Car subscription poised to increase as research shows strong consumer appetite

• New research from PwC UK finds that nearly half of consumers would be interested in a subscription service for their next vehicle
• Demand for subscription offerings largely driven by younger customers, particularly for premium and luxury brands
• Key factors for current and aspiring motorists considering subscription include access to latest cars and technology, budget-friendly running costs and driver convenience.

Nearly half of UK consumers (49%) would be more likely to choose an alternative subscription model rather than traditional purchasing and financing routes when buying a car, according to new data from PwC. 

Subscription is an alternative way to acquire and pay for a personal car where, unlike owning or financing, drivers pay lower upfront fees, and unlike leasing, can sign up for shorter time periods, which also allow for cancellation or switching models at relatively short notice. Engineered to ease hassle and provide budgetable monthly costs, many subscription offerings include a package of additional benefits such as insurance, digital services, maintenance and roadside assistance. 

44% of consumers are looking to buy a car in the next five years and would choose subscription over a traditional purchase or lease. The remaining 5% would be ‘net new’ customers: 4% would be those who currently own cars and would not have been looking to replace their vehicle in the next five years, but would be interested to do so under a subscription offering. The final 1% represents an expansion of the market; consumers who do not currently have a personal car and would not be looking to purchase one, but would be interested in having one under subscription.

Source: PwC Strategy& Auto Finance Consumer Survey, 2526 UK respondents, 2023.

Understanding customers - demographics and motivations

The research found that age was a key indicator of interest: For premium and luxury brands, 85% of subscription demand is expected to come from customers between 18-44 years old. For volume brands, younger customers in this age bracket still make up the bulk of demand (61%).

Consumer motivations were grouped into three main themes. Of these, 38% were ‘vehicle explorers’ who seek the flexibility to access new or better cars with a shorter commitment, reflecting lifestyle, seasonality and a desire to use the latest technology. Conscious budgeters make up a third, who seek an all-inclusive package with a single, guaranteed monthly fee and 29% seek value and convenience through commitment-light options which reduce admin and concerns over depreciation and battery life.

Akshara Chandhok, Director in PwC’s Automotive Practice, said:

“The clear conclusion from our survey is that front-runners have a chance to set the pace and seize market share as subscription takes hold. Companies that fail to offer this option are at risk of losing out, especially now that many carmakers are moving towards EV-only output. Our research showed that one in ten potential subscribers are people who would otherwise have no interest in acquiring a new car, so subscriptions could bring new consumers into the market who would otherwise be absent or disengaged. Given over half of consumers interested in buying a car in the next five years would be likely to choose a subscription over traditional purchasing routes, this could create healthy competition among carmakers, as those who do not roll out subscription models risk losing existing customers to competitors and struggling to acquire new motorists.

“The move to EVs is opening up a whole new set of supply, demand and pricing dynamics. While many drivers would prefer a sustainable EV over their current petrol or diesel vehicle, they may baulk at the high upfront cost. With battery technology and digital features advancing so fast, many might also be concerned about being saddled with a vehicle that could quickly become outdated and difficult to sell. Subscription offers a readily affordable option, while enabling owners to avoid the risks of obsolescence, battery deterioration and value depreciation.  

Cara Haffey, Manufacturing and Automotive lead at PwC UK, added:

“Putting subscription at the heart of plans to address the evolving customer lifecycle will help carmakers manage output, costs and the residual value of vehicles. In a clear case in point, subscriptions could help to attract customers who want a ‘try-before-you-buy’ EV option or only want a vehicle for a few months at a time. Subscription could also help to manage supply rates more effectively by putting surplus stock up for subscription rather than conceding to lower prices or sitting idly on forecourts.”