A few years back, subscription cars were tagged as the next big thing for the automotive industry. Despite its appeal, the subscription model — bundling the car, insurance, and maintenance into a single commitment-free monthly payment — never took off. You can still subscribe to a car today, but the pool of providers has shrunk considerably.
Subscription cars have left their mark, however. In the mature space of cars and insurance, subscribing to a car was an innovative concept. The innovation supported auto insurance advancements that did stick, including pay-per-mile, pay-how-you-drive, monthly, and on-demand coverage. Like subscription cars, these programs deliver flexibility as a primary selling point.
Why the subscription model struggled
“The hallmark of a successful subscription service is both increased value and benefit,” said Mark Thomas, executive vice president for the automotive app Way.com. Unfortunately, car subscriptions struggled to deliver on both fronts.
Early car subscriptions emphasized the freedom of choice, according to Thomas. You can drive a convertible in the summer months and an SUV in the winter. Later iterations tried to pitch all-in pricing, where one payment covered the car, insurance, maintenance, and roadside assistance.
The benefit of seasonal car-switching simply wasn’t compelling enough to create wide-scale demand. And without scale, the subscription model was too expensive for drivers and too complex operationally for providers.
All-in subscription pricing fell flat as a value-add because it seemed far more expensive than a short-term lease. “The challenge with this model came down to perceived value,” Thomas said. “People didn’t truly understand the total cost of owning their car.”
What subscription models still exist
Some car subscription programs are still operational, including:
Sixt
Finn, available in 12 U.S. states
GO
Enterprise Subscribe, available in three U.S. states
These car subscriptions primarily support short-term living situations, urban drivers, and others who want a car without a long-term commitment.
How subscriptions have evolved
Car owners still want flexibility, as demonstrated by the rising popularity of these alternative insurance programs:
Pay-per-mile insurance: A subset of usage-based insurance (UBI), pay-per-mile insurance incorporates a variable pricing component based on how many miles you drive.
Pay-as-you-drive insurance: Pay-as-you-drive is also a form of UBI. The insurance company uses collected driving data to set personalized insurance rates.
Monthly adjustable insurance: Traditional auto policies have six- or 12-month policy periods. A true monthly policy renews at month-end instead. This provides more flexibility for cancellations or adjustments without added fees. Monthly adjustable auto insurance is not widely available. As an alternative, car owners can buy a six-month policy with no cancellation fees, pay monthly, and cancel as needed.
On-demand insurance: Policyholders can turn coverage on and off, with charges incurred only when the policy is active. On-demand auto coverage is also rare, but pay-per-mile insurance offers similar flexibility.
These programs function like subscriptions because pricing adjusts dynamically, coverage is flexible, and no long-term commitment is required.
Read more: Most common types of car insurance explained
Finding flexible subscription-based auto insurance
If you like the concept of a more flexible insurance model, there are ways to identify a solution that works for you. Try these strategies:
Test your driving. Download an app, like DriveSafe Pro or Toot, that scores your driving. Good driving scores indicate you may qualify for cheaper rates with pay-as-you-drive insurance. Poor driving scores will show you where you can improve.
Check your mileage. If you don’t drive much, a pay-per-mile policy could provide flexibility and cost savings.
Estimate your total cost of ownership. Car ownership expenses can include financing charges, insurance, maintenance costs, inspection fees, personal property taxes, and more. Add up the expenses that apply to you and compare them to the cost of a car subscription.
Put a value on flexibility. Convenience and flexibility may be worth something to you. Consider what that value is when comparing the cost of a traditional car lease to a subscription car.
Understand the insurance included with a subscription car. Joshua Morrison, owner of BadDrivingRecord.com, warned that subscription insurance may not provide the coverage you need. He recommended asking which carrier provides the subscription coverage, how much coverage you get, and how your personal insurance history could be affected by subscription claims.
The next wave of car subscriptions
Thomas believes car subscriptions could make a comeback: “The next generation of subscriptions will be offered as short-term leases, with vehicles that are lease returns,” he said.
Flexcar is a provider to watch in this space: It offers month-to-month car leases with no down payment, including insurance and maintenance. Notably, Flexcar calls itself “the flexible car lease company.”
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