Tough market conditions have led three times as many Australians to car subscription services according to subscription platform Loopit.
The company, which provides a software back-end for 80 per cent of subscription services across Australia and New Zealand from car manufacturers to start-ups, says it has seen a 320 per cent spike in new car subscriptions between Q4 of 2021 and the end of Q1 2022.
Loopit says demand has been boosted off the back of long delivery times for new cars, lack of stock in empty showrooms, and people selling a car while values for used cars are at a premium. Many of its newest users were subscribing to a vehicle while they were either waiting for stock or delivery of a new car.
When asked if demand would remain high if and when the new car market returns to some form of normalcy, Loopit’s managing director Michal Higgins said: “Absolutely, the current market conditions have only accelerated the uptake of subscription services and given more consumers the opportunity to experience the convenience of car subscription.”
Small hatchbacks and small SUVs were noted to be most popular amongst subscribers, with the total mix largely reflecting the most popular passenger car models on sale in Australia today. But electrified vehicles are also taking a lead with Mr Higgins saying: “We are seeing enormous demand for EVs across the network, and it is our understanding that the growth in EV subscription demand has contributed to new car wait times blowing out for popular EV models like the Tesla Model 3.”
“Data commissioned by Loopit shows 77 per cent of future EV adopters would prefer to subscribe than buy. Consumers want the freedom to upgrade their EVs more often and take advantage of new product innovations,” he said.
Currently buyers lining up for a new Tesla Model 3 are estimated to need to wait six to nine months for delivery as the brand struggles to keep up with demand, with the Model 3 still managing to reach 3097 deliveries last month. Things could even get worse for buyers, as a new coronavirus wave has put the brand’s Shanghai factory out of service.
The subscription model, which is championed by big-name businesses like GoGet, is also becoming a part of manufacturer offerings globally, with major OEMs like Renault investing heavily in building in-house offerings. This could combine with direct-to-consumer sales models to spell bad news for dealer groups who need to adjust to an upheaval of the status-quo in the market, but Mr. Higgins says there are opportunities to be had in the future.
“Dealers are ideally positioned to offer subscription services alongside typical sales and finance models. Research commissioned by Loopit suggests that 84 per cent of consumers want the option to subscribe through their local dealership. In the near future, we believe a dealership without subscription will be like a real estate agency without a rent roll,” he said.
Keyword: Would you try a Tesla Model 3 while you wait for a Toyota RAV4? Long delivery times sees demand for subscription services more than triple