Low subscription rate
I recently wrote of corporate experimentation with vehicle subscription services. It’s one of many fledgling business models offering alternatives to auto ownership, this one where subscribers pay a monthly fee for access to a variety of vehicles — insurance and maintenance included.
The “subscription” ownership model sounds like a good concept, allowing consumers to exchange vehicles with regularity, theoretically letting them use a pickup when hauling, a convertible on a summer day, or a luxury ride for an evening out. As it is turning out, however, the cost of administering the service may be too pricey. And that, or some other aspect, is causing lukewarm participation in early versions of the service.
A pilot subscription program begun last year by the Lincoln division of Ford Motor Company has seen little demand. Like many others, Robert Parker, Lincoln’s director of marketing, noted, “I’ve been surprised how few people are genuinely interested in that type of ownership;” further admitting, “If you had asked me a year ago, I would have said this is the next big thing.”
To me, price is the main issue. Even those who have signed up are exiting the program after a month or two at an unexpected rate. These early adopters are evidently not getting a perceived value from their subscriptions, and are seeking other forms of ownership/vehicle use.
Lincoln’s program functions under the wing of Canvas, an online portal owned by FoMoCo, offering used, one-to-three-year-old vehicles, with pricing ranging from $500 to $950 per month. Other subscription services offer new vehicles, with prices rising to thousands per month.
Even with the slow start, Lincoln is not abandoning the program, but admits it will have to be tweaked. I believe that there is a revolution on tap adapting some form of subscription/leasing that frees users from insurance and maintenance costs — it simply has not yet been formulated.
Another factor limiting the Lincoln experiment is the relatively narrow product line, making it impossible to cater to the wide whims of potential prospects.
In the end, subscription costs must be in check to induce consumers to try the program and stick with it. I’m not the only one addressing the cost of the service. As Ivan Drury, an Edmunds senior analyst, put it, “At these price points that we’re seeing, it makes virtually no sense to anyone;” characterizing such current programs as a “rich person’s toy.”
Lincoln’s Parker summarized, “I’m fully convinced somebody’s going to reinvent leasing. We’re waking up every day trying to figure out what’s the next big thing. A year ago I would have said subscriptions, but now…that’s why we didn’t go whole hog.”
One experiment that has been shelved by FoMoCo was a lease program, sort of like a time-share condo, where three to six customers share a lease, scheduling their driving time and dividing payments any way they like. In Texas, no one signed up for the service after a year-long pilot.
A new generation is definitely exploring new models of transportation and vehicle ownership. Exactly who will satisfy that movement and how they will accomplish it is still in a state of flux. As a result, consumers will continue to see ever-new options related to owning, leasing, renting subscribing, sharing, and generally using automobiles.
Readers may contact Bill Love via e-mail at precisiondriving@spokesman.com.
