Collecting and understanding your data is essential in order to make your Car Subscription service profitable. Below are some examples of how the imove platform provides useful insights.
Customer segments and subscription length
imove data suggest that there are two types of customers on similar subscription services:
(1) long term customers that replace traditional ownership with having access to cars for typically 6-12 months. This segment is about 70-80% of the customer pool in imove.
(2) short term customers that have a temporary need for a car for 1-2 months. This segment counts for about 20-30% of the customers. Churn data drastically improves if the customer stays with the service longer than two months.
Recent polls from a similar service in Norway told that 35-40% of the customers sees subscription as their definite solution to car ownership.
Marketing and wording are key to attracting the right type of customers. Messages like Vacation car or Rental will attract short term customers. Communicating a lifestyle where customers choose their car based on changing needs attracts long term customers.
Price range and cost savings
imove data suggest that less pricey cars stay longer with one customer and have shorter availability when they become free. Profitability is typically higher due to price elasticity and risk of value depreciation is lower. These statistics argue for a car mix with a large percentage of smaller affordable cars. In the old days, when people bought a car, you typically choose a car based on the most challenging thing you will do with the car. If you are going up in the mountain during the year, you end up with a SUV. Even if you spend most of the year in urban areas driving narrow streets and trying to fit in small parking spaces.
That is not the case for a car subscriber. A car subscription customer can drastically reduce car costs by subscribing to a smaller car for everyday use and upgrading to a larger car for a couple of months during the year. Some of our customers report that they have reduced their total cost of ownership in half.
Flexibility also means churn
imove data suggest that car subscription services have an average of 10-15% monthly churn. Churn increases on more expensive cars. Churn is highly affected by seasonal cycles and type of car. Small electric cars get turned in before summer vacation and replaced by larger fossil cars. A high degree of fossil cars get turned in after summer vacation and replaced by smaller cars again. One fleet containing of mostly larger SUVs had 30% + churn rate in August. Electrical cars also change during the year and typically show that customers have cars with limited mileage for everyday use, and swap to models with more mileage during vacation and winter season. The corona pandemic triggered similar numbers. imove had about 20% of customers pausing the subscription due to losing their job or change of transportation needs. Looking at this in a positive way - it really shows the power of flexibility that these kinds of services can give to the end-consumer. imove's business intelligence platform easily extracts these types of insights and helps optimize the service
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Did you know that..
imove’s advanced data platform is built for extracting insights and key learnings about car subscription. How will a specific car perform on car subscription? How can a car subscription provider compose a mix of vehicles in the fleet to optimize the business case? What will happen when subscription features like mileage and cancellation period impact the user behavior?