More than a hundred years have gone by since American business leader Henry Ford decided that his car manufacturing plants needed to offer workers the competitive wages of $5 per day for the purpose of flooding the roads with his automobiles. Ford was being more than just magnanimous when he made this decision; he also thought about the likelihood of his factory employees buying the cars they made, thus giving them an opportunity to save up enough cash to purchase a Model T.
A few decades after Ford established this new and successful business model, the cost of passenger cars increased to levels that required loan financing and commitments from buyers. Saving up enough money for a down payment and being locked into a term that lasted a few years became part of the American Dream; a rite of passage that began to die down around the height of the Great Recession in 2008. Car ownership is no longer such a lofty ideal for many Americans, which explains the rise of personal transportation services such as Uber, Lyft and Zipcar.
While drivers in metropolitan urban centers can actually live with the decision of never owning a car again, the reality for most Americans is that they still want to have easy access to passenger and utility vehicles, but they are not too thrilled about long-term debt commitments, maintenance and watching the value of their car purchases evaporate on a weekly basis. What many American drivers seem to be showing strong interest in is Cars-as-a-Service (CaaS), also known as vehicle subscription services.
Car subscription services are not exactly new; this is a concept that has been previously offered to wealthy individuals in Italy, mostly as part of a luxurious lifestyle concierge service. Auto leasing companies with corporate clients also offered something similar to the new subscription option, but this was largely limited to fleet deals. Today’s car subscriptions are being offered by automakers as a matter of branding or by third-party companies associated with dealerships. The third-party option is bound to resonate more with average drivers because it provides more choice; for example, if you go with the BMW program, you get luxury sedans, roadsters and SUVs from the legendary German automaker, but the right third-party subscriptions will give you a chance of a convertible for a few days, a minivan for a trip to the beach, a pickup truck for home remodeling projects, or a nice compact car for commuting.
With the right combination of technology and convenience, American drivers will likely choose car subscription services more and more in the near future. They are very similar to leasing vehicles from car rental companies, but they offer additional perks such as concierge delivery, roadside assistance, full insurance coverage, and maintenance. Not all subscription programs are the same; they can be negotiated in terms of “flips,” which are the number of times you can switch to another car in a set period. Concierge service may also include the installation of special equipment such as Bluetooth connections and extra seats for passengers.