The car subscription market looks as if it’s set for a bumper year in the U.K.
While the withdrawal of Cazoo from the market as it focuses on its core used-car proposition might be deemed a negative response to further growth, more established subscription providers are looking to expand.
Mycardirect is forecasting record revenue growth in 2023, the company pointing to doubts about the economy and subscribers looking for a new provider now that Cazoo has exited the market.
Duncan Chumley, CEO of Mycardirect, says fleets wanting to decarbonize are also attracted to the flexibility the product offers, adding that 65% of initial enquiries are for either electric or hybrid models.
He adds: “Whilst the cost-of-living crisis continues to cause uncertainty for business and retail customers alike, the unique flexibility of vehicle subscription provides reassurance to customers. The flexibility offered by Mycardirect allows a customer to cancel or change a vehicle mid-contract with no long-term contract lock-in.
“The recent decision of Cazoo to exit the subscription market and to concentrate on their core business is undoubtedly having a positive impact on our new customer order take.”
Mycardirect expects its fleet size to increase from 1,000 to 2,000 vehicles during the year.
But Chumley is not the only CEO expecting conditions for car subscriptions to improve this year.
Electric car subscription service Onto has recently raised a £100m (US$ 1.2m) credit facility to help the business expand its electric car fleet.
Onto provides its monthly EV car subscribers an all-inclusive package that covers the car, insurance, breakdown cover and free public charging. Onto says it empowers subscribers with flexibility because no deposit or long-term commitment is required, and the option to swap cars or stop the subscription every month is offfered.
Rob Jolly, Onto CEO says the new credit facility “will turbocharge” its U.K. growth plans and consolidate its position as the leading electric car subscription service.
Like Mycardirect, Jolly points to the drive for decarbonisation as a key element in the company’s future growth.
“This is a pivotal moment for the adoption of electric cars and at Onto we want to make them more accessible and affordable to people who want to make environmentally-conscious choices. The opportunity to provide an alternative to car ownership has also never been more desirable — our subscribers benefit from the convenience, flexibility and choice that comes with a monthly subscription model.”
Onto, which provides subscriptions to both fleets and private consumers, says its current U.K. fleet is 7,000 vehicles.
In the meantime, SOGO Mobility, which styles itself as a flexilease provider rather than a subscription company, has seen its corporate customers grow by 92.4% as businesses look for greater flexibility around vehicle provision.
The company argues that businesses are increasingly reluctant to sign lengthy leases due to the threat of recession. The approach has seen corporate customers grow from 56% to 89% of revenue in the last 12 months, it says.
Karl Howkins, SOGO Mobility managing director adds:
“SOGO’s commitment to green mobility has also helped drive corporate business growth as it solves an important problem in their journeys to net zero. A flexible, monthly leasing offer allows companies to try different EVs to find the most suitable vehicle.”
And in the final sign car subscriptions are beginning to come of age in the U.K., is the investment by platform provider Loopit in the U.K. market.
The Australian business is planning to offer its platform to existing leasing and rental businesses, as well as OEMs, that want some of the car subscription action.
The company says its turnkey cloud-based software solution makes electric car subscription with salary sacrifice easy and cost-effective for employers to initiate, administer and manage internally.
Loopit U.K. Executive Chairman Andrew Mortimer adds: “Recruitment and employee retention are challenges for many business sectors in the U.K., so the introduction of electric car subscription opportunities with the salary sacrifice scheme adds an appealing new incentive to the corporate package.”
He also points out that car subscriptions can mitigate EVs' high-cost entry points.
“It provides an affordable channel, without any long-term financial commitment so this, together with tax concessions, makes it an attractive proposition, especially with the cost-of-living crisis having such an impact on personal finances.”
Which all suggests fleet managers will have another acquisition channel to assist them in providing driver mobility in the future at a fixed budgeted cost.
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