New research from Volkswagen Financial Services UK (VWFS) has found that 61 per cent of people aged 18 to 34 are interested in accessing a car via subscription, similar to services such as Netflix where consumers can cancel anytime.
With subscription cars, all the costs needed to run a vehicle are typically bundled into one monthly payment. Unlike other models of ownership, users hand the car back when they cancel their subscription.
According to the research, desire for subscription cars decreases with age, with 39 per cent of respondents aged 35 to 40 saying they’re interested in a subscription service. This drops further among people aged 45 to 54 (26 per cent), people aged 55 to 64 (18 per cent) and people aged 65 to 74 (11 per cent).
VWFS’ data insights team suggests this indicates a clear generational gap in attitudes towards the digitalisation of not just the automotive industry, but of consumer behaviour generally.
“With younger people more commonly consuming music, TV and even food at the click of a button, the millennial consumer is evidently keen to embrace the subscription model in other areas of their lives,” VWFS said.
VWFS in Germany has already announced plans to develop and implement car subscription models for selected brands in the Volkswagen Group across Europe. The car subscription models for the Group brands will be developed based on individual customer needs, brand identity and the respective product range. By 2030, around 20 per cent of revenue could come from subscriptions and other mobility offerings.
VWFS said the move is indicative of an evolving market, with recent industry research showing that in the UK, 31 per cent of drivers want flexibility to change their vehicle to suit their mobility needs, while 22 per cent are interested in a subscription that allows access to various models from the same brand.
To that end, VWFS UK launched its Rent-a-Car platform in 2018, which allows users to rent a vehicle for a week, a month or longer, offering a choice of vehicles, options and insurance cover for all its customers.
The Rent-a-Car platform also features a flexible long-term rental option, which the company said is similar to a subscription model. “With a long-term rental, there are no ownership costs, customers have flexibility to change the vehicle monthly, and it’s a very simple process,” VWFS said.
The research from VWFS also found people aged 18 to 34 are four times more likely (77 per cent) than people over the age of 55 (18 per cent) to use a smartphone to research their next car.
“The way that people buy and rent cars is fast evolving and we need to make sure that, as our customers continue to engage more with digital technology, we make their online journey as simple and as convenient as possible,” said Mike Todd, CEO at Volkswagen Financial Services UK.
“Subscription models are becoming increasingly central to how we consume content, food and almost everything in between, so it stands to reason that people – particularly younger people – are interested in accessing vehicles in the same way.”