Global Vehicle Subscription Market - 2023-2030

Global Vehicle Subscription Market - 2023-2030

Global Vehicle Subscription Market reached US$ 3.2 billion in 2022 and is expected to reach US$ 18.2 billion by 2030, growing with a CAGR of 24.2% during the forecast period 2023-2030.

Over the forecast period, increasing electric vehicle (EV) production will likely propel the growth of the global vehicle subscription market. Annual EV production surpassed 10 million for the first time in 2022. To increase EV adoption, manufacturers are likely to significantly expand EV vehicle subscription services

High cost of vehicle ownership will likely induce more people to adopt vehicle subscription services over the forecast period. Vehicle subscriptions offer far lower costs and flexibility to subscribers as compared to outright ownership. The expansion of third-party subscription providers will further boost market growth. In December 2022, Kyte, a U.S.-based startup specializing in on-demand car rentals, started offering vehicle subscription services for customers in select U.S. cities.

Market Dynamics

Changing Consumer Preferences

Consumers, particularly younger generations, are displaying a shift in mentality by valuing access over ownership. The vehicle ownership model comes with various expenses such as maintenance, insurance and depreciation costs. Vehicle subscription offers an alternative model that allows consumers to enjoy the benefits of a personal vehicle without the long-term commitment and financial burdens of ownership.

Vehicle subscription provides a high level of flexibility and convenience. Subscribers have the ability to choose from a wide range of vehicles to suit their needs, such as hatchbacks, sedans, SUVs, or electric vehicles and subscription services allows them to switch between different models as per their requirements. Furthermore, monthly subscription charges often include maintenance, insurance and roadside assistance, saving consumers from incurring additional expenses.

Increasing Rates of High-Density Urbanization

The rise of high-density urbanization has changed the mobility behaviour of people, with increasing preference towards flexible methods of transportation. High-density urban areas often face a shortage of parking spaces. Ownership of a personal vehicle in such high-density urban locations can therefore be challenging due to limited parking availability and high parking costs.

High-density urban areas are also known for heavy traffic congestion, leading to longer commute times and increased stress levels. Vehicle subscription allows individuals to use a vehicle when needed, enabling them to avoid peak traffic hours and use alternative modes of transportation when traffic is high. It also eliminates the need for long-term parking space, thereby leading to savings on parking costs.

Limited Infrastructure

Vehicle subscription is an emerging service and therefore does not have adequately developed infrastructure. Although companies are expanding their operations, service center and maintenance facilities have still not caught up with the growth, leading to problems for subscribers. A lack of adequate parking space also presents challenges for subscription providers in increasing their fleet size.

Another major problem is the lack of charging infrastructure for companies providing subscriptions of electric vehicles (EVs). Lack of adequate charging infrastructure prevents companies from expanding their operations to newer areas. Addressing these infrastructure limitations is crucial to resolving the various bottlenecks restraining the growth of the global market.

COVID-19 Impact Analysis

The COVID-19 pandemic created opportunities and challenges for the global vehicle subscription market. Faced with the economic uncertain brought on by the pandemic, many customers cancelled their vehicle subscriptions. Furthermore, the pandemic also led to a drastic reduction in new vehicle subscribers.

The surge in e-commerce during the pandemic created opportunities for vehicle subscription providers. Businesses and individuals in the delivery and gig economy sought access to vehicles on a temporary or flexible basis, thus creating a short-term surge in the demand for vehicle subscription services.

AI Impact Analysis

Artificial intelligence (AI) is expected to have a profound impact on the global market. AI-powered algorithms can be used to analyze customer data and preferences to offer personalized vehicle recommendations. It will help subscription companies to tailor their offerings to individual customers with the most suitable vehicles.

AI-based algorithms can also be used to analyze market trends, demand patterns and vehicle availability to optimize pricing strategies and manage fleet inventory efficiently. It will ensure that subscription providers can offer competitive pricing to subscribers while maintaining optimum fleet utilization and profitability.

Segment Analysis

The global vehicle subscription market is segmented based on type, service provider, subscription period, vehicle type and region.

Electric Vehicles are Expected to Become a Popular Choice Among Consumers

IC engine vehicles account for more than half of the global market. Due to the wide ranging variety of IC engine vehicles such as hatchbacks, sedans, MPVs and SUVs, consumers can choose a car best suited to their needs. Consumers prefer IC engine vehicles since the EV charging infrastructure might not be adequately developed.

However, during the forecast period, electric vehicles are expected to gain a significant share of the global market. To increase electric vehicle adoption, manufacturers are rolling out OEM or third party-based subscription services which enables customers to use an electric vehicle without the associated high ownership costs.

Geographical Analysis

Shifting Consumer Sentiment Propels Market Growth in Europe

Europe is expected to account for more than a quarter of the global market. To counter plateauing automobile sales in the region, automotive manufacturers, along with startups and established rental agencies are increasingly rolling out vehicle subscription plans for a wide range of conventional and electric vehicles.

According to a recent analysis, there are around 210,000 to 230,000 unique active vehicle contracts in Europe in 2022. It is forecasted that the number could rise to nearly 4 million by 2030. Most of the European vehicle subscribers do not own a car. Consumer sentiment around car ownership in Europe has undergone a profound shift with outright ownership being replaced by a desire for convenience and flexibility.

Competitive Landscape

The major global players include Sixt, Avis Budget Group, Lyft, Inc., Arval BNP Paribas Group, The Hertz Corporation, ORIX Auto Corporation, Volvo Car Corporation, ALD Automotive, Carvolution and Mercedes Benz.

Why Purchase the Report?
• To visualize the global vehicle subscription market segmentation based on type, service provider, subscription period, vehicle type and region as well as understand key commercial assets and players.
• Identify commercial opportunities by analyzing trends and co-development.
• Excel data sheet with numerous data points of vehicle subscription market-level with all segments.
• PDF report consists of a comprehensive analysis after exhaustive qualitative interviews and an in-depth study.
• Product mapping available as Excel consisting of key products of all the major players.

The global vehicle subscription market report would provide approximately 64 tables, 64 figures and 195 Pages.

Target Audience 2023
• Automotive Manufacturers
• Vehicle Subscription Companies
• Automotive Insurance Companies
• Industry Investors/Investment Bankers
• Research Professionals
• Emerging Companies