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Will Car Subscriptions Revolutionize Auto Sales?
Article

Will Car Subscriptions Revolutionize Auto Sales?



Editorial Rating

8

Qualities

  • Overview
  • Visionary
  • Concrete Examples

Recommendation

Gen Z seems to have a marked distaste for owning physical objects, and subscription service start-ups may take advantage of this generational quirk. Of all the industries ripe for disruption by subscription services, transportation seems a likely candidate. Who wants to own a high-priced physical object that depreciates no matter how you use it? In this special report, the Boston Consulting Group explores vehicle subscription services.

Summary

The sharing economy and subscription services could change the modern transportation market, and investors are taking note.

A majority of baby boomers (75%) see car ownership as a necessity, and their children still see cars as a status symbol, but gen Z is different. Only 45% of America’s youngest consumers think owning a car is necessary. The buying process is clunky, maintenance is intimidating, and overall, cars are an expensive, depreciating asset. One study suggests that “people underestimate the total cost of vehicle ownership by more than 50%.” As technological advances make digital and subscription-based services more feasible, the younger generations seem to be veering away from owning physical objects. 

Vehicle OEMs (original equipment manufacturers) like Audi, Volvo, BMW and Mercedes have dabbled in the car subscription space in recent years, but results have been underwhelming. Still, car subscription start-ups have inspired venture capitalists to invest over $700 million since 2015, and the Boston Consulting Group predicts that by 2030, the long-term rental, lease and subscription-based vehicle market could grow to the...

About the Authors

Daniel Schellong, Philipp Sadek, Nikolaus Lang and Miles Mattson are professionals from the Boston Consulting Group.


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