Managing the Financial Side of Commercial Fleets

Can Fleets Subscribe to a Vehicle?

October 2017, by - Also by this author

The “subscription economy” is a business trend that supplants the traditional pay-per-product model with one that offers goods and services on a subscription basis — from software and shaving blades to music and wall art — and, in our world, vehicles.

In five years, the subscription economy has grown 420% faster than U.S. retail sales, according to the Subscription Economy Index. Why? Because the model makes sense — use an asset as needed and pay only for the time you use it. (Did brides ever need to buy wedding gowns?)

In an automotive subscription service, consumers pay a flat monthly fee to be able to switch between a selection of models within a brand family or across multiple marques. The programs bundle depreciation with insurance, registration, maintenance, and even carwashes into one price.

Automakers such as General Motors, Ford, and Volvo now offer subscription-based services and third-party platforms such as YOYO and Carma. Launched in 2014, Cox Automotive’s Flexdrive program was a pioneer.

The benefits of choice and flexibility appeal to varying corners of the consumer market. But can this model work for fleets?

The subscription-service concept fits in with the broader trend away from ownership to “shared use” of an asset and mobility as a service (Maas), says Cox Automotive’s David Liniado, vice president, consumer mobility.

For fleets, technology is enabling a more efficient way to use vehicles, increase utilization, and more precisely match the type of vehicle to usage. “The benefit of flexibility applies to commercial and corporate fleets,” Liniado says. “It’s no longer about assigning one vehicle to the same person for three years, but assigning a vehicle based on the need of the moment or the week.”

The shift from ownership to shared vehicles in carshare and rideshare fleets — and ultimately autonomous fleets — is also creating a new category of fleet management. “This will bring an evolution of services and business opportunities, from acquisition, reconditioning, transportation, and vehicle remarketing,” Liniado says.

At the 2017 Fleet Forward Conference, Liniado will explain how vehicle sharing and subscription-service models will evolve to serve fleets. “We’re excited to share at the conference how these programs work, the variety of use cases, the economics behind them, and why they’re growing.”

Fleet Forward Conference, a new event, is designed to facilitate the active inclusion of fleet stakeholders in the smart mobility revolution. The inaugural Fleet Forward Conference will be held at Hilton Miami Downtown Nov. 7-8. For more information, visit www.fleetforwardconference.com.

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