The car fleet and leasing alternative: car subscriptions

At the beginning of any vehicle procurement process, fleet managers must answer the following questions: What is the purpose of the vehicle and how long will it be needed?

There are so many options at the moment in Germany when it comes to commercial vehicles. Do you go for a company car or a shared car pool vehicle? Are you opting for a leasing program or car purchase?

Car subscriptions, an alternative to car leasing is becoming increasingly popular. The trend to move away from a static mobility management program to a more flexible one is becoming stronger in the recent years.

We will give you an overview of the subject of car subscriptions, show you the advantages and disadvantages of this mobility model and clarify when a car subscription can be a possible addition or perhaps even a replacement for your company's fleet.

What is a car subscription?

When it comes to car usage in the recent years, especially company cars, the requirements are shifting towards having more flexibility and freedom.  These points less are apparent when it comes to a cash purchase program or financing a vehicle through car leasing schemes.  

With purchase and financing options, the car belongs to you or your company, but with a car subscription, as with leasing, you have the advantages of a car owner, but not the head aches of owning the vehicle.

The main advantage is that you can use the car to its full extent, but you do not bear the full risk, such as the loss of value of the vehicle. Consequently, you are also not tied to the vehicle for a long period of time should circumstances change.

Similar to leasing, with a car subscription you use a vehicle for a certain period without actual purchasing it. However, this period is significantly shorter than with leasing.

The unique selling point of this subscription model is: with a car subscription, everything is included except for fuel and electricity.

Therefore, you don't have to worry about other costs like insurance, registration or maintenance.

Car subscriptions work like other subscriptions, e.g., to streaming services. You pay a fixed monthly price, which varies depending on the vehicle model you subscribe to.

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Advantages of a subscription model for your company

  1. With the car subscription, almost all costs are included - except fuel and electricity costs

The biggest advantage of a car subscription is that you don't have to worry about insurance, registration, transfer or the costs of maintenance and wear and tear.

This is because car subscriptions usually have an all-inclusive flat rate.

Plainly speaking, all ancillary costs - except for fuelling or charging - are included in the monthly rate of the car subscription. In addition, there is a pre-agreed monthly mileage allowance.

Included costs include: Transfer, registration, insurance, vehicle tax, general inspection, maintenance & wear and tear, tire service.

The subscriber only incurs the cost of fueling or charging. Some providers also charge a small one-time registration fee.

  1. Car subscriptions have short and flexible terms

One reason why car subscriptions are becoming more popular is their flexibility. Car subscriptions have shorter and more flexible terms compared to leasing.

While leasing terms are usually at least two years, you can sign up for a car subscription with a term of just one month to one year.

The terms are also flexible and you can extend them if necessary. This means you can use the car until you feel like getting a new one or a change in life situation requires a change.

  1. Car subscriptions offer particularly high planning security

The monthly all-inclusive rates and their short, flexible terms lead to another advantage, because car subscriptions thus offer a particularly high degree of planning security.

You know right from the start how much you'll have to spend each month on the car subscription and for how long.

  1. The risk turns out to be very low with car subscriptions

Accordingly, car subscriptions don't have much risk, because any costs for maintenance and wear and tear, for example, are covered and you can cancel the subscription at any time.

Subscribers also don't have to worry about residual value and resale.

  1. Many car subscriptions are available immediately

Many new cars are currently subject to significant supply bottlenecks and long delivery times.

When leasing or buying a car, you may have to wait up to a year for a new vehicle. Since car subscriptions usually offer vehicles that have already been produced, they are usually available within a few weeks or even immediately.

  1. Car subscriptions allow you to test different makes, models or types of vehicles

Finally, car subscriptions are a great way to try out new vehicle brands, models or types. Many providers now also offer e-cars.

What is important to consider with car subscriptions? Things to consider and disadvantages of car subscriptions.

It is true that car subscriptions offer numerous advantages. However, this also has its price.

Car subscriptions are significantly more expensive than you might be used to from car leasing. However, this is put into perspective when you consider that all ancillary costs (except fuel) are included in a subscription.

However, since the subscription price includes the cost of insurance or maintenance, you cannot obtain your own quotes for these.

This means that you are bound to the choice of the subscription provider. You may end up paying for premium services, even if the standard services would be enough for you. However, you save valuable time because you don't have to take care of anything.

In addition, you usually cannot configure the vehicle model yourself, i.e. adapt it to your personal wishes or possible company requirements.

As with rental cars, for example, many car subscription providers have a minimum age for the driver. Some providers also have a maximum age limit.

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For whom is a car subscription suitable?

The car subscription is a mixture of leasing and rental car. It combines the advantages of leasing with those of a rental car, making it a serious alternative.

Compared to leasing, the car subscription is especially worthwhile if you ...

  • you only need the car for a short period of time.
  • would rather spend money than time on registration and insurance.
  • you want to be able to plan the costs ideally.
  • you want to keep a flexible termination option open.
  • want to test many different models.

Car subscription as a supplement or replacement for the company fleet?

A car subscription is a good alternative to leasing if your company does not want to tie up capital over the long term.

If a vehicle is only needed for a few months, it can be purchased flexibly on a subscription basis.

This can be the case, for example, if employees need to be mobile on a seasonal basis or if employees initially need a company car for the duration of their probationary period.

Using a subscription model, your company can test which type of vehicle is suitable for the fleet in the future.

In addition, fleet managers are relieved because the car subscription is an all-inclusive package.

There is no need to spend time organizing registration, insurance and tire changes, as these items are covered by the subscription price. However, it is important to clarify in advance whether special requirements or equipment are necessary. With many car subscription providers, the vehicle models can only be configured to a limited extent.

It should also be clarified whether the desired car can, for example, drive a trailer if the vehicle may have to be used for a lot of transport.

The topic of taxes also needs to be considered. If the vehicle is used exclusively for business purposes, the driver does not have to pay any further attention.

This is because taxation is the responsibility of the employer.

If the driver is granted private use of the subscribed vehicle in the transfer agreement, the resulting non-cash benefit must be taxed, as is the case with a leased company car.

The holder of the vehicle is usually the car subscription provider. He is therefore obliged to carry out a regular check of the subscriber's driver's license.

A one-time check of the driver's license at the start of the subscription is not sufficient to fulfill the obligation to keep the vehicle, especially if the subscriber uses the vehicle for several months. In addition, the car subscription provider cannot transfer its keeper obligation to the driver or rider of the car. The employer is obliged to ensure occupational health and safety.

This means carrying out the one-time instruction on the subscribed vehicle and the regular driver instruction.

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Stefan Wendering
Stefan is a freelance author and editor at NAVIT. Previously, he worked for startups and in the mobility sphere. He is an expert in urban and sustainable mobility, employee benefits, and New Work. In addition to creating blog content, he also produces marketing materials, taglines, and website content, as well as case studies.
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