Why manufacturers have pulled back on subscriptions

The same car on a 36-month contract at the same mileage and with maintenance was £553.65 from leasing giant Lex Autolease – £4.68 per month less. When we dropped the Lex quote to 24 months, it rose to £675.65 – £117.32 more per month than Wagonex’s 12-month offering. 

Lex’s longer contracts of 48 and 60 months cost £502.98 and £468.12 – respectively £56 and £90.21 per month less than Wagonex’s 12-month contract. 

As with any form of funding, prices can vary dramatically between providers, and it is worth noting that that Lex’s online quote tool is designed for fleets with up to 20 vehicles, so bigger organisations will almost certainly pay less per car, while Wagonex’s does not appear to distinguish its offering between fleets and consumers. 

Leasing firms have also told us that fleets, at least, often want longer contracts. Ben Edwards, a consultant at Arval, said: “Fleet leasing is generally moving up to 48 months. We went through a stage where everything was coming back into a three-year lease to try and get that [electric] technology into the fleet and reduce CO2, but fleets are now seeing that they can extend that back up to four years for cars, because the technology is here. The cars are not going to get much greener than they are now, especially with electric, [and] fleets are reducing their mileages.” 

Subscribe and thrive 

Mycardirect makes subscription look more promising. It was launched in 2020 by Duncan Chumley, formerly chief commercial officer of Daimler Fleet Management and MD of Free2Move Lease. Along with contract hire and rental offerings, it supplies both new and used cars on subscription, has reported consistent yearly growth, and now has a fleet of more than 3000 vehicles. Chumley says subscription counts for more than 30% of those and climbing and he is candid about its nascency. 

“I think it’s still quite an unknown. I’d love to think that everyone knows who Mycardirect is, and I’d love to think that everyone knows what car subscription is [but] in reality, it’s still a very new product.”

He says business customers often use it to dip a toe in the water with EVs: “We are finding companies trying out different electric cars – what works for them, and what doesn’t… They try maybe a BMW iX against the Tesla Model Y, against the Mercedes EQC.”

Top-end business customers also use subscription to determine whether they want to stick with electric or go another route. “With some of the smaller businesses, where the cars are run by the very senior directors, we are seeing people opt back out [of electric],” says Chumley. “Where money is less of an objective… they might try a [Porsche] Taycan, then think: ‘That range of 220 miles – I just can’t live with that. I want a Porsche, so please can you put me in a 911 on lease’.

“Saying that, what we are finding is that a lot of them are actually opting back in to [plug-in] hybrid. When they haven’t found electric’s been working, we’ve had quite a few orders for Range Rover P550es, for Mercedes GLE plug-ins, and BMW X5 45es. They still want that benefit but, because of the nature of what they do every day, they also want that range, so I’ve increased the volume of plug-in hybrids on the fleet.”  

Insurance: the sticking point  

Insurance is often cited as problematic for subscription because providers often do not include it. Its absence reduces subscription’s purported appeal as an easy, all-in-one bundle product, particularly for individuals without company policies, and the manufacturer that told us it had ceased offering subscription said insurance was one of the main challenges.