In our first article of the series, we introduced you to the general concept and history of subscription models. In the second article we described how different types of players, from startups to globally operating corporates, have recently established vehicle subscription models as a new type of mobility product. Now, we want to take a closer look at the demand side of subscription and describe our learnings on the actual customer preferences and desires.
Subscription: what do customers want?
It is nothing new that customer expectations in the digital age are evolving at a similar speed as digital products and the technology that delivers them. But what do customers really expect when they consider the conclusion of a subscription contract? What are the particularities for the automotive sector? And which key dimensions of vehicle subscriptions, as described in our previous article, are most important to customers?
To shed light on this matter, in October/November 2019 we conducted a consumer survey on subscription preferences of 630 participants in the US and Germany. This enabled us to generate key insights on general behavior and use preferences, desired product features, as well as the preferred way of contract conclusion.
Car ownership still matters, but one out of three customers demand flexible offerings.
We were very keen to find out about customers’ general vehicle use preferences. Our survey shows that roughly a third of consumers would rather use a car flexibly within a subscription model instead of owning it. It is important to highlight that we discovered different motives for the tendency towards flexible use: while some consumers value the possibility to flexibly terminate the contract, change the vehicle, or adjust the scope of services, others would rather choose flexible use for mainly financial reasons and to avoid rigid, long-term conditions.
Subscription models as enabler for mass electrification?
When considering the e-mobility market, we see a different pattern. Half of our respondents in the US and Germany indicated that they would rather use an electric vehicle flexibly via subscription model than owning it. This is an impressive result, which suggests that the motivation and decision-making process for electric vehicles is different from traditional internal combustion vehicles and that subscriptions could potentially serve as a jump start for manufacturers to market their vehicles.
Both online (42%) and offline (58%) channels are important for contract closure and service.
The world we live in increasingly becomes digital and connected, but we found that both online and offline channels play an important role in the case of vehicle subscription models. Younger respondents (18-44 years) expressed an even stronger preference for closing and operating a subscription online or via app, while older people would prefer to conduct these steps personally, for example with the car dealer of their trust.
What are the decisive features for consumers regarding subscription offerings?
Besides these frame conditions, we let participants rank the specific features that matter most to them within a subscription product for vehicles. These are our key findings:
We find it remarkable, that affordability, transparency, and flexibility are more important to consumers than the type and actual brand (ranked fifth) of the vehicle. We conclude that, if set up correctly, subscription models have the potential to serve a new type of automotive mobility demand and might close a gap between car sharing, long-term leasing, and car ownership. However, our detailed findings show that there is no one-fits-all solution when it comes to defining a subscription model, as customer preferences vary strongly by location, demographics, and mobility habits. Companies that are considering offering subscriptions must therefore conduct research tailored to their target group in order to confirm relevance and to be able to define the core dimensions of subscription products in a promising way.
Besides the key findings outlined in this article, Capgemini Invent has generated in-depth market knowledge as well as brand-specific insights and supported companies launch successful subscription models.