A World of Cars
in One Subscription

Peo­ple want to be mobile. The inven­tion of the steamship 300 years ago was a mile­stone. It was fol­lowed in 1825 by the first rail­road, then the air­plane and the automobile—and a car at your doorstep quick­ly became a sta­tus sym­bol. As a result of social issues such as sus­tain­abil­i­ty and cli­mate pro­tec­tion, as well as the devel­op­ment towards what is known as the shar­ing economy—the tem­po­rary lend­ing or shar­ing of vehi­cles, for example—the num­ber of peo­ple who have changed their demands regard­ing auto­mo­bil­i­ty has grown rapid­ly in recent years. And demand is trans­form­ing what is being offered. One of the new prod­ucts is the car subscription.

Sub­scrip­tion con­tracts for mag­a­zines, TV, and music stream­ing ser­vices are clas­sics. But does this also work for cars? The first providers of vehi­cles at flat-rate tar­iffs rolled onto the mar­ket in 2017. Ini­tial­ly, they were main­ly inde­pen­dent start-ups. Then Volvo, Jaguar Land Rover and a hand­ful of other man­u­fac­tur­ers fol­lowed. As a rule, the in-house finan­cial ser­vice orga­ni­za­tions at the man­u­fac­tur­ers’ head­quar­ters assume oper­a­tional respon­si­bil­i­ty. They are, as it were, the auto­mo­tive banks that tra­di­tion­al­ly han­dle vehi­cle financ­ing and leasing.

Con­ven­tion­al car rental com­pa­nies such as Europ­car, Hertz, and Sixt have also jumped on the band­wag­on. And it has picked up speed. Small cars such as the Opel Corsa and mid-size and lux­u­ry sedans such as the Volk­swa­gen Pas­sat and the Audi A4 are all avail­able on a sub­scrip­tion basis. But also sports cars like the Porsche 911. Demand for car sub­scrip­tions is grow­ing rapid­ly. Accord­ing to a Porsche Con­sult­ing esti­mate, in 2021 the num­ber of con­tracts con­clud­ed in Ger­many already exceed­ed 50,000. The prin­ci­ple: cus­tomers pay a flat month­ly fee for use of the vehi­cle dur­ing the con­tract peri­od. All costs are includ­ed in the month­ly install­ment: main­te­nance, wear and tear, gen­er­al inspec­tion, insur­ance, motor vehi­cle taxes. As a sub­scriber, the cus­tomer only has to pay for fuel—or elec­tric­i­ty in the case of an elec­tric car—plus a trip to the car wash and a refill of oper­at­ing supplies.

What is the dif­fer­ence between car sub­scrip­tion and car leas­ing? First of all, the term of the con­tract is short­er: while leas­ing requires a com­mit­ment for at least twelve months, some car sub­scrip­tion providers entice cus­tomers with a term of just one month. Six- or nine-month con­tract peri­ods are also fea­si­ble. The cost per month for the car ranges from a few hun­dred euros to over 3,000 euros, depend­ing on the make and model. In the vast major­i­ty of vehi­cles avail­able, the equip­ment is already con­fig­ured. Changes are gen­er­al­ly not pos­si­ble. The terms of the con­tract and details such as reg­is­tra­tion fee, min­i­mum age (between 18 and 25 years, depend­ing on the provider), num­ber of addi­tion­al autho­rized dri­vers list­ed on the con­tract, deliv­ery peri­od, or mileage allowance are sim­i­lar to those for long-term rental cars. If a sub­scriber dri­ves more kilo­me­ters than agreed, they usu­al­ly also have to pay extra for these at the end. As with leas­ing, users do not own the vehicle.

But how do com­pa­nies ben­e­fit from this busi­ness model? The major­i­ty of sub­scrip­tion providers are more con­cerned with medi­um- and long-term goals in this new mar­ket. Many providers are cur­rent­ly invest­ing in these new busi­ness mod­els in order to find out how great the poten­tial is. A 2020 study by the mar­ket research insti­tute Puls reveals that the great­est appeal is for 30- to 50-year-olds; near­ly 40 per­cent of respon­dents in this age group find car sub­scrip­tion offers “very inter­est­ing.” The car sub­scrip­tion is also suit­able as a test mar­ket for elec­tro­mo­bil­i­ty prod­ucts, as some inter­est­ed par­ties use it to find out whether an elec­tric vehi­cle would make sense for them in day-to-day life. Vol­ume man­u­fac­tur­ers, who pro­duce mil­lions of vehi­cles a year, also use car sub­scrip­tions to give one model or anoth­er from their model range a lit­tle extra push. Leas­ing and car-shar­ing returns can also be remar­ket­ed through subscriptions.

Porsche Finan­cial Ser­vices (PFS) launched the first car sub­scrip­tion model for the Porsche fam­i­ly brand back in 2020. Along with address­ing addi­tion­al tar­get groups, PFS was also direct­ing a focus on estab­lish­ing a sus­tain­able and eco­nom­i­cal busi­ness model as an addi­tion­al pil­lar for the core busi­ness. Porsche Drive sub­scrip­tion ser­vice is intend­ed to give Porsche cus­tomers and prospec­tive cus­tomers an oppor­tu­ni­ty to “react flex­i­bly to chang­ing life cir­cum­stances while enjoy­ing the fun of dri­ving a Porsche,” says Christoph Köh­ler, Senior Con­sul­tant in the Mobil­i­ty Ser­vices divi­sion at the man­age­ment con­sul­tan­cy Porsche Con­sult­ing. Togeth­er with his col­leagues, he assist­ed the auto finance experts at the sports-car man­u­fac­tur­er’s PFS sub­sidiary with the subscription.

Porsche relies on a min­i­mum term of six months, with a notice peri­od of three months. The cost of the sub­scrip­tion depends on the model and its equip­ment. For the Porsche 911, for exam­ple, these costs range from 2,800 to 3,500 euros.

Porsche Con­sult­ing sup­ports the Stuttgart-based sports-car man­u­fac­tur­er in devel­op­ing inno­v­a­tive busi­ness mod­els. Christoph Köh­ler says, “We assist Porsche with car sub­scrip­tion along the entire value cre­ation path.” Porsche Con­sult­ing is suc­cess­ful because it is able to test new ideas direct­ly on the mar­ket. “Our Ser­vice Devel­op­ment approach allows us to val­i­date inno­va­tions on the mar­ket with real cus­tomers with­in just a few weeks, with­out cre­at­ing a direct link to the brand,” explains Köh­ler. In addi­tion, Porsche Con­sult­ing’s exper­tise in the auto­mo­tive world enables it to pro­vide analy­ses and opti­miza­tion, pre­pare busi­ness cal­cu­la­tions, and sup­port the estab­lish­ment of agile prod­uct organizations.

Porsche, a pre­mi­um sup­pli­er, has con­tin­ued devel­op­ing its sub­scrip­tion model in the inter­im. A sec­ond busi­ness model pil­lar has emerged: Porsche Drive Flex. What’s par­tic­u­lar­ly attrac­tive is the free choice of model dur­ing the sub­scrip­tion peri­od: 911 today, Cayenne tomor­row, Tay­can the day after. As Christoph Köh­ler notes, “Whether it’s the way to the office, week­end dri­ving plea­sure, a fam­i­ly out­ing, or a road trip with friends—the cus­tomer has max­i­mum flex­i­bil­i­ty, can change vehi­cles quick­ly and eas­i­ly with­in the ver­sa­tile fleet.” The fixed month­ly price comes to 2,899 euros. The min­i­mum term for Porsche Drive Flex is three months, and the notice peri­od is one month.