Blog

Mercedes has canceled its subscription service Mercedes Collection. The two-year pilot, which offers paid access to 30 different models, insurance, breakdown assistance and maintenance, had around 100 participants. The Mercedes Collection offered people a different way of driving than buying or leasing. Apparently the expected profit did not materialize. On the other hand, Mercedes has learned a lot about drivers and their wants and needs. For example, Mercedes has learned what many of us know: Our cars can become extensions of our cupboards. After a while, the users of the Mercedes Collection no longer wanted to change vehicles because all items such as running shoes, dress shoes, sports bags, golf clubs, sunglasses, freeway transponders and various items of clothing had to be moved to another car.

The Mercedes collection generated a lot of data, especially on younger drivers and others, to whom Mercedes always seemed out of reach. In addition, as most automotive companies and dealers have learned, the Mercedes Collection has highlighted the benefits of a digital approach to the car experience that will soon be used across brands.

The appeal of subscriptions

Vehicle subscriptions are aimed at people who evade the obligation to own a car. You don’t want to drive the same car for the duration of most leases. You want the flexibility of having a car instead of using a Lyft or Uber. You want to drive different vehicles with different equipment, performance and luxury levels. Also, someone who is not eligible for credit can use a subscription service without incurring massive debt.

Access from BMW (Nashville, TN only), Care from Volvo, and Audi Select are just a few of the options on the market. Porsche currently has two mobility programs: the expensive Porsche Pass and the short-term car rental Porsche Drive. Genesis, the upscale Hyundai brand, was supposed to be testing a program, Genesis Select, in Florida, but the coronavirus may have delayed that. Cadillac had a book by Cadillac, but it was canceled in 2018. It can be revived if personal mobility increases after the pandemic.

The majority of vehicle subscriptions are advertised by luxury car brands. You might not be able to afford a Porsche 911, but for a fee, you can drive one for a while. However, Nissan is taking the chance for a subscription program called Switch. Launched just before the coronavirus in a test in Houston, TX in February 2020, Nissan Switch is a two-tier program for $ 699 and $ 899. For an additional $ 100 ($ 999), a subscriber has the option to drive a Nissan GT-R.

There are also several third-party mobility options. Flexdrive is one of the most popular app-based services. Flexdrive customers pay weekly and the mileage is extra. Third party services, unlike the OEM services, do not offer new cars. In fact, these services mimic traditional rental car services somewhat in terms of pricing, except you have more make and model control and easier access. Even Chapter 11 Hertz entered the subscription model program in some test markets in 2019.

Some traders have initiated their own subscription models. For many of these traders, however, the financial data made no sense. One of the things that these programs have highlighted is the popularity of having your own car in order to provide yourself without actually owning a car. This is personal mobility without responsibility.

Owning cars for many people has many responsibilities and obligations. Many of us want to be able to get around without the hassle of leasing, payments, insurance, maintenance, and / or service visits. Car subscriptions are the ultimate no-obligation driver ship. Uber and Lyft take care of it, but someone else drives. ZipCar and the like also offer a no-obligation ride, but choosing a vehicle is not a luxury.

Welcome to the non-binding economy

The no-commitment idea is fundamental to our increasingly non-committal economy. Renting is convenient and offers a tremendous choice. People are increasingly accessing products and services through leasing and rental instead of owning them. Clothing, ski equipment, jewelry, beach houses, scooters, almost everything can be rented. People want the participatory experience without actual possession. As early as 2015, a PriceWaterhousCoopers study came to the conclusion: “Consumers find more satisfaction and status in experiences than in material possessions.” Owners become subscribers.

In our no-obligation economy, subscription car brands take advantage of the idea of ​​owning use for a short period of time. You’ve owned the car for a while, but you don’t own the problems. You experience the drive for a while, but you don’t experience the cons. Audi Select uses this idea on its Audi Select website with the heading “All of the Power. No responsibility. “

Analysts predict that vehicle subscription options will rise to around 10% of new vehicle sales by 2025. The subscription model currently accounts for around 1% of new vehicle sales. However, a research and consulting company forecast (before the coronavirus) around half a million new and used vehicles in subscription fleets by the end of 2020. The forecast for 2025 envisages 16 million new and used vehicles that will be used by subscription fleets.

Car brands have hit the freeway for personal mobility subscriptions. Some cannot survive. As with Mercedes, some may find the finances unrewarded, especially when vehicle depreciation is a huge cost. For the remaining car subscriptions, there is reason to believe in future success.

Property can be wonderful, but it can also be stressful. As the world opens up again, public transportation concerns can lead to more personal driving. People who don’t own a car might want one, but wouldn’t prefer any of the problems and other running costs. If ever there was a time to put resources behind subscription services, it seems right now. Mercedes might want to try again.

Contribution to Branding Strategy Insider by: Larry Light, CEO of Arcature

The Blake Project can help you create a better competitive future for your brand in the workshops

Brand Strategy Insider is a service from The Blake Project: A strategic brand consultancy specializing in brand research, brand strategy, brand growth and branding

FREE Publications and Resources for Marketers