Adopting the Future: How Car Subscriptions Benefit and Transform Car Dealerships

Rexalto's Head of Product Paul Fedorov shared an inspirational view to Car Subscription Adoption Strategy for Dealerships. We publish the original text below.

I have been involved in the car subscription field since it was just a small sprout in the global automotive market. In 2018, I founded a startup that evolved into the online car subscription services Hyundai Mobility & Genesis Mobility. Since then, I’ve clocked tons of development hours for the car subscription platform at Rexalto, participated in many interviews and debates on the topic, and frequently compared various vehicle ownership models from both dealership and OEM perspectives.

Rexalto Car Subs platform for car dealers and OEMs. Looks pretty cool, aye?

In an era where convenience and flexibility are paramount, the car subscription model has emerged as a transformative approach in the automotive industry. Despite their conservative attitude, this model offers a myriad of benefits and opportunities for car dealers, enhancing customer satisfaction while optimizing fleet utilization. This article explores the advantages of the car subscription model and how it can be a game-changer for car dealerships open to new customer satisfaction patterns.

Understanding the Car Subscription Model

The car subscription model is an innovative service where customers pay a monthly fee to access a vehicle, with the flexibility to switch between different models or cancel the subscription with minimal hassle. Unlike traditional leasing or buying, this model includes insurance, maintenance, and other costs in one all-inclusive price, offering a seamless and worry-free experience for the consumer.

Those cars could be subscribed out from a dealer’s lot easily

Benefits for Car Dealers

1. Recurring Revenue Streams

One of the most significant advantages of the car subscription model for dealers is the creation of recurring revenue streams. Instead of a one-time sale, subscriptions generate consistent monthly income, providing financial stability and predictability. This shift from transactional sales to recurring revenue can significantly enhance the financial health of a dealership.

2. Enhanced Customer Retention

The subscription model fosters higher customer retention rates. By offering flexibility and convenience, dealers can attract customers who might otherwise seek alternatives. Subscribers are likely to remain loyal due to the ease of switching vehicles and the inclusive nature of the service, leading to long-term relationships and repeat business.

3. Attracting New Demographics

Car subscriptions appeal to a broader audience, including millennials, expats, and urban dwellers who prioritize flexibility and experience over ownership. These demographics are often deterred by the long-term commitment and high upfront costs associated with traditional car ownership. By offering a subscription service, dealers can tap into this lucrative market segment.

4. Efficient Fleet Utilization

For dealers with existing fleets, the subscription model offers an opportunity to maximize fleet utilization. Vehicles that would otherwise sit idle on the lot can generate revenue through subscriptions. Additionally, the ability to rotate vehicles among subscribers ensures that the fleet remains active and well-maintained, reducing depreciation and enhancing asset management.

Subscription Card with Buyout feature in the Customer Profile

Fleet Utilization Opportunities

1. Dynamic Fleet Management

Car subscriptions enable dynamic fleet management, allowing dealers to rotate vehicles based on demand and availability. This flexibility helps in balancing the utilization of different models and maintaining the overall health of the fleet. Dealers can also analyze usage patterns to make informed decisions about inventory and fleet composition.

2. Efficient Maintenance Scheduling

With the subscription model, maintenance is typically included in the monthly fee, ensuring that vehicles are regularly serviced and kept in optimal condition. Dealers can schedule maintenance more efficiently, minimizing downtime and maximizing the availability of vehicles for subscribers.

3. Data-Driven Insights

The subscription model provides dealers with valuable data on customer preferences, usage patterns, and vehicle performance. These insights can inform marketing strategies, inventory management, and customer service improvements. By leveraging data analytics, dealers can enhance their operations and offer more personalized experiences to subscribers.

4. Enhanced Brand Loyalty

Offering a subscription service can enhance brand loyalty by creating a seamless and positive customer experience. Subscribers who enjoy the flexibility, convenience, and quality of the service are more likely to remain loyal to the dealership, recommend it to others, and consider it for future vehicle needs.

Advantages of the Car Subscription Model

1. Flexibility and Convenience

The primary allure of the car subscription model is its flexibility. Customers can easily switch between different car models based on their changing needs, whether it’s a compact car for city driving or an SUV for a family trip. This flexibility caters to the modern consumer’s dynamic lifestyle and offers unparalleled convenience.

2. All-Inclusive Pricing

Subscription services simplify budgeting for customers by bundling insurance, maintenance, and other costs into one monthly fee. This transparency eliminates unexpected expenses and makes financial planning easier. For dealers, it provides an opportunity to offer value-added services and enhance the customer experience.

3. Reduced Commitment

Unlike traditional leases, which often require multi-year commitments, car subscriptions typically offer more flexible terms, such as month-to-month contracts. This reduced commitment level attracts customers who are hesitant to engage in long-term financial obligations, making it easier to convert prospects into subscribers.

4. Access to the Latest Models

Subscribers can enjoy driving the latest car models without the need for frequent buying or leasing. This access to new technology and features is a significant draw for tech-savvy consumers who want to stay ahead of the curve. Dealers benefit by showcasing their latest inventory and encouraging customers to upgrade regularly.

Conclusion

The car subscription model represents a significant shift in the automotive industry, offering unparalleled flexibility and convenience to consumers while providing car dealers with new revenue streams and enhanced fleet utilization opportunities. By embracing this innovative approach, dealers can attract new demographics, increase customer retention, and optimize their operations. As the demand for flexible mobility solutions continues to grow, the car subscription model stands out as a compelling strategy for forward-thinking car dealerships. Now is the time for dealers to leverage this model, driving their business towards a future of sustained growth and customer satisfaction.