How to 'subscribe' to your next car and look out for the pitfalls

Many subscribe to companies for goods and services, so why not do the same for a new car? It's flexible – but beware the potential cost

Gone are the days when buying a car simply meant writing a cheque for the full ticket price, or spreading the cost in affordable, monthly sums with hire purchase. Nowadays, there are a number of different ways of having the latest wheels on your driveway.

From personal contract plans (PCPs) to leasing, the new car buyer can choose exactly which model they want, how much they want to spend, and whether they want to swap it for another after a period of time. The new way of car ‘ownership’ is through a subscription service.

We say ‘ownership’ in quote marks because, much like car leasing, people who opt for the latest trend of car subscription never own the car they choose. But like so many goods and services that have a subscription model these days, car subscriptions are becoming popular because of their convenience. The year 2020 and coronavirus have shown many people that owning a car is perhaps a bit last century, too. With more people working from home, do these people really need a car they can’t drive depreciating on their driveways? 

New companies are springing up regularly, offering consumers tempting subscription deals for new cars and even manufacturers are wading into the equation. Jaguar Land Rover’s Pivotal service and Volvo, through its Care by Volvo programme, are two of the latest and aim to shake up the car ownership scene with affordable and straightforward subscription packages on their new cars. 

Read on to discover more about car subscriptions, including the benefits and pitfalls.     

What is a car subscription?

Simply put, it’s like any other subscription – you pay for as long as you want the car, you can swap cars every month and can cancel at any time. Leasing a car tends to be a long-term contract between you and the leaser with the average contract lasting two to three years.

Unlike with a PCP finance plan you could change the car every month Credit:  Utamaru Kido/Getty Images

Finance can be even longer and, while a PCP finance deal gives you the option to cancel at the end of the agreement, it’s generally common practice you’ll start another PCP deal immediately. Car subscriptions are offered as monthly packages with no long-term agreements.

How does it work?

Just like a subscription to a music streaming service, most car subscription companies offer an online sign-up process. For some, there may be a sign-up fee and after registering you choose the car and subscription pack you want. The provider will then carry out ID, DVLA and credit checks.

Superminis such as the top-selling Ford Fiesta are likely to cost about £400 per month

The car will be ordered and delivered to your house in a matter of weeks – although some can deliver within 48 hours – and should you wish to cancel it’s easier than cancelling a finance agreement. When you choose to end your subscription, the car is then collected from your address, although usually at a cost to you.

Generally speaking, superminis can start at about £400 per month, while luxury SUVs are around the £1,600 mark, but packages vary enormously. 

What are the benefits?

The main advantages are flexibility and convenience. You pay for how long you want the car and then can hand it back without being locked into a contract, which can be costly to cancel.

Most car subscriptions are all inclusive with the car tax, breakdown cover and maintenance, just leaving drivers to add fuel. Jaguar Land Rover’s Pivotal service even covers insurance for two drivers. Car subscriptions are also good for people who want a different type of car at various times, and can be particularly useful for those who want an electric car for a short period of time, but aren’t ready to commit to the EV life.

Services such as Pivotal even deliver a new car every six months as part of the service.

Just add fuel: susbcriptions tend to be more inclusive than finance

What are the disadvantages?

That flexibility comes at a cost. While it’s true all the hassle is taken away, you pay for that convenience and, consequently, this way of car ‘buying’ can be expensive. Car subscriptions are designed for people who either want a car for a short period of time or who want to switch between cars frequently – if this isn’t you, then a lease could make better financial sense.

Although, much like leasing, you’ll never own the car as you’re merely paying to use it. Therefore, it’s important to choose the right mileage package as going over the agreed monthly mileage can be very costly. 

Who is the target customer?

Many younger drivers are being tempted by subscriptions as they want a new car but don’t want to be tied down to one car for years. Drover, one of the biggest car subscription firms, says the average user of its service is in their 30s, while 30% of its users are in their 20s.

Volvo's package starts from £559 per month

Meanwhile, 92% of people using Care by Volvo are new to the Swedish brand and the average age of the customer is 40. By comparison, the average traditional new car buyer is around 55 years old.

Is this really the new way of ‘owning’ a car?

Car subscriptions have been around for a few years, but in 2020 they took on a renewed appeal. Many drivers have reconsidered owning a car that has sat on their driveway and depreciated during a year of coronavirus and new companies, including services offered by car manufactures, have launched to meet this expected demand.

While it’s hard to say whether or not this is a seismic shift in the way people own cars, it’s fair to say the flexibility and convenience car subscriptions offer chime with a lifestyle many people are happy with.

“It’s the perfect financial product in uncertain financial times,” believes Conor Horne, head of Care by Volvo UK. So confident is Volvo, it expects 10% of all new cars it sells in 2021 will be through its Care by Volvo service.

Car subscriptions, it seems, are here to stay.

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