially viable than buying one? How?
Car subscription helps in availing fractional ownership, which is superior to conventionally owning a car which is a depreciating asset. The subscription models are not only affordable but also feasible and flexible, allowing people to switch cars in a defined period.
The car subscription model has multi-fold benefits, including hassle-free usage, no maintenance and insurance costs, flexibility in changing cars, and short-term savings. People can have a new car buying experience without the responsibilities of owning a car. Also, as I already mentioned, a car subscription is a financial management tool that helps maintain expenses. Instead of worrying about saving up for your dream car, you can now choose the monthly spend you are willing to make and find your dream car much sooner and at a fraction of the cost.
5. Which car segments and models does Myles attract the most subscriptions for?
We have seen huge demand for Maruti Suzuki, Toyota and MG motor vehicles on our platform. The improvement in Indian highways and road travel infrastructure in general has led to an increase in demand for the Compact SUV segment. Subscription is also a great way to own/use Electric vehicles since the customer does not need to worry about the high upfront costs of EVs with subscription.

6. Can the car subscription model lend a boost to EV adoption in India?
In today’s scenario, people have some concerns about EVs. First, the initial ownership cost is high, contributing to the total car cost borne by the owner. Secondly, there is uncertainty about the residual value of EVs in general. And lastly, there remains uncertainty about the battery life and what will happen if there is a malfunction.
The car subscription model tackles all these challenges for the customer since they don’t have to pay any down payments, take car loans or bear huge costs on the purchase. Instead, they can opt for subscriptions without worrying about the costs. I think it is one of the most affordable options if I leave the Mahindra vehicles aside. The most economical EV option from Tata costs about Rs. 14 lakhs. However, with subscription accessibility, customers can pay around Rs. 40,000 rather than spending that huge amount.
7. Are you onboarding any new OEM brands besides Maruti, Toyota, and MG, in the coming weeks or months? What is your outlook for this industry in the new year soon approaching?
We are continuously working with OEMs, Used car dealers and Online car sale portals to enable Subscription to every customer looking to buy a car. In the next 12 months we would want to add at least 5,000 vehicles to our platform. This will also be enabled by the strong financial partners we are working with to scale up the vehicle supply.