Almost four out of 10 Australians – 38 per cent – would consider subscribing to a car rather than purchasing or leasing a vehicle, according to new research released by car subscription provider Carly. This shift in consumer preferences towards flexible car access is accelerating as Australia experiences its first recession in decades.
Carly commissioned OmniPoll to conduct the nationwide research, which noted a generational shift towards car subscription. The survey found that the younger Generation Z and Millennial demographics were the ones most likely to reject traditional ownership or leasing options in favour of subscribing to a car.
The financial pressures created by COVID-19 were also found to be a key factor in consumer attitudes towards car subscription, with 18 per cent of Australians more likely to consider it the best way to obtain a car, compared to six months ago, as they try to recession-proof their finances.
“Car subscription is a hot topic right now,” said Chris Noone, CEO of Carly. “Australians are looking at various ways to de-risk their finances in light of COVID-19, with big-ticket expenses such as mortgages and car loans causing the greatest concern. For more Australians than ever, a subscription model presents a familiar and risk-free alternative to a big financial outlay.
“Our own figures have indicated that Australians are increasingly interested in car subscription, with a +43 per cent increase in live subscriptions in June (versus March 2020). This can be compared to retail sales of new passenger vehicles and SUVs, which declined by 18 per cent in the June 2020 quarter versus the March 2020 quarter (VFACTS June 2020). However, we wanted to have an accurate understanding of the level of consideration for car subscription, the key drivers, the genuine level of intent in terms of uptake and if that is being driven by the impact of COVID-19 on the economy and their financial circumstances – this is what drove us to conduct the nationwide survey.”
OmniPoll conducted the research in June 2020 and surveyed a sample of 1228 people aged 18 or higher. Carly says the results are post-weighted to Australian Bureau of Statistics census data, providing “the first-ever statistically reliable insights into the attitudes of Australians to car subscription and how they are becoming increasingly favourable”.
According to Carly, the research found that car subscription is on the national agenda, with consistent figures registered across all states and territories. Queensland showed the highest interest, with 41 per cent saying they would consider a shift to car subscription.
The demographics most likely to be hardest hit by COVID-19’s impact on jobs and financial security strongly embraced the idea of car subscription. Generation Z (18- to 24-year-olds) is leading the charge, with 69 per cent indicating a preference for a no-strings-attached subscription option. Millennials (25- to 34-year-olds) followed closely behind at 50 per cent, while 47 per cent of households with children would also consider subscribing to, rather than purchasing, their next family car.
Carly says that the survey found two key features underpinning interest across the demographics. The most important is that all car running expenses are included – no surprises or hidden costs. Secondly, respondents indicated that the ‘no deposit’ feature, which Carly says is unique to its car subscription service, was a real incentive.
The variable addressed in the research was the impact of COVID-19 and the current economic climate on attitudes to car subscription – with Australia now experiencing high levels of unemployment and the economy in recession, is this driving interest, and importantly, the intent to take up car subscription? According to Carly, the results indicate that this is the case: of the 38 per cent of Australians now considering car subscription, 42 per cent are more likely to consider this option as the best way to obtain a car, compared to six months ago.
The research also said that 31 per cent of Australians are now extremely or very worried about their financial situation. Of that group, 46 per cent would consider car subscription and 24 per cent are more likely to choose it now, confirming what Carly says is real growth potential for car subscription in the current economic climate.
“The research indicates that the conventional wisdom of long-term car ownership is fast losing ground, accelerated by the impact of COVID-19, with many Australians saddled with cars they can no longer afford to drive, repay or maintain,” says Noone. “In the current recession, spending big on material possessions like cars – or taking out loans to eventually own them – is now considered a risky move.”
“Australians are turning their attention to car subscription because the financial risk is negated by the ability to stop their subscription at any time, without any financial penalty – at Carly, you just need to give 30 days’ notice. This is the perfect card to have up their sleeve to immediately alleviate expenses should their employment or financial circumstances change. Carly’s unique offering of no upfront fee or deposit further mitigates risk in the minds of Australian consumers.”
While the full impact of COVID-19 on the economy is still unknown, Carly says its online operating model and cloud-based technology mean the business is positioned to cope with future operational challenges and to deliver a product Australians can easily access. In addition, there will be no shortage of car availability as Carly has partnered with multiple vehicle suppliers (including a recent partnership with Hyundai and investment from SG Fleet), creating a new and recurring revenue stream for the automotive industry at a time when car sales are at a 30-year low.
“Carly’s flexible vehicle access and no deposit offering is an appealing, low-risk financial solution for Australian consumers recession-proofing their lifestyle,” says Noone.