Benefits of a Vehicle Subscription Program
Many would say we are now living in a subscription-based economy. Everything we do revolves around signing up for a service, whether it is to enjoy music on Spotify, clear our minds for meditation with Calm, job search or business development on LinkedIn Premium, or make purchases for grocery, entertainment, or any product thinkable with Amazon. It is all at our fingertips within a few clicks, sometimes even as little as 1 click. It is no surprise that the automotive industry is exploring the subscription space, as many consumers are prioritizing flexibility and ease of service for their vehicle of choice.
You may ask, "What is a vehicle subscription program?" A vehicle subscription program provides consumers a cost-effective alternative to owning or leasing a car. It is an ideal option for those that want flexibility as there are no long-term contracts. Subscription plans traditionally offer terms in months rather than years and are more affordable than rentals. We will be taking a deeper dive into the difference between leasing versus vehicle subscriptions, the benefits of a vehicle subscription program, Toyota's first vehicle subscription program, and why Toyota Financial Services wanted to enter this niche space.
Leasing Versus Vehicle Subscription
Another question that pops into one's top of mind is, "How is vehicle subscription different than leasing?" First, we must understand how leasing works. Leasing locks customers into a long-term commitment of 2-5 years. The customer is responsible for insurance, registration, and fees.
As mentioned before, a vehicle subscription is a flexible alternative to owning or leasing a car. Subscription programs offer short-term contracts and include insurance, maintenance, and registration into a single monthly fee.
Subscribers often fall into 3 common categories:
- Drivers who need an everyday vehicle long-term but don't want to deal with maintenance, insurance, or tons of paperwork. They want a "grab-and-go" option.
- Drivers who need a short-term solution. They are looking for a vehicle for a few months to a year but do not want to be locked into a financing or leasing contract.
- Drivers who want to try out several vehicles in a short period of time for a chance to explore which car is best for their lifestyle.
Vehicle subscription programs fit the needs of all these drivers and more.
Subscribe + Drive
Subscribe + Drive, Powered by Toyota, is a single VIN subscription program currently being piloted by Strategic Innovation, the business incubation arm of Toyota Financial Services (TFS). Our vision is to innovate and grow new business opportunities for TFS. One of the reasons why TFS decided to provide a subscription solution was because we saw customer preferences shift.
"TFS has observed the change in consumer preference away from 'ownership' and towards 'usership'. Like many other companies across a wide array of industries, we wanted to test the reception of offering a bundled experience that offers peace of mind for busy individuals who don't have the time or the desire to deal with all of the aspects of owning a vehicle. This includes scheduling the maintenance, paying for; repairs, new tires, registration, state inspections, and more." -Gary Rainey, National Manager, Strategic Innovation
Also, we think that bundling Toyota's vehicle subscription services with a short-term commitment can create an offering that will appeal to people and drive them to sign up for our program. We are currently providing short-term subscriptions as low as 60 days. Not only is the commitment short, but it gives people the opportunity who have never tried the Toyota brand before a chance to do so. These discoveries led us to explore and investigate a program's development with potential partners.
Benefits of Subscribe + Drive
Subscriptions in other industries have sought to simplify and improve customer experience with vehicle subscriptions aiming to do the same thing. As mentioned, flexibility and ease of use are key in the industry. Below are the benefits of our Subscribe + Drive vehicle subscription program if a customer were to sign up today:
- Application on app
- Insurance included
- Maintenance included
- Registration and title fees included
- No long-term commitment (2-month minimum)
- No haggling on price
- No additional upsells on finance products
- A consumer can try out a vehicle before getting into a long-term contract
As we push forward with the pilot program in the Dallas, Texas area, TFS wanted to stand out against the competition to launch this initiative. One advantage we had was our vehicles' top quality and partnership with our Toyota dealers. Providing a fleet of cars with great mileage, excellent condition, and maintenance by trained Toyota technicians, we knew this would bring a lucrative feature to our vehicle subscription program. Our vehicles are showroom ready to provide the best customer experience.
Another benefit that is important in these times is our ability to offer home delivery. We found that our customers needed a vehicle subscription service that offered ease of use and convenience. That is what any subscription service in any industry aims to do, as people are looking for different plans and perks to fit their array of needs. A concierge can support the customer with scheduling the delivery and any additional questions they may have. Moreover, our Subscribe + Drive program sets itself apart from other vehicle subscriptions by offering full coverage insurance, other programs vary on insurance levels and coverage.
Lastly, finding the right partnership and platform needed for our vehicle subscription program was vital. It is the steppingstone of how our customers can apply from the convenience of their home. Using the Subscribe + Drive app, anyone can apply in minutes by filling out an application and having a quick background check completed. The app provides the customer an excellent user experience, which is imperative for a successful subscription program. The Strategic Innovation team wanted to provide a service that would be quick, simple, and intuitive. When downloading and using our Subscribe + Drive app, one will find the latest technology with the following features:
- Easy sign-up
- Convenient ordering
- A wide selection of vehicles
- Online payment processing
- Frequently asked questions (FAQ) and digital concierge for inquiries
The Strategic Innovation group looked back on their time getting the pilot up and running, and discovered some valuable lessons learned. In the ever-changing world of subscription, it is important to be flexible and nimble. The first lesson learned, was that customer needs are changing rapidly, by keeping in sync with Toyota's customer-first approach, we consistently listened to our customers’ feedback. Obtaining this type of data helps drive how we move forward in this space, including changing our program features to meet our users' expectations. Secondly, trying to reach customers that are seeking an alternative to leasing in a niche market was difficult. It was important to find new ways to identify these customers. We have explored creative marketing tactics as opposed to traditional marketing. The SI team is constantly seeking new opportunities to have a sales and marketing approach that relies on relationship building. Finally, taking the time to sit down with our partners and understand how the market is changing will help evolve our subscription service.
A Look Ahead
As we move forward in our vehicle subscription pilot program, the Strategic Innovation team understands that our customers will want to have certain needs filled over time, especially post-pandemic. The office environment has already changed for so many, even how people will get to and from work. We wanted to hear from our program lead, Philip Loveridge, to share his thoughts on where he foresees vehicle subscription heading toward the future.
"People love subscription when they try it. Over the next year, as we all determine what a post-pandemic normal is, there will be opportunities for subscriptions to meet new mobility needs. Those returning to their office commute, deciding whether they need a second family car, or just looking for a simplified driving experience, will benefit from the flexibility and convenience of vehicle subscription." – Philip Loveridge, Consultant, Strategic Innovation
Subscribe + Drive, Powered By Toyota, Features
Registration and title included
No long-term commitment
The information in this blog is offered for informational purposes only. Any product names, logos, brands, images, and other trademarks featured or referred to within the Strategic Innovation (SI) website are the property of their respective trademark holders. These trademark holders are not affiliated with SI or Toyota Financial Services (TFS) and do not sponsor or endorse SI, TFS, or any of their respective websites, products, or comments unless otherwise disclosed. SI and TFS declare no affiliation, sponsorship, nor any partnerships with any registered trademarks unless otherwise disclosed. By clicking on any link contained within this blog, you will be directed to a third-party website and will be subject to the terms of that website, including those relating to confidentiality, data privacy and security.
"Those returning to their office commute, deciding whether they need a second family car, or just looking for a simplified driving experience, will benefit from the flexibility and convenience of vehicle subscription."
-Philip Loveridge, Consultant, Strategic Innovation
Visit the Subscribe + Drive Website
Interested in learning more about our vehicle subscription program? See more details on how our program works, how to apply, and how this program can meet your needs, visit our Subscribe + Drive website to get started now!
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