Car subscriptions are conquering the vehicle fleet

Auto subscription app

A car subscription is a type of long-term rental, whereby customers choose the model as well as the vehicle category.

(Photo: Shutterstock)

Cologne The perks make the difference. Since e-cars and plug-in hybrids have been significantly better off in the flat-rate taxation of company cars, many of Christian Steiner’s employees want to switch from combustion engines to more climate-friendly drives as quickly as possible, even before fuel prices have risen as dramatically as they did for now. But when the head of the 20-strong agency for digital marketing Analytica A asked the established leasing companies about new vehicles, he was disappointed: “I was promised delivery times of up to 15 months,” says Steiner. “We didn’t want to wait that long.”

Instead of extending leasing contracts, Steiner is breaking new ground: the Munich agency obtains three of the seven company cars as a so-called car subscription. This is a kind of long-term rental, whereby customers choose the model as well as the vehicle category. A monthly fee is charged for use. Apart from the expenses for charging or refueling, all costs are included – for example for insurance and repairs. Steiner says he appreciates the gain in comfort. “But the decisive factor was that the electric cars were delivered within two weeks.”

Trying out new technologies and drives, bridging waiting times for new cars, having a complete overview of costs – these are the main reasons for fleet managers to subscribe to a car, according to a recent survey by market researcher Dataforce for a study commissioned by the Association of Brand-Independent Mobility and Fleet Management Companies (VMF). would have. Annual growth rates of between 50 and 70 percent are expected for the still young market. In 2025, there would be 400,000 to 700,000 subscription vehicles on the road in Germany – around a third of them with corporate customers.

Stephan Lützenkirchen sees the pandemic as the catalyst for this development. “Some companies needed additional vehicles at short notice, others had to downsize their fleet,” says the co-founder of Vivelacar. “In view of the uncertainties, hardly anyone wanted to make long-term commitments.” The Stuttgart start-up started in 2019 with car subscriptions for private customers. A B2B offer followed in early 2021, which now accounts for a third of the business. Lützenkirchen does not believe in a trend reversal after Corona. “Mobility behavior has changed permanently due to home office options.”

Top jobs of the day

Find the best jobs now and
be notified by email.

The Frankfurt consultancy HPP determined that other providers are also making increasing efforts to attract corporate customers. “The great potential is attracting more and more players to the market,” says Managing Director Thorsten Liebehenschel. The consultants counted almost 55 car subscription brands in the DACH region. In addition to start-ups, rental companies, car manufacturers and suppliers, leasing companies focused on B2B business are also getting involved. “One motive is, in addition to trying to defend market shares, to improve capacity utilization and sales per vehicle,” says Liebehenschel.

graphic

At the beginning of February, for example, the Mercedes-Benz subsidiary Athlon started a subscription with initially ten vehicle models. The response is very good, the offer closes the gap between renting and leasing, says sales manager Doris Brokamp: “A car subscription fits perfectly – with a clear basis for calculation – if the period of use is no less than six months and probably no more than 24 months is planned.” As an example, she cites company cars for new employees during their probationary period. A typical application is the testing of e-cars in vehicle fleets.

Intensified competition

Athlon competitor ALD is particularly bold. In autumn, the subsidiary of the major French bank Société Générale took over the Cologne start-up Fleetpool, which was one of the first car subscription providers. In January, ALD also announced that it would take over competitor Leaseplan and gave an outlook on the new strategy. Accordingly, “New ALD” is intended to drive the change from car ownership to car use – also on the B2B market.

The growth potential is underscored by the fact that it is not just small companies that are discovering car subscriptions for themselves. The first large corporations with professional fleet managers are also feeling their way. Deutsche Telekom, for example, has been cooperating with Fleetpool since May 2021.

The provider grants attractive conditions for the employees – in return, Telekom beats the internal advertising drum. 2,000 interested parties have registered, so far 40 contracts have been concluded, says Olga Nevska, head of Telekom Mobility Solutions. Subscriptions fit the strategy of the group. “We want to move away from rigid company cars towards a need-based provision of mobility.”

In order to encourage the 6,000 people who are entitled to a company car to give up their car, Deutsche Telekom is using “Benefit Budgets”. Employees can have the savings paid out, put the money into their pension plan or get a BahnCard 100. Together with Sixt, the group is currently testing whether car subscriptions can accelerate the change.

The pilot started a year ago with 15 employees. “It was amazing that none of the participants wanted their own company car,” says Nevska. “And in the subscription, on average, much smaller vehicles were chosen.” In everyday life, a Mini Cooper is enough for many – the station wagon or SUV is often only used for vacations. The charming thing about the subscription is that users can switch to the larger model for a few months if necessary or do without it completely in the summer months.

VMF: So far, the business has not been particularly profitable

Flexibility is an important marketing promise for providers. In fact, they hope that users will stay with one vehicle for as long as possible – because every change incurs costs. According to the VMF, which mainly counts leasing companies among its members, the business has not yet had particularly high margins. The corporate customer business is particularly challenging. As the association’s study shows, the average subscription rate paid by tradespeople is just 440 euros. For private individuals, on the other hand, it is 650 euros.

According to HPP boss Liebehenschel, not every provider is profitable. The first companies have already given up. Above all car manufacturers – currently with a focus on private customers – pushed into the market. “They are trying to open up an additional sales channel.” The purchasing conditions for independent subscription providers with their own fleets are currently coming under pressure. Because production is still faltering due to the lack of chips. And the Ukraine war causes bottlenecks in other parts.

“We could sell significantly more subscriptions if the vehicles were more available,” says Vivelacar manager Lützenkirchen.
However, the Stuttgart-based company sees itself at an advantage over some of its competitors. Vivelacar also operates the subscription platforms of several manufacturers. In addition, the start-up does not buy any vehicles itself, but brokers the subscriptions to around 700 dealers. “Not all of them have been swept completely empty,” says Lützenkirchen. It is attractive for dealers to initially let new cars earn money and then sell them at a slight discount as young used vehicles.

More: Company car: This is how co-payments reduce the monetary benefit

source site-17