The newest trend in car ownership is actually not owning a car. A third ownership option has emerged beyond financing and leasing. Automobile subscription models have recently appeared on the market and people are starting to take notice. 

How in the world can a person “subscribe” to a car? Well, it’s quite ingenious; For a fee, users would have the ability to swap out their vehicle several times per year. Every program is different, and as of right now, they are very limited.

As it stands at this moment, the subscription model cuts out the credit union because it eliminates the need for lending. That could change down the road, but should credit unions be worried about this new model?

Several carmakers have launched subscription services: BMW’s Access, Cadillac’s Book, Porsche’s Passport, Volvo’s Care, and Ford/Lincoln’s Canvas are the first services to tread this new territory. Even car dealership groups and startup companies are jumping on the idea.

Here’s how it works: A customer would apply via an app or a website, agree to a check of their driving record, and enter their credit card information. Some services may also do a "soft" credit check. Once approved, the user would pay a startup fee, usually around $500. After that, the monthly fees range from $250 to $3,700, depending on the program and the vehicle.

One unique feature some subscriptions offer is the ability to swap out the vehicle at any time for another. Say a person wants a Ford Escape to drive around during the week and then they want to swap it out for a Lincoln MKZ for the weekend. With Ford/Lincoln’s Canvas program, in fact it is encouraged. However, most of these services restrict how customers can use their vehicles. For example, some program require all animals to ride in crates. To track mileage and mitigate theft, some companies install GPS tracking devices. Those restrictions alone may turn off many potential users.

For a brand new car, subscribing to a service may be an interesting idea. However, the high monthly cost and numerous restrictions are a big hinderance to widespread adoption.  The model is also only for new vehicles.  A subscription can make sense for a person who wants a car with a minimal commitment, and for whom money isn’t a factor. In all other cases, which the majority of car buyers, the credit union is a powerful ally for the vehicle shopper and isn’t going anywhere any time soon.

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