The pandemic has taught us many lessons, including the importance of adaptability.
It has also created opportunities for businesses that offer flexible and convenient services.
One such opportunity is the growing popularity of the service-as-subscription model, particularly in the car subscription market.
Subscription services have gained momentum in recent years, allowing consumers to enjoy the benefits of ownership without the hassle of maintenance, repair, and other ownership-related costs. The car subscription market is a prime example of this trend, with more and more people turning to subscription services for their transportation needs.
Today, people are changing jobs and adjusting living conditions more than ever, driving the need for more flexible car access options without the burden of long-term debt.
As a result, consumers are shifting their preference toward more flexible subscription options over more traditional financing.
In Australia, Carly Holdings (ASX:CL8) has been making strides since its car subscription launch some four years ago, cementing its status as the only ASX-listed company to focus on this opportunity.
Subscribers to Carly www.carly.co are able to select their ideal car online, with a monthly recurring payment covering all expenses, including insurance, registration, servicing and repairs. All the drivers must do is add fuel or plug in the charger, in the case of electric vehicles (EVs).
Launched in 2019, the Sydney-based company’s flexible car subscription service is servicing consumers across different generations, and increasingly, business customers..
Global market
The global car subscription market’s popularity has grown in leaps and bounds thanks to its flexibility, affordability, and simplicity.
Global Market Insights (GMI) said the global car subscription market is expected to reach more than US$100 billion at a CAGR rate of more than 35 per cent during its forecasting period of 2023-2032.
Another reason for the popularity surge has stemmed from the opportunity at large.
While options to car share for just one hour or one day or rent a car for between one and 14 days already exist extensively in the market, car subscription companies, like Carly, offer car access for a minimum of one month and for as long as you need it. On average, Carly’s customers subscribe for 5 and a half months.
According to Straits Research, North America appears to be the largest car subscription market, but between 2020 and 2030, it expects Europe to be seen as the fastest-growing market.
A recent report by McKinsey and Company surveyed more than 4000 customers across Europe as to their thoughts on the future of auto finance. Respondents spanned across the UK, Germany and France, highlighting mobility subscription offerings are gaining more relevance, with 33 per cent of respondents open to trying a vehicle subscription in the future.
Millennials and Gen X cast their eye
The younger generations aren’t the only ones casting an eye toward the emerging market, with Millennials and Gen X also showing strong interest, with 39 and 38 per cent respectively receptive to car subscriptions, according to the McKinsey report.
The report attributed the interest from Millenials and Gen X could be due to their relatively higher disposable income, among other reasons.
Carly commissioned an Omnipoll survey in June 2020, which showed the attitude in uptake is not that dissimilar in Australia. The survey indicated that 69 per cent of Gen Z would consider subscribing to their next car.
As for Millennials and Gen X, 50 per cent and 40 per cent respectively indicated their preference to follow suit — signalling that it’s not only attracting interest from younger generations. Proving that car subscription has broad appeal, 47% of households with children would consider car subscription.
With 69 per cent of Gen Z expressing their preference to subscribe, the demand for Carly’s services is likely to grow, as many is in this cohort are yet to reach the driving age, but will do so in the next few years.
The Omnipoll research revealed that, in Australia, it has been reported that 38 per cent of Australians would consider subscribing to a car— a figure which wouldn’t have been so high years ago.
Carly leads the charge for car subscriptions across Australia
As the only ASX-listed focusing on car subscriptions in Australia, Carly’s service is ideal for those who value flexibility and not being locked into long-term debt — people changing careers or starting families with growing needs, for example.
Carly’s offering benefits from its extensive fleet, which continues to grow, accompanied by important relationships with leaders in the automotive industry – namely SG Fleet (SGF), Turners Automotive (TRA) and Hyundai.
From small SUVs to hatchbacks and even electric vehicles, Carly provides a variety of vehicles to match consumer demand and keep up with market trends.
The company also has tapped into the opportunity to offer new and innovative electric vehicles creating a ‘try before you buy’ opportunity to experience how EVs suit your needs before making the commitment to purchase one. Carly has secured the sold-out IONIQ 5 through its partnership with Hyundai.
Carly’s average car subscription period is over five months, proving there is an unmet need between car share & rental and outright purchase & long-term finance.
The company’s demand has grown in recent times, which led it to secure a $10 million asset finance facility to fund new vehicles.
Carly said it was “a really good time” to expand its fleet, marking the biggest-ever facility it’s secured.
The previous largest finance facility was $1.5 million. The new, much larger facility allows the company to rapidly increase its fleet size and keep up with the demand it continues to receive.
Carly said its new facility would bolster the company’s growth moving forward, cementing its status as the leading car subscription player in Australia.
The announcement, at the end of March, marks “one of the biggest” the company has ever made, giving it very good control over its fleet growth as vehicle supply restrictions have eased post-COVID.
Notably, the company reported a 76 per cent increase in revenue in March 2023 Quarter compared to March 2022 Quarter. The company also reported a 175% growth in the size of its owned and financed fleet.
Carly said its results came from increasing its fleet size, bolstering vehicle utilisation, and retaining its customers for more than five months at a time.
With an exclusive ATO product ruling that allows businesses that use Carly the ability to claim the subscription fee as a tax deduction, Carly is destined to drive its brand into the next stage of growth, backboned by a management team with industry experience, a proven business model and healthy asset finance.