Enterprise Offers Vehicle Subscriptions

Forget car and truck rentals, at least for the moment. Subscription commerce is the coolest new thing in automotive retail. Enterprise Holdings reportedly is running a test in three states to figure how many consumers would pay (pretty hefty) subscription fees for reliable access to vehicles instead of renting them the traditional way.

As the digital economy spreads throughout the globe and becomes even more deeply ingrained in the daily lives of consumers, the automotive industry continue to undergo significant, even historic disruption. The Enterprise vehicle subscription offering — itself a reflection of a broader eCommerce trend — provides the latest example of that disruptive, innovative force.

Program Offerings

Here are the details, according to Car and Driver: Consumers in Minnesota, Missouri and Nevada can pay a $250 enrollment fee and a subscription cost of $1,499 a month for access to the Enterprise fleet. That’s not all the program offers, according to the report; those costs cover insurance, maintenance, roadside assistance, SiriusXM radio and up to 3,000 miles each month. For such prices and conditions, vehicle leases might prove more attractive to certin customers. But as the report goes on to say, “The biggest advantage may be that users can swap out their car up to four times a month from Enterprise’s selection of pickup trucks, SUVs, and sedans.”

The vehicle subscription program would seem, perhaps, a potential fit for Uber and Lyft rideshare drivers, but the report added that Enterprise prohibits use of the vehicles for ride-hailing or ridesharing services. That said, Enterprise has announced no other blanket prohibitions for its fledgling vehicle subscription service, at least through its subscription website.

Subscription Growth

Enterprise is hardly the first player in the general automotive industry to go with subscription commerce. Luxury automakers, among others, have already gone that route — in large part to attract younger consumers who might not want to own vehicles, or who are drawn to the ability to switch vehicles with greater frequency.

In fact, according to PYMNTS research, the anticipated compound annual growth rate (CAGR) of the global automotive subscription services market through 2022 is 71 percent. More generally, that research also shows the growth of all forms of subscription retail. Take meal kits as one example — the projected value of meal kit subscription sales in 2018 is $3 billion. Take software as another — the share of SaaS software vendors that will shift to subscription-based business models by 2020 is 80 percent.

Enterprise’s test of vehicle subscriptions is also a fresh example of how digital technology and new or refreshed forms of retail are changing the ideas and practices of vehicle ownership and use — and doing so beyond subscriptions. The ongoing rise of vehicle sharing is a good demonstration of that, and not just in the U.S. As PYMNTS recently covered, Drivezy, the car-sharing startup based in India, is in the process of raising $100 million in equity funding and $400 million in asset financing as it seeks to expand.

Sharing Trends

Drivezy plans to use the proceeds to bring its business to other markets, both developed and developing, including the U.S. Its launch outside of India — where car ownership is rare — comes at a time when many are predicting car ownership will see a precipitous drop in demand. Thanks to ridesharing services that make it cheap and easy to get a ride, Americans are rethinking car ownership.

Beyond that, car-sharing marketplaces are rolling out new ways for borrowers to access cars through mobile apps. Consider Turo. It enables some car owners — such as Tesla owners — to allow their cars to be locked and unlocked through mobile apps. In fact, at least 15 percent of the cars on its platform already offer remote access. Some platforms even require that owners use remote lock and unlock features, but not all marketplaces follow this policy or plan to do so.

With Turo’s remote access device, car owners can ditch the traditional key swap and put spare keys in the glove box instead. They can then use the device to lock and unlock the car.

Such a system provides several benefits to car owners: They can track mileage on their vehicles, for instance. Turo plans to roll out that functionality because some car owners want to put a mileage cap on their vehicles when they lend them out, particularly if they have a specialty car that they don’t want to be driven all that much. (Turo car owners can put a mileage cap on rentals by the day or week and charge extra for drivers who go over that cap.) Additionally, the device allows car owners to geolocate their cars.

The changes, disruptions and innovations to how people not only drive, but access, own, rent or share vehicles are just getting started. Expect to see many more experiments as Enterprise seeks to determine how much gas its subscription offering really has.