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Automotive leaders see benefits of subscription models

Volkswagen Financial Services and Drover offer vehicle subscription services to UK customers

Subscription and membership-based models are seen as a major revenue opportunity by three-quarters of automotive industry leaders.

A study by Manifesto Growth Architects revealed an evident appetite for more commercially based customer models within the automotive sector, however, 72% of business leaders disclosed that less than 30% of their revenue is currently accrued through these methods.

Sam Jordan, executive vice president at Manifesto and member proposition development specialist, said: “The results of this survey identify the huge opportunity within the automotive sector – and there are already companies leading the way in this space.

"Those businesses who haven’t yet incorporated new ideas around subscription and membership into their business models may run the risk of being outpaced in a highly competitive and rapidly changing market.”

Key players in the automotive industry have already explored this space, including Jaguar Land Rover with Carpe and Audi, with Audi Select. Volvo is offering access to its cars via subscription service Care By Volvo.

Mainstream brands from Volkswagen Group and PSA are also entering the space.

In order to change or add to the incumbent commercial model, automotive companies would need to examine the resources and processes in place. When asked which areas of their business would need work to maximise on the opportunity presented by subscription and membership models, 36% of respondents cited customer services, followed by marketing with 28% and digital platform development with 19%.

Jordan added: “It is great to see that senior professionals in the automotive sector are realising financial pay off as a result of introducing these contemporary business models.

"Alongside the industry-held belief that this is a viable and rewarding system to build on – as revealed by our survey – the sector has established a firm foundation on which to build further successes for the dual benefit of these innovating companies and their customers."

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