Car subscriptions on the rise: Trends in Europe and UK

In recent years, the car subscription model has emerged as a compelling alternative to traditional car ownership and leasing, particularly in the UK and Europe. A combination of changing consumer preferences, technological advancements, and the growing popularity of electric vehicles (EVs) is driving interest in this new form of vehicle access.

Two recent surveys from PwC and McKinsey & Company highlight how nearly half of British consumers and a third of Europeans are now considering car subscriptions as their preferred way of driving. This trend has significant implications for the automotive industry across the region, particularly as it adapts to new consumer expectations and the evolving mobility landscape.

The appeal of car subscriptions in the UK

A June 2024 PwC survey found that 49 percent of British consumers are exploring car subscriptions as an alternative to purchasing or leasing a vehicle. The appeal lies in the simplicity, flexibility, and convenience offered by the subscription model. Of those surveyed, 38 percent cited flexibility as the main draw, preferring shorter-term commitments and access to newer vehicles. Around 33 percent appreciated the ease of having a single, fixed monthly payment that includes all costs, while 29 percent valued the reduced worries around vehicle maintenance and depreciation.

He notes that this model allows drivers—especially younger ones in urban areas—to enjoy the use of a car without the burdens of ownership, such as high upfront costs, insurance, and depreciation. Car subscriptions, in Bailey’s view, are part of the broader “mobility as a service” movement, which is gaining traction across Europe.

Growing interest in Europe

Across the continent, the McKinsey study reveals similar enthusiasm, with 33 percent of Europeans considering car subscriptions for their next vehicle. Much like their British counterparts, European consumers are drawn to the flexibility and convenience of the model. Shorter-term commitments, lower maintenance hassles, and a single monthly payment covering all expenses are appealing factors.

He points out that dealerships and manufacturers alike are exploring subscription services as a new revenue stream and a means of staying relevant in a rapidly changing market.

He notes that the car subscription model is thus seen as a low-risk solution that aligns with the evolving demands of modern drivers: “The industry is recognising the opportunities presented by a plug-and-play solution that enables implementation of a subscription service without significant investments. Automated processes and streamlined digital management reduce the need for manual labour.”

The role of electric vehicles (EVs)

One key factor linking the growing interest in car subscriptions with the automotive industry’s future is the rise of electric vehicles. As both British and European consumers begin to embrace EVs, the subscription model offers a low-risk entry point into electric mobility. The high cost of EVs, particularly due to expensive batteries and advanced technology, is often a barrier for many buyers. Subscription services, however, provide a way for consumers to access electric cars without making a significant financial commitment upfront. This aligns with the industry’s push toward greater EV adoption and allows consumers to “test the waters” of electric driving before committing to ownership.

Bailey believes that car subscriptions could play a pivotal role in increasing EV adoption. The low-cost, low-commitment nature of these services allows consumers to try EVs without worrying about long-term financial risks or concerns over future resale values.

Jesper Hill-Kjærsgaard echoes this sentiment, noting that subscription models cater to modern consumer preferences while also supporting the automotive industry’s shift toward more sustainable mobility. He notes that, “The significant upfront cost of electric vehicles, driven by pricey batteries and cutting-edge technology, can pose a financial challenge for many consumers. Coupled with the uncertainty around future resale values, subscription models provide a flexible way to embrace the future of mobility without making a heavy financial commitment – meeting the evolving needs of today’s consumers.”

Transforming the automotive industry

For car manufacturers and dealerships, the rise of car subscriptions represents both a challenge and an opportunity. Traditional business models centred on ownership are being disrupted by new consumer demands for flexibility and convenience. Dealerships, in particular, are beginning to embrace subscription services as a means of growth and customer retention. Bailey notes that franchise-style setups are becoming popular, and the market for fleet managers to adopt these models is expected to grow significantly in the coming years.

In both the UK and Europe, the increasing consumer interest in car subscriptions signals a shift in how people think about mobility. This transformation is fuelled not only by convenience but also by the technological shifts occurring within the automotive industry, particularly with the rise of EVs.

As the mobility-as-a-service movement continues to gain momentum, car subscription services may well become a dominant model, offering drivers the flexibility, choice, and sustainability they seek.