Analysis
3 Apr 19

SIXT targets growing car subscription market

Traditional vehicle finance models are under assault as companies and their drivers seek flexible solutions to meet work and domestic lifestyles.

The fixed and inflexible contracts of outright purchase and long-term lease are being increasingly challenged by subscription services that give customers the freedom to change products and commitments on a regular basis.

These all-inclusive subscriptions bundle finance, service, maintenance, winter tyres, breakdown cover and fully comprehensive insurance into a single monthly payment, often with only a low or even no deposit.

Subscription services are the new 'middle ground'

In KPMG’s new report, Mobility 2030: Transforming the mobility landscape, the strategy group identified subscription services as products that fit neatly in the space between traditional personal contracts or long term leasing and new on-demand ride hailing services.

“With consumers increasingly tempted to forgo personal vehicle ownership for more flexible access, subscription services could be a ‘middle ground’ for those who still want full-time access to a vehicle and flexibility to change models or ‘pause’ their usage,” said KPMG.

Rental and leasing giant SIXT sees great potential in the subscription sector, launching a series of SIXT Flat subscription models to meet the demands of companies and individuals for convenience and flexibility.

All-inclusive, flexible products

“The SIXT Flats are all-inclusive packages: services such as tyre changing, maintenance and inspection are already included. For the user this means time savings, as he does not have to worry about anything,” said Vinzenz Pflanz, Senior Vice President Corporate Sales at SIXT.

Contract lengths are also flexible, which can deliver significant cost savings when cars are changed, plus the appeal of an arrangement that allows a driver to change car to suit the season is easy to understand.

“Users are not tied to a specific vehicle, but can change the model several times a year depending on the contract - for example, a convertible in summer, an SUV in winter and a comfortable limousine for the seasons in between. In this way, companies increase employee satisfaction,” said Pflanz.

Alternatively, flexibility can be tailored to the demands of the working week, or to the travel requirements of an employee. SIXT Flat Weekend, for example, provides a car for employees who have no need of one between Monday and Friday; and SIXT Unlimited, as its name suggests, provides a rental car from any one of SIXT’s 800 stations at any time in any one of 10 European countries for a competitive monthly fee.

Massive growth potential

Early adopters come from all sectors of industry and typically small to medium sized enterprises, but many more are forecast to follow, according to industry analyst Frost & Sullivan. It has forecast that subscription services will account for 16.3 million vehicles by 2025.

 

Authored by: Jonathan Manning