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