Our last major article on subscription was published in April 2021, and examined the then-nascent concept shortly after it burst onto the scene. Often dubbed ‘Netflix for cars’, it was tipped to be the next big thing in motor finance, offering fleets and consumers instant access to vehicles, often on rolling contracts with as little as a month’s commitment.  

Online used car retailer Cazoo was the elephant in the room at the time – and certainly the size of one. Founded in 2018 by internet entrepreneur Alex Chesterman of LoveFilm and Zoopla fame, it bought a series of European subscription companies (including UK-based Drover in December 2020 for £65.4m, which it rebranded under its own name) amid a wave of expectation that it would turn vehicle finance on its head.  

After listing on the New York Stock Exchange for an unbelievable £6.5bn in August 2021, those predictions were not to be, and the firm closed its subscription arm in June 2022.  

“Their whole business model continues to be about selling used cars,” says Duncan Chumley, CEO of subscription specialist Mycardirect, “I think they used their subscription option as an opportunity to maybe grow their fleet, attract new customers, and then take them in a direction of buying the car [but] I’m not sure why they even diversified into subscription, because running a subscription business is a 24-hour job. As you see with a lot of large corporates, when they try and diversify a bit, it doesn’t work, because it’s not what they’re key at doing.”

Other companies had pinned their hopes on piggybacking off the ill-fated Cazoo bubble. Among them was Caasta, whose CEO and co-founder, Michael Minahan, was one of those who spoke to us back in April 2021, saying, “I’ll take the crumbs off his [Chesterman’s] table”. Caasta’s website did not load when we attempted to log on in October, and when we contacted Minahan via LinkedIn, to ask if it was still trading, he replied, “Yes, but no new members only existing. We have had significant issues and challenges with our supply chains. We made the decision to not recruit any new members as we could not provide the vehicles.  We are in the process of pivoting the services we offer, which involve significant investment in technology and moving to providing a digital marketplace for car subscription services in initially UK and Europe, we are planning to launch in the next 6 months. [sic]”

Business Car contacted seven car manufacturers advertising subscription products to ask how they were getting on. Four did not respond, one could not provide an answer and, speaking on condition of anonymity, another told us that it had stopped offering cars via subscription. 

Volvo was previously one of subscription’s most vocal advocates. During a press video call in February 2023, CEO Jim Rowan said it was “here to stay”, after a 49% year-on-year uptick. However, it too, has curbed its enthusiasm. A spokesperson told us via email that its switch to the agency sales model (an increasing trend, where retail cars are sold directly to consumers by the manufacturer and the dealer is paid a handling fee – different from the traditional franchise model) from June this year meant that, “subscription doesn’t have the same focus it once did for us, as we now sell direct regardless of finance method. Whereas in the first part of the year, subscription was our only direct channel”. 

We also asked the AFP if any of its members were sourcing vehicles via subscription, but it said it was not aware of any who were. We attempted to post on its LinkedIn page, appealing to any members who had given it a shot to get in touch, but the post was not approved for publication. 

Mycardirect makes subscription look more promising. It was launched in 2020 by Chumley, formerly chief commercial officer of Daimler Fleet Management and MD of Free2Move Lease. Along with its contract hire and rental offerings, it supplies both new and used cars on subscription, has reported consistent yearly growth, and now has a fleet made up of more than 3,000 vehicles.  

Chumley says subscription counts for more than 30% of those and climbing, and is candid about its nascency. 

“I think it’s still quite an unknown. I’d love to think that everyone knows who Mycardirect is, and I’d love to think that everyone knows what car subscription is [but] in reality, it’s still a very new product.”

One of the common arguments levelled against subscription is that it is a lot more expensive than conventional leasing, so we examined the difference. In October, we found a Nissan Qashqai Acenta Premium advertised on subscription specialist Wagonex on a 12-month/10,000-mile contract, including maintenance, for £558.33 per month excluding VAT. 

The same car on a 36-month contract at the same mileage and maintenance was £553.65 from Lex Autolease – £4.68 per month less. When we dropped the Lex quote to 24 months, it rose to £675.65 – £117.32 more per month than Wagonex’s 12-month offering. 

Lex’s longer contracts of 48 and 60 months cost £502.98 and £468.12 – £56 and £90.21 per month respectively less than Wagonex’s 12-month contract. 

As with any form of funding, prices can vary dramatically between providers, and it is worth noting that that Lex’s online quote tool is designed for fleets with up to 20 vehicles, so bigger organisations will almost certainly pay less per car. 

Leasing firms have also told us that fleets often want longer contracts. Speaking to Business Car in June, Arval’s consultant, Ben Edwards, said: “Fleet leasing is generally moving up to 48 months. We went through a stage where everything was coming back into a three-year lease to try and get that [electric] technology into the fleet and reduce CO2, but fleets are now seeing that they can extend that back up to four years for cars, because the technology is here. The cars are not going to get much greener than they are now, especially with electric, [and] fleets are reducing their mileages.” 

Arval’s Flex fleet – which offers vehicles on rolling contracts of up to 24 months – totalled around 4,100 in mid-2023, which represented 2.2% of the 187,000 vehicles on its books. However, it grew by more than 50% in 2022, largely due to fleets needing stopgaps while waiting an age for new vehicles, and Edwards acknowledged (as have others) that short-term, flexible leasing products work well in a ‘try-before-you-buy’ capacity, especially for those new to EVs. 

Chumley says subscription can operate in a similar way: “We are finding companies trying out different electric cars – what works for them, and what doesn’t. they try maybe a BMW iX against the Tesla Model Y, against the Mercedes EQC.”

He adds that top-end business customers also use subscription to determine whether they want to stick with electric cars or go another route. “With some of the smaller businesses, where the cars are run by the very senior directors, we are seeing people opt back out [of electric]. Where money is less of an objective. they might try a [Porsche] Taycan, then think, ‘that range of 220 miles – I just can’t live with that. I want a Porsche, so please can you put me in a 911 on lease’.

“Saying that, what we are finding is that a lot of them are actually opting back in to [plug-in] hybrid. When they haven’t found electric’s been working, we’ve had quite a few orders for Range Rover P550es, for Mercedes GLE plug-ins, and BMW X5 45es. They still want that benefit but, because of the nature of what they do every day, they also want that range, so I’ve increased the volume of plug-in hybrids on the fleet.”  

Insurance is often cited as problematic for subscription because providers often do not include it. Its absence reduces subscription’s purported appeal as an easy, all-in-one bundle product, particularly for individuals without company policies, and the manufacturer that told us it had ceased offering subscription said insurance was one of the main challenges. 

Chumley, who is keen to stress that Mycardirect includes insurance with its retail contracts, explains: “The insurance industry is catching up with vehicle subscription fast, with a number of companies specialising in that area. It is worth noting [that] all our contracts to retail customers are regulated hire agreements, which not all subscription companies offer. They are not 28-day rolling daily rental agreements, which, from my understanding, insurance companies do not like.”

There is a place for subscription in the market. Regulated, priced sensibly, and sold with insurance, it could absolutely do the trick for employees on short-term contracts, fleets looking to fill a lead-time gap or give an EV a first whirl, someone with a generous cash allowance, or as a replacement for daily rental that rolls into a pricey long run.

But Public Enemy were right when they told us not to believe the hype. Suppliers and manufacturers who bigged it up to the extent where they claimed it would become the dominant form of funding were overstating it. Subscription is a niche product that suits particular applications, but it’s not going to muscle contract hire out of the picture any time soon.