The car subscription market in North America is experiencing rapid growth and is projected to continue expanding in the coming years.
According to a report by Allied Market Research, the car subscription market in America is expected to grow at a compound annual growth rate (CAGR) of 71.2% from 2020 to 2027. This growth can be attributed to changing consumer preferences, with more people opting for flexible and convenient mobility solutions instead of traditional car ownership.
In current post we going to provide more deep dive details about market background which lead car subscription services growth.
Car subscription services are gaining popularity among millennials and urban residents.
Forbes reports that car subscription services are particularly popular among millennials and urban residents, who prioritize convenience and flexibility over car ownership. These consumers are attracted to the idea of having access to a range of vehicles without the hassle of buying, maintaining, and selling them.
A report by McKinsey & Company also supports this statement - urban dwellers are the most likely to use car sharing and car subscription services, with 30% of urban respondents saying they are interested in these services, compared to 18% of suburban respondents and 14% of rural respondents. Consider them as your source of great mobility insights, when diving into R&D for your subs products.
Rising popularity of electric and hybrid vehicles.
The electric vehicle market in the US is projected to grow at a compound annual growth rate of 29.4% between 2020 and 2027, according to a report by Fortune Business Insights. This growth is expected to drive demand for car subscription services that offer access to these vehicles.
Tesla launch forever changed automotive landscape, presenting and nurturing car as a service concept, so any new electric and hybrid models now are launching with Tesla experience in mind and providing higher utility and service along with engine power.
Growing preference for online shopping and digital services
The COVID-19 pandemic has accelerated the shift towards online shopping and digital services. According to Statista data, online car sales in the US have already reached $45.1 bln and continue to growth. Automobile and auto parts category demonstrated highest YoY growth in 2022 – over 30% compared to the previous year. Customers now are more aware of they buying options, have access to the wide list of informational sources, current customer is be more informed about models, configurations and trends and requires more personalized approach. This consumer behavior change will shape subscription market as well.
Increasing availability of connected car technology
The connected car market refers to the sale and distribution of vehicles that are equipped with advanced technologies that allow them to connect to the internet, other devices, and networks. These technologies include features such as GPS navigation, infotainment systems, telematics, and advanced driver assistance systems (ADAS).
The global connected car market is expected to grow at a compound annual growth rate of 16.9% between 2020 and 2027, according to a report by Allied Market Research.
Furthermore, the availability of connected car technology enables car subscription services to offer personalized and data-driven services to their customers. For example, these services can use data from the car's sensors to provide customized maintenance alerts or recommend routes based on traffic patterns. This level of personalization and convenience is likely to appeal to consumers who prioritize technology and efficiency in their daily lives.
Fortune Business Insights report highlights that North America is expected to dominate the market due to the high adoption rate of connected cars in the region. Other key players in the market include Europe and Asia-Pacific.
Allied Market Research. (2020). Connected Car Market by Technology, Connectivity Solutions, and Services: Global Opportunity Analysis and Industry Forecast, 2020–2027. https://www.alliedmarketresearch.com/connected-car-market
Fortune Business Insights(2021). United States Electric Vehicle Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021-2028). https://www.fortunebusinessinsights.com/u-s-electric-vehicle-market-106396
Statista. (2021). U.S. online vehicle sales revenue from 2018 to 2022. https://www.statista.com/statistics/1197534/us-online-vehicle-sales-revenue/, Automotive industry in the United States - statistics & facts https://www.statista.com/topics/1721/us-automotive-industry/
Fortune Business Insights. (2021). Connected Car Market Size, Share & COVID-19 Impact Analysis, By Application Type (Mobility Management, Telematics), By Connectivity Type (Embedded, Tethered, Integrated), By Services (OEM Services, Aftermarket Services), By End-use (Private Cars, Commercial Cars), and Regional Forecast, 2021-2028. https://www.fortunebusinessinsights.com/connected-car-market-103564